Case Note & Summary
The appeal arose from a judgment of the National Company Law Appellate Tribunal (NCLAT) dated 13 July 2020, which dismissed the appellant's appeal as barred by limitation under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC). The appellant, appointed as liquidator of Cethar Ltd (the Corporate Debtor), had filed a miscellaneous application in liquidation proceedings to resist the invocation of a performance guarantee by Respondent No. 10. The National Company Law Tribunal (NCLT) dismissed this application on 31 December 2019, holding that performance guarantees are not a 'Security Interest' under the IBC. The appellant claimed that the order was not uploaded until 12 March 2020, with a corrected version on 20 March 2020, and that a free copy was requested but not issued. Due to the COVID-19 lockdown, the appeal was filed on 8 June 2020 with a downloaded copy, relying on the Supreme Court's suo motu order extending limitation. The NCLAT dismissed the appeal, noting the 30-day limitation period under Section 61(2) had expired and no condonation application was filed. The core legal issue was whether the appeal was time-barred, considering the non-availability of a certified copy and the applicability of Section 420(3) of the Companies Act, 2013 and Rule 50 of the NCLT Rules, which mandate free copies. The appellant argued that limitation runs from the date the order is made available, citing Sagufa Ahmed v. Upper Assam Plywood Products Pvt Ltd, and that Rule 14 of the NCLAT Rules allows waiver of certified copy requirements. The respondent contended that Section 61(2) does not specify 'made available' and the limitation had expired. The Supreme Court analyzed that the limitation period under Section 61(2) commences from the date the order is made available, applying principles from Sagufa Ahmed and noting that an appeal cannot be filed without a copy. It held that Section 420(3) and Rule 50 apply to IBC proceedings, and the principle of lex non cogit ad impossibilia justified the delay due to non-issuance of the order and pandemic conditions. The Court allowed the appeal, setting aside the NCLAT's order on limitation and remanding the matter for consideration on merits.
Headnote
A) Insolvency Law - Limitation for Appeals - Commencement of Limitation Period - Insolvency and Bankruptcy Code, 2016, Section 61 - The Supreme Court held that the limitation period under Section 61(2) of the IBC runs from the date the order is made available to the aggrieved party, not from the date of pronouncement, applying the principle from Sagufa Ahmed v. Upper Assam Plywood Products Pvt Ltd and noting that an appeal cannot be filed without a copy of the order. The Court emphasized that Section 420(3) of the Companies Act, 2013 and Rule 50 of the NCLT Rules, which mandate free copies, apply to IBC proceedings, making the date of availability crucial for calculating limitation. (Paras 12-28) B) Insolvency Law - Procedural Compliance - Waiver of Certified Copy Requirement - National Company Law Appellate Tribunal Rules, 2016, Rule 14 - The Court observed that Rule 14 of the NCLAT Rules permits waiver from procedural requirements, including filing a certified copy, and that online copies can be used for filing appeals when certified copies are not issued. This supports the appellant's contention that the appeal was not defective despite lacking a certified copy, as an application for waiver was filed and allowed. (Paras 12-28) C) Insolvency Law - Limitation Principles - Application of Lex Non Cogit Ad Impossibilia - Insolvency and Bankruptcy Code, 2016, Section 61 - The Court applied the principle of lex non cogit ad impossibilia, stating that the law cannot mandate an impossible act, such as filing an appeal within 30 days when the order is not available. This justified the appellant's delay in filing the appeal due to the non-issuance of a free copy and the COVID-19 pandemic lockdown. (Paras 12-28) D) Insolvency Law - Security Interest - Exclusion of Performance Guarantees - Insolvency and Bankruptcy Code, 2016, Sections 3(31), 14 - The NCLAT had noted that performance guarantees are explicitly excluded from the definition of 'Security Interest' under Section 3(31) of the IBC and are not subject to the moratorium under Section 14, which was a merit-based observation but not central to the limitation issue decided by the Supreme Court. (Paras 4-5)
Issue of Consideration
Whether the appeal filed by the appellant under Section 61 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, considering the non-availability of a certified copy and the applicability of Section 420(3) of the Companies Act, 2013 and Rule 50 of the National Company Law Tribunal Rules, 2016
Final Decision
The Supreme Court allowed the appeal, set aside the NCLAT's order dated 13 July 2020, and remanded the matter to the NCLAT for consideration on merits
Law Points
- Limitation period for appeals under Section 61 of the Insolvency and Bankruptcy Code
- 2016 runs from the date the order is made available to the aggrieved party
- not from the date of pronouncement
- Section 420(3) of the Companies Act
- 2013 and Rule 50 of the National Company Law Tribunal Rules
- 2016 apply to IBC proceedings
- providing for free copies
- The principle of lex non cogit ad impossibilia applies where compliance with limitation is impossible due to non-availability of order
- Performance guarantees are excluded from 'Security Interest' under Section 3(31) of the IBC and not subject to moratorium under Section 14
