The NCLAT and the Supreme Court upheld the dismissal, ruling that the limitation period for appeals could not be extended by subsequent modification orders.
On 10-03-2025, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Technical Members Mr. Naresh Salecha and Mr. Arun Baroka, reviewed an appeal and held that an appeal against an order must be filed within the prescribed limitation period. The Tribunal further clarified that a subsequent order disposing of a modification application does not extend the limitation period or merge with the original order—thus, an appeal barred by limitation cannot be revived through later proceedings.
The present appeal was filed against the order dated 17.08.2023, wherein I.A. No. 2679 of 2023, preferred by the Appellant, had been disposed of. The dispute arose from an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiated by IDBI Trusteeship Services Limited against Ornate Spaces Pvt. Ltd., which was admitted by the National Company Law Tribunal, Mumbai Bench IV, on 29.06.2020. Subsequently, the Resolution Professional (Respondent No. 1) filed I.A. No. 1927 of 2021 based on the transaction audit report dated 13.05.2021, alleging certain transactions as preferential, undervalued, fraudulent, and extortionate. The Appellant was arrayed as Respondent No. 6 due to allegations regarding the misuse of funds related to a land transaction.
The Tribunal, while partly allowing I.A. No. 1927 of 2021, observed that Rs. 1.20 crore had been outstanding as an investment in Aryan Spaces, owned by the Appellant. It was noted that the Corporate Debtor had entered into an unregistered Memorandum of Understanding (MoU) for the purchase of land, with an alleged diversion of funds. The Tribunal directed the Resolution Professional to examine the identity of the Appellant vis-à-vis another individual, Aarif Khan, to ascertain if the transaction amounted to concealment. Conclusively, it held that Aryan Spaces was liable to contribute Rs. 1.20 crore to the Corporate Debtor or permit a set-off against the Appellant's admitted claim.
The Appellant contended that the Tribunal had erroneously recorded in its order dated 02.05.2023 that no reply had been filed by him. Seeking rectification, the Appellant moved I.A No. 2679 of 2023 for modification of the said order, which was disposed of on 17.08.2023. Thereafter, the Appellant challenged both orders dated 02.05.2023 and 17.08.2023 through an appeal filed on 15.09.2023. However, given that the appeal against the 02.05.2023 order was beyond the prescribed limitation period, an application for condonation of delay was filed, followed by an additional appeal on 27.09.2023, numbered as CA (AT) (Ins) No. 1429 of 2023.
The Tribunal, vide its order dated 08.12.2023, dismissed CA (AT) (Ins) No. 1429 of 2023, holding that the limitation for challenging the order dated 02.05.2023 commenced from the date of its passing. It rejected the Appellant's argument that the order dated 02.05.2023 had merged with the subsequent order dated 17.08.2023, concluding that the appeal was time-barred. The Hon’ble Supreme Court, on 04.12.2024, upheld this finding, dismissing the appeal against the 08.12.2023 order but clarifying that the pending appeal against the 17.08.2023 order would be adjudicated on its own merits.
The Appellant claimed that the Tribunal had first recorded that no reply was filed and later contradicted itself by stating that the reply was considered. Alleging a violation of principles of natural justice, the Appellant sought relief. However, the Tribunal clarified that the observation regarding the absence of a reply applied to Respondent Nos. 1 to 5 and not Respondent No. 6 (Appellant), whose reply was duly taken into account. Furthermore, it found no merit in the Appellant’s challenge to the Tribunal's findings on the second MoU. The Respondent argued that the Appellant, having exhausted all legal remedies regarding the order dated 02.05.2023, could not seek its recall through the present appeal. Concluding that all pertinent issues had been previously adjudicated and that the Appellant had not effectively pursued his case, the Tribunal dismissed the appeal with no order as to costs, also closing all pending applications.
Mr. Ankit Virmani, Ms. Ruchika Agarwal, Mr. Hrithik Sharma, Mr. Akshat Mishra and Mr. Amit Singh, Advocates, represented the Appellant.
Mr. Tishampati Sen, Riddhi Sancheti, Mr. Ashish Parwani, Mr. Devesh Juveker, Mr. Dikshat Mehra, Mr. Anurag Anand and Mr. Mukul Kulkarni, Advocates, appeared for Respondent No. 1.
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