07 May 2025 Bankruptcy & Insolvency Law >> Business & Commercial Law  

The Supreme Court of India recently delivered a significant judgment in the case of Tata Steel Ltd. v/s Raj Kumar Banerjee & Others, Civil Appeal No. 408 of 2023, decided on May 7, 2025. The ruling, delivered by Justices J.B. Pardiwala and R. Mahadevan, unequivocally emphasizes the strict adherence to limitation periods for appeals filed under the Insolvency and Bankruptcy Code, 2016 (IBC). This decision sets aside an order by the National Company Law Appellate Tribunal (NCLAT) that had condoned a delay in filing an appeal beyond the statutorily prescribed period.

Background of the Case:

The appeal originated from an NCLAT order dated December 14, 2022, which condoned a 15-day delay in an appeal filed by Respondent No. 1, an erstwhile minority shareholder of Rohit Ferro-Tech Limited (Corporate Debtor). Tata Steel Ltd., the successful resolution applicant whose plan for the Corporate Debtor was approved by the National Company Law Tribunal (NCLT) Kolkata on April 7, 2022, challenged the NCLAT's decision.

Under Section 61(2) of the IBC, an appeal to the NCLAT must be filed within 30 days, with a potential extension of an additional 15 days if sufficient cause for the delay is demonstrated. The appellant (Tata Steel Ltd.) argued that the 30-day limitation period expired on May 7, 2022, and even with the 15-day grace period, the final deadline was May 22, 2022. Respondent No. 1 e-filed the appeal on May 23, 2022, and physically filed it on May 24, 2022, which the appellant contended was beyond the maximum 45-day period.

Conversely, Respondent No. 1 contended that the limitation period commenced on April 8, 2022, the date they became aware of the resolution plan's approval through an intimation letter issued to the stock exchanges, rather than the NCLT's order date of April 7, 2022. They argued that since May 8, 2022 (the calculated end of the initial 30 days) was a Sunday, Section 4 of the Limitation Act, 1963, extended the period to May 9, 2022. Consequently, the 15-day condonable period, according to Respondent No. 1, ended on May 24, 2022, making their filing within the 45-day window. Respondent No. 1 also cited the Resolution Professional's alleged failure to comply with SEBI disclosure obligations as a contributing factor to the delay.

Key Issues for Adjudication:

The Supreme Court identified two central issues:

• Whether Respondent No. 1's appeal was filed within the prescribed 30-day limitation period plus the 15-day condonable period under Section 61(2) IBC.
• If not, whether the NCLAT possessed the power to condone the delay beyond this combined 45-day period.

Supreme Court's Analysis and Ruling:

The Court, after considering arguments and precedents, clarified several crucial aspects of limitation under the IBC:

• Commencement of Limitation Period: The Court reiterated its stance from V. Nagarajan v. SKS Ispat & Power Ltd. that the limitation period for filing an appeal under Section 61(2) IBC commences from the date of pronouncement of the order by the NCLT, not from the date the order is received or made available. In this case, the NCLT order was pronounced on April 7, 2022. The appellant successfully demonstrated that the Corporate Debtor's Company Secretary informed the stock exchanges on April 7, 2022, within 30 minutes of the NCLT order pronouncement, refuting Respondent No. 1's claim of delayed disclosure.

• Applicability of Section 4 of the Limitation Act: The Court emphasized that while Section 238A of the IBC makes the Limitation Act, 1963, applicable to IBC proceedings, the benefit of Section 4 (expiry of prescribed period when court is closed) applies only to the "prescribed period" of limitation, not to any extended or condonable period. The "prescribed period" is defined in Section 2(j) of the Limitation Act as the period of limitation computed in accordance with the Act. Previous judgments, including Assam Urban Water Supply & Sewerage Board v. M/s. Subash Projects & Mktg. Ltd., Sagufa Ahmed and Others v. Upper Assam Plywood Products (P) Ltd. & Others, Bhimashankar Sahakari Sakkare Karkhane Niyamita v. Walchandnagar Industries Limited (WIL), and My Preferred Transformation & Hospitality Pvt. Ltd. and Another v. Faridabad Implements Pvt. Ltd., were cited to reinforce this distinction.

• Working Saturday for Registry: The Court noted that May 7, 2022, the last day of the 30-day limitation period, was a working Saturday for the NCLAT Registry. Therefore, Respondent No. 1 could have filed the appeal on that date.
• NCLAT's Lack of Power to Condon Further Delay: The Supreme Court definitively held that the NCLAT, being a creature of statute, operates strictly within the powers conferred upon it and lacks inherent jurisdiction to extend time on equitable grounds beyond the maximum 45-day period (30 days prescribed + 15 days condonable) under Section 61(2) IBC. Allowing condonation beyond this period would defeat the legislative intent and undermine the efficacy and finality of the appellate mechanism.

Conclusion:

In light of these findings, the Supreme Court concluded that Respondent No. 1's appeal was filed beyond the statutory maximum period of 45 days. Consequently, the NCLAT's order condoning the delay was deemed ultra vires (beyond its powers) and was set aside. The Court underscored the principle 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 considered fatal if the statute does not provide for its condonation.

Section 61, INSOLVENCY AND BANKRUPTCY CODE - 2016  

Section 34, INSOLVENCY AND BANKRUPTCY CODE (SECOND AMENDMENT) ACT - 2018  

INSOLVENCY AND BANKRUPTCY CODE, 2016  

Limitation Act, 1963