Whether a 'Certified Copy' of the impugned order, as required under Rule 22 of the NCLAT Rules, 2016, necessary for filing an appeal?
The NCLAT Bench, comprising two members - Justice M. Venugopal (Judicial Member) and Jatindranath Swain (Technical Member), has expressed dissenting views on the interpretation of the term 'Certified Copy' for filing an appeal under Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016.
The Company Appeal (AT) (CH) (INS) No. 53 / 2024 arose due to a disagreement between two members of the bench regarding the term "Certified Copy" for the purpose of filing an appeal under Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016. The matter, involving a dispute between State Bank of India and India Power Corporation Limited, was initially heard by a two-member bench of the NCLAT.
Per: M. Venugopal (Judicial Member)
Justice Venugopal (Judicial Member) addressed a significant procedural issue in its recent order, emphasizing the critical importance of adhering to procedural requirements when filing appeals. The tribunal concluded that once an application for a certified copy of an order had been made, no exclusion of time could occur. The explanation clarified that the time taken by the court to prepare the decree or order could not be excluded before the application for a copy was made. Furthermore, the right to receive a free copy under Section 420(3) of the Companies Act did not eliminate the appellant's obligation to seek a certified copy through an application.
The appellant contended that Rule 1420 of the NCLAT Rules empowered the NCLAT to exempt parties from compliance with the rules in the interest of substantial justice, typically exercised to allow a downloaded copy in lieu of a certified copy. However, waivers on filing an appeal with a certified copy did not confer an automatic right to dispense with compliance and did not nullify Rule 22(2) of the NCLAT Rules. Filing an application for a certified copy was not just a technical requirement for computing limitation but also indicated the diligence of the aggrieved party in pursuing litigation timely.
In a related case, the NCLAT dismissed an appeal as time-barred under Section 61(2) of the IBC because the appellant filed for a certified copy five months after the order was pronounced, despite being present in court. The court determined that the limitation period for proceedings under the IBC began upon the order's pronouncement, requiring the aggrieved party to apply for a certified copy in alignment with Rule 22(2) of the NCLAT Rules. Section 12(2) of the Limitation Act allowed for the exclusion of time needed to obtain a copy of the decree or order appealed against. The aggrieved party could not await a free certified copy under Section 420(3) of the Companies Act 2013 and Rule 50 of the NCLT Rules to prevent the limitation period from running. Accepting such a construction would disrupt the IBC's timely framework. Appeals had to be filed within thirty days, extendable by fifteen days upon showing sufficient cause.
Regarding the annexation of a certified copy, Rule 22(2) of the NCLAT Rules required it for appeals under the IBC. Although tribunals and courts might exempt parties from this procedural requirement in the interest of substantial justice, this discretionary waiver did not automatically apply where litigants failed to pursue a timely resolution. The appellant's failure to apply for a certified copy rendered the appeal before the NCLAT clearly barred by limitation.
Justice Venugopal (Judicial Member) had concluded that filing a paid-for certified copy of the impugned order was essential under Rule 22(2) of the NCLAT Rules, 2016, and that a free copy provided by the NCLT could not substitute for this requirement, thus rendering the appeal not maintainable. Additionally, he found that the reasons for a three-day delay in filing the appeal did not constitute sufficient cause for condonation.
Another Member Jatindranath Swain (Technical Member) expressed a dissenting view from his colleague, Justice M. Venugopal. Justice Venugopal had concluded that filing a paid-for certified copy of the impugned order was essential under Rule 22(2) of the NCLAT Rules, 2016 and that a free copy provided by the NCLT could not substitute for this requirement, thus rendering the appeal not maintainable. Additionally, he found that the reasons for a three-day delay in filing the appeal did not constitute sufficient cause for condonation.
Per: Jatindranath Swain (Technical Member)
Swain addressed the Points of Determination, which included whether a free copy provided by the NCLT qualified as a certified copy, whether the period between the pronouncement and the supply of a free copy could be excluded under Section 12(2) of the Limitation Act, whether applying for a certified copy was mandatory, and whether the reasons for the delay constituted sufficient cause for condonation.
Swain opined that a free copy provided by the NCLT, certified by the registry, should be considered equivalent to a paid-for certified copy. However, since the appellant did not apply for the certified copy within the limitation period, the time taken to obtain the free copy could not be excluded, starting the limitation period from the date of pronouncement. Despite this, he found the reasons for the three-day delay, such as difficulties in contacting counsels during major festivals and the voluminous nature of the appeal, to be sufficient cause for condonation.
Consequently, Swain allowed the condonation of the delay and directed that the main appeal be listed for admission, thus enabling the appeal to proceed.
In view of the divergent Order(s), delivered by the Hon'ble Member Justice M. Venugopal, Member (Judicial) and Hon’ble Mr. Jatindranath Swain, Member (Technical) of NCLAT, Chennai Bench, on 01.05.2024, the ‘Office of the Registry’ of ‘NCLAT – Chennai Bench’, is to place the entire record(s) in IA No. 158 / 2024 and in main Company Appeal (AT) (CH) (INS) No. 53 / 2024, together with the copies of the said Order(s), before the Hon'ble Chairperson of 'NCLAT - Principal Bench’, New Delhi, for constituting an appropriate Bench / nominating Hon'ble Third Member, for rendering his opinion/decision, in the subject matter, in issue.
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