Limitation For Filing An Appeal To Commence From Date Of Pronouncement Of Order By NCLT: Supreme Court Of India

• Published date: 10 November 2021
• Subject Matter: Corporate/Commercial Law, Tax, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Insolvency/Bankruptcy, Income Tax
• Law Firm: Phoenix Legal
• Author: Mr Vasanth Rajasekaran, Saurabh Babulkar and Harshvardhan Korada

In a recent decision in V Nagarajan v. SKS Ispat and Power Ltd. and Ors.¹, the Hon'ble Supreme Court held that the period of limitation for filing an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) shall start running immediately after the pronouncement of an order and is not dependent on the date on which the order copy is uploaded. In this article, we navigate through the facts and findings of the Hon'ble Supreme Court in the aforesaid judgment.

Brief Facts

Cethar Ltd. (Corporate Debtor) is a corporate entity which is undergoing liquidation. The appellant was appointed as the interim resolution professional and thereafter the resolution professional of the Corporate Debtor. After an unsuccessful attempt at resolving insolvency, the appellant was appointed as the liquidator. The appellant instituted proceedings under Section 43 and 45 of the IBC to avoid certain undervalued transactions of the Corporate Debtor. The appellant claimed to have subsequently discovered that the first respondent and its subsidiary (tenth respondent) had colluded with the promoters of the Corporate Debtor. The appellant alleged that the first and the tenth respondents defrauded the Corporate Debtor over INR 400 crores by entering into fraudulent settlement of only INR 4.58 crores. As per the appellant, the tenth respondent allegedly at the behest of the first respondent sought to invoke certain bank guarantees issued by Corporate Debtor for its failure to perform certain services. Therefore, the appellant filed a miscellaneous application to resist the invocation of the performance guarantee until the liquidation proceedings were concluded.

The National Company Law Tribunal (NCLT), on 31 December 2019 held that the performance guarantees were not a part of the 'security interest' as defined under Section 3(31) of the IBC and refused to grant an injunction against the invocation of the bank guarantee until the completion of the liquidation proceedings. While the appellant did not dispute his presence before the NCLT when the order was pronounced, it was argued that the order was uploaded on NCLT website only on 12 March 2020. Further, the appellant stated that even the order uploaded on 12 March 2020 carried incorrect name of the judicial member. The corrected order was uploaded by 20 March 2020.

Subsequent to the order being uploaded on 20 March 2020, the appellant claimed to have awaited to be issued a free copy of the order and eventually sought one on 23 March 2020. According to the appellant, the free copy was never issued. Thereafter, owing to the onset of the COVID-19 global pandemic, the appeal before the National...