NCLAT Has No Power To Condone Delay Beyond Period Stipulated Under IBC: Supreme Court
The Supreme Court reiterated that the NCLAT cannot condone any delay beyond 15 days even on equitable grounds; and that the appellate mechanism under IBC is strictly time-bound by design to preserve the speed and certainty of the insolvency resolution process.
Justice J.B. Pardiwala, Justice R. Mahadevan, Supreme Court
The Supreme Court held that the National Company Law Appellate Tribunal (NCLAT) has no power to condone the delay beyond the period stipulated under the Insolvency and Bankruptcy Code, 2016 (IBC).
The Court held thus in a Civil Appeal filed against the Order of the NCLAT which allowed Interlocutory Application seeking condonation of delay in filing an Appeal.
The two-Judge Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan observed, “Once the prescribed and condonable periods (i.e., 30 + 15 days) expire, the NCLAT has no jurisdiction to entertain appeals, regardless of the reason for the delay. … Thus, the NCLAT has no power to condone delay beyond the period stipulated under the statute. Accordingly, the second issue is answered by us.”
The Bench reiterated that the NCLAT cannot condone any delay beyond 15 days even on equitable grounds; and that the appellate mechanism under IBC is strictly time-bound by design to preserve the speed and certainty of the insolvency resolution process.
AOR Ashok Mathur represented the Appellant while AOR Shagufa Salim represented the Respondents.
Brief Facts
The Appellant was the successful Resolution Applicant for Rohit Ferro-Tech Limited (Corporate Debtor) having its Resolution Plan approved by the Committee of Creditors (CoC) and subsequently by the NCLT, Kolkata vide an Order. The Respondent was an erstwhile minority shareholder of the Corporate Debtor. He preferred an Appeal under Section 61 of the IBC seeking to set aside an Order of the Adjudicating Authority and direct the Resolution Professional to scrutinise the Resolution Plan proposed by the Appellant in accordance with Section 30(2) IBC. Along with the Appeal, he also filed an Interlocutory Application praying for condonation of delay of 15 days in filing the same. The NCLAT condoned the delay and allowed the said Application. Being aggrieved, the Appellant was before the Apex Court.
Reasoning
The Supreme Court in view of the above facts, noted, “… the benefit of Section 4 of the Limitation Act, 1963 and Rule 3 of the NCLAT Rules, 2016, extends the limitation period to the next working day, if the prescribed period expires on a holiday.”
The Court said that the benefit of exclusion of period during which the Court is closed shall be available when the Application is filed within “prescribed period of limitation” and shall not be available in respect of period extendable by Court in exercise of its discretion.
“In the present case, Respondent No. 1 was neither a party to the proceedings before the NCLT nor privy to the CoC deliberations, and became aware of the order only upon its subsequent disclosure. However, it is evident that the Company Secretary of the Corporate Debtor duly informed the listing departments of both NSE and BSE about the NCLT order dated 07.04.2022 within 30 minutes of its pronouncement. Hence, the limitation period for filing the appeal commenced on 07.04.2022 and expired on 07.05.2022. Notably, 07.05.2022 fell on the first Saturday of the month, which is a working day for the Registry of the NCLAT”, it further noted.
The Court added that the benefit of Section 4 of the Limitation Act, 1963 cannot be granted, as the Respondent filed the Appeal beyond not only the prescribed period of 30 days but also the condonable period of 15 days.
“In view of the same reason, Rule 3 of the NCLAT Rules, 2016 has also no application to the facts of the present case. Thus, applying the principles laid down in the decisions referred to above, we arrive at the irresistible conclusion that Respondent No. 1 filed the appeal beyond the statutory maximum period of 45 days prescribed under section 61(2) IBC”, it also held.
Furthermore, the Court observed that the IBC prescribes strict timelines for filing Appeals and taking legal action so as to ensure that insolvency proceedings are not misused to recover time-barred debts and the proviso to Section 61(2) clearly limits the NCLAT’s jurisdiction to condone delay only up to 15 days beyond the initial 30-day period.
“Where a statute expressly limits the period within which delay may be condoned, an Appellate Tribunal cannot exceed that limit. In other words, the NCLAT being a creature of statute, operates strictly within the powers conferred upon it. Unlike a civil suit, it lacks inherent jurisdiction to extend time on equitable grounds”, it remarked.
The Court was of the view that the Order passed by the NCLAT condoning the delay in filing the Appeal, is ultra vires and liable to be set aside.
“Before parting, we may observe that time is of the essence in statutory appeals, and the prescribed limitation period must be strictly adhered to. Even a delay of a single day is fatal if the statute does not provide for its condonation. As held by us, the NCLAT has no power to condone delay beyond the period stipulated under the statute. Allowing condonation in such cases would defeat the legislative intent and open the floodgates to belated and potentially frivolous petitions, thereby undermining the efficacy and finality of the appellate mechanism”, it concluded.
Accordingly, the Apex Court allowed the Appeal and set aside the NCLAT’s Order.
Cause Title- Tata Steel Ltd. v. Raj Kumar Banerjee & Ors. (Neutral Citation: 2025 INSC 639)
Appearance:
Appellant: AOR Ashok Mathur, Advocates Shivkrit Rai, and Apeksha Singh.
Respondents: AORs Shagufa Salim, Ekta Choudhary, Advocates Brijesh Singh Bhaduriya, Aviral Kapoor, Sonal Alagh, Ayush Kumar, Anand Krishna, and Rushali Sikand.
