Judgments

V NAGARAJAN VS SKS ISPAT AND POWER LTD : CASE SUMMARY

The Supreme Court in V Nagarajan Vs SKS Ispat and Power Ltd ( 2022) 2 SCC 244  held that Limitation will start running from date or pronouncement of order by NCLT. The time taken in preparation of certified copy after making an application for certified copy has to be excluded.

Facts of the Case

Corporate Insolvency Resolution Process (CIRP) was initiated in the matter of Cethar Ltd (Corporate Debtor) and  the Appellant was appointed as IRP. CIRP was not successful as such Liquidation Order was passed and  the Appellant was appointed as Liquidator. Respondent No. 10  allegedly at behest of Respondent No. 1, sought to invoke certain bank guarantees issued by the Corporate Debtor for its failure to perform its engineering services. The Appellant filed miscellaneous application to resist the invocation of performance guarantee until the liquidation proceedings are concluded.

The NCLT refused to grant any injunction. Order was pronounced in open court on 31st December, 2019. The order was uploaded on the NCLT website only on 12th March, 2020. There was error in name of Judicial Member as such corrected order was uploaded on 20th march, 2020.

The Appellant was waiting for free certified copy. The Appeal before NCLAT was filed on 8th June, 2020 along with an application for exemption from filing a certified copy of the order as it had not been issued.

The NCLAT vide its order dated 13.07.2020 dismissed the Appeal on the ground that Section 61 (2) of the IBC which mandates a limitation period for appeals to be thirty days extendable by fifteen days has already expired.

An appeal against the same was filed before the Supreme Court.

Findings of the Court

The Court noted that IBC is a complete code and it has overriding effect under Section 238.  Limitation Act is applicable to the Code vide Section 238 A. Section 29 (2) of the Limitation Act provides that period of Limitation prescribed under the special or local law shall be deemed to be period prescribed for the purposes of Section 3 of the Limitation Act.

The Supreme Court observed that Section 61 (2) provides for a limitation period of thirty days which can be extended by a maximum of fifteen days on the demonstration of sufficient cause of delay.

The Court observed that notable difference between Section 421 (3) of the Companies Act and Section 61 (2) of IBC is absence of the words “from the date on which a copy of the order of the Tribunal is made available to the person aggrieved”. The absence of these words are not mere omissions.

Proceedings under IBC is timebound. Reading in the requirement of an “order being made available” under a general enactment (Companies Act) would do violence to the special provisions enacted under IBC  where timing is critical for the workability of the mechanism, health of the economy, recovery rate of lenders and valuation of the Corporate Debtor. An appeal, if considered necessary, is expected to be filed without awaiting free copy which may be received at indefinite stage.

Rule 22 (2) of the NCLAT Rules mandates that an appeal has to be filed with a certified copy of impugned order.

Section 12 of Limitation Act provides that a person wishing to file an appeal is expected to file an application for a certified copy before expiry of the limitation period, upon which time requisite for obtaining a certified copy has to be excluded.  Time taken in preparation of certified copy before making of application cannot be excluded.

The Court observed that law mandated the Appellant to apply for certified copy once order was pronounced on 31st December. In the event the appellant was correct in assertion that correct order was not available till 20th March, 2020, the appellant would not have received the certified copy and would have received the benefit of the suo motu order which came into effect on 15th March, 2020. In the absence of application for certified copy Appeal was barred much prior to suo motu direction in light of COVID Pandemic.

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Mukesh Kumar Suman is an advocate and legal author based at Delhi. He regularly appears before various Judicial Forums including NCLT, NCLAT, High Courts and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

Mukesh Kumar Suman

Mukesh Kumar Suman

Mukesh Kumar Suman is an advocate based at Delhi. He has rich experience in civil, criminal, commercial, arbitration and corporate insolvency matters. He regularly appears before District Courts, NCLT, NCLAT, High Court and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

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