No Excuse for Delay: Supreme Court Demands Strict Adherence to IBC Limitation.


04 April 2025 Civil Appeals >> Civil & Consumer Law  

In a recent judgment, the Supreme Court of India has reinforced the stringent timelines stipulated under the Insolvency and Bankruptcy Code, 2016 (IBC), specifically concerning the filing of appeals against orders passed by the National Company Law Tribunal (NCLT). The apex court dismissed appeals filed against an order of the National Company Law Appellate Tribunal (NCLAT), which had earlier rejected the appeals due to delays in filing and misstatements made by the appellant.

The case centered on appeals brought by a shareholder and suspended Managing Director of Dharti Dredging and Infrastructure Limited, challenging two separate orders of the NCLT. These orders concerned the dismissal of the appellant's application to place his resolution plans before the Committee of Creditors (CoC) and the approval of a resolution plan submitted by a consortium of respondents.


 

 

A critical point of contention was the appellant's failure to file the appeals within the 30-day limitation period prescribed under Section 61(2) of the IBC. Initially, the appellant claimed the appeals were filed within the statutory period, a claim later proven false. Subsequent applications for condonation of delay were filed, citing reasons such as the late receipt of certified copies of the NCLT orders. However, the NCLAT found these explanations unsatisfactory, noting discrepancies and misstatements in the appellant's submissions.

The Supreme Court, in its ruling, emphasized the mandatory nature of the 30-day limitation period, with a permissible extension of only 15 days upon showing sufficient cause. The court underscored the legislative intent behind these strict timelines, aimed at ensuring the timely resolution of insolvency proceedings.

Justice [Names of Judges Involved] stated, "The restrictions with regard to allowing extension in the provisions stipulated is cloaked in such a manner that the provisions have to be strictly followed." The court rejected the appellant's argument that the limitation should be calculated from the date of knowledge of the order's contents, affirming that the limitation commences from the date of pronouncement.

The court further highlighted the importance of adhering to Rule 22(2) of the NCLAT Rules, which mandates the filing of appeals along with certified copies of the impugned orders. The appellant's failure to apply for and obtain certified copies was deemed a critical procedural lapse.

Drawing upon previous judgments, including V Nagarajan Vs. SKS Ispat and Power Limited and Sanjay Pandurang Kalate Vs. Vistra ITCL India Pvt. Ltd., the Supreme Court reiterated the primacy of the IBC's timelines over other procedural considerations. The court clarified that while Section 12(2) of the Limitation Act allows for the exclusion of time taken to prepare certified copies, this benefit is contingent upon the appellant having applied for such copies.

In this case, the appellant's lack of diligence in obtaining certified copies and the misstatements made in the appeals were deemed sufficient grounds for rejecting the condonation of delay applications. The Supreme Court upheld the NCLAT's decision, emphasizing the necessity of adhering to the statutory timelines to maintain the integrity of the IBC's resolution framework.

This judgment serves as a stern reminder to litigants to strictly comply with the procedural requirements and timelines prescribed under the IBC. It reinforces the judiciary's commitment to upholding the time-bound nature of insolvency proceedings, thereby ensuring efficient and effective resolution of corporate insolvency cases.


INSOLVENCY AND BANKRUPTCY CODE, 2016