New Supreme Court Ruling: Commencement of Appeal Limitation Tied to Order Upload Date

In a recent legal development, the Supreme Court has clarified the initiation point for the limitation period in filing appeals related to National Company Law Tribunal (NCLT) orders under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC). The ruling distinguishes cases where the NCLT hears a matter but delays order pronouncement from those where both actions occur on the same day.

According to the bench, headed by Chief Justice Dr. Dhananjaya Y Chandrachud and Justices J B Pardiwala and Manoj Misra, the crucial factor is when the order of the NCLT gets uploaded. The decision emphasizes that if the NCLT hears a case but does not pronounce an order on the same day, the clock for filing an appeal starts ticking from the date of order upload. Conversely, if the order is both heard and pronounced on the same day, the limitation period begins from the date of pronouncement, not the upload.

The case in question involved Vistra ITCL (India) Limited filing a Section 7 petition under IBC against Evirant Developers Pvt. Ltd. The appellant, the erstwhile director of the corporate debtor, contested the NCLT’s dismissal of their application, arguing that the reply to the Section 7 petition was filed without proper authorization.

The NCLT heard the matter on 17.05.2023 but did not pronounce any order on that day. The order was subsequently uploaded on 30.05.2023, prompting the appellant to file an appeal. The central issue revolved around whether the limitation, as per Section 61(2) of IBC, should commence from 17.05.2023 or 30.05.2023.

The Supreme Court, delving into the NCLT Rules of 2016, highlighted the distinction between the ‘hearing’ and ‘pronouncement’ of an order. The bench stressed that, as per Rule 89(1), the cause list clearly differentiates between cases listed for order pronouncement and others. The court’s decision emphasized the necessity of pronouncing an order and how it cannot be dispensed with, aligning with the provisions of Rule 150(1) and Rule 151.

Conclusively, the bench held that the limitation period would only commence from the date of order upload, as no substantive order was passed before 30.05.2023. In a nuanced ruling, the court acknowledged that although the appeal was filed beyond the initial 30-day period, it fell within the condonable period of 15 days. Consequently, the bench restored the appeal to the National Company Law Appellate Tribunal (NCLAT) for reconsideration, emphasizing the need for demonstrating sufficient cause for condoning the delay beyond the initial 30 days.

This landmark ruling in the case of Sanjay Pandurang Kalate v Vistra ITCL (India) Limited and Others has far-reaching implications for the timeline of appeals related to NCLT orders, providing clarity on when the clock starts ticking for filing such appeals.