State Bank of India v. India Power Corporation Limited

 

[2024] 10 S.C.R. 384 : 2024 INSC 774

State Bank of India

v.

India Power Corporation Limited

(Civil Appeal No. 10424 of 2024)

27 September 2024

[Dr Dhananjaya Y Chandrachud, CJI and Manoj Misra, J.]

Issue for Consideration

The issue which arises for consideration is the interpretation

of Rule 50 of the National Company Law Tribunal Rules, 2016

(NCLT Rules) and Rule 22 of the National Company Law Appellate

Tribunal Rules, 2016 (NCLAT Rules).

Headnotes†

National Company Law Tribunal Rules, 2016 – Rule 50 –

National Company Law Appellate Tribunal Rules, 2016 –

Rule 22 – Interpretation of:

Held: Rule 22(2) of the NCLAT Rules requires that every appeal

shall be accompanied by a certified copy of the impugned

order – Rule 50 of the NCLT Rules prescribes that the Registry

shall send a certified copy of the final order free of cost and

certified copies may be made available on payment of costs in

terms of the Schedule of Fees in all other cases – Both the

certified copy which is made available free of cost as well as the

certified copy which is made available on the payment of costs,

are treated as certified copies for the purpose of Rule 50 – A

litigant who does not apply for a certified copy cannot then fall

back and claim that he was awaiting the grant of a free copy to

obviate the bar of limitation. [Para 19]

National Company Law Tribunal Rules, 2016 – Rule 50 –

National Company Law Appellate Tribunal Rules, 2016 –

Rule 22 – Before NCLAT, appellant filed an application for

condonation of delay on the ground that the appeal was lodged  with delay of 3 days beyond the 30 day period prescribed – A divergence arose between the two members of the NCLAT – The third member agreed with the judicial member in dismissing the application for condonation of delay:

[2024] 10 S.C.R. 385

State Bank of India v. India Power Corporation Limited

Held: The Judicial Member, NCLAT held that the certified copy

which was filed by the appellant was a “free of cost” copy and hence in the absence of an application for the grant of a certified copy, the delay of three days could not be condoned – The Technical Member, on the other hand, held that no distinction could be made between certified copies obtained through the payment of fee and a free copy and sufficient cause was shown for condoning the delay of three days – The third member agreed with the judicial member – In the instant case, the free copy was made available on 14.11.2023 after the decision of the NCLT was pronounced on 30.10.2023 – The appeal was lodged on 02.12.2023 – The appeal was lodged with a delay of only three days beyond the statutory period of 30 days and, therefore, fell within the condonable period of 15 days – Sufficient cause was shown for condoning the delay of three days – A Schedule of Fees is prescribed by the NCLT Rules – Entry 31 of the Schedule stipulates that the fee for obtaining true certified copies of final orders passed to parties other than the concerned parties under Rule 50 shall be Rupees five per page – The stipulation of Rupees five per page in Entry 31 excludes “the concerned parties under Rule 50” – The provisions of Rule 50 of the NCLT Rules place both the free certified copy as well as the certified copy which is applied for on payment of fees on the same footing – The appeal in the present case was filed within the condonable period of 15 days, which should have been condoned – Accordingly, the delay of three days in filing the appeal shall stand condoned. [Paras 5, 20, 21, 22, 23]

Case Law Cited

V Nagarajan v. SKS Ispat and Power Limited & Ors. [2021] 14

SCR 736 : (2022) 2 SCC 244 – relied on.

List of Acts

National Company Law Tribunal Rules, 2016; National Company

Law Appellate Tribunal Rules, 2016; Insolvency and Bankruptcy

Code, 2016.

List of Keywords

Interpretation of Rule 50 of the National Company Law Tribunal

Rules, 2016; Rule 22 of the National Company Law Appellate

Tribunal Rules, 2016; Section 61(2) of Insolvency and Bankruptcy

Code, 2016; Condonation of delay; Certified copy of order; Free

of costs; Payment of costs; Bar of limitation.

386 [2024] 10 S.C.R.

Case Arising From

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10424 of 2024

From the Judgment and Order dated 09.07.2023 of the National

Company Law Appellate Tribunal, Chennai Bench in I.A. No. 158 of 2024 in Company Appeal (AT)(CH)(INS) No. 53 of 2024

Appearances for Parties

Tushar Mehta, SG, Madhav Kanoria, Ms. Surabhi Khattar, Ms. Neha

Shivhare, Sriharsh Raj, M/s. Cyril Amarchand Mangaldas, Advs. for

the Appellant.

Dr. Abhishek Manu Singhvi, Sr. Adv., Anirban Bhattacharya, Rajeev

Chowdhary, Ms. Priyanka Bhatt, Pranjit Bhattacharya, Advs. for the

Respondent.

Judgment / Order of the Supreme Court

Order

1. On a difference between two members of the National Company

Law Appellate Tribunal,1 reflected in a split verdict on 1 May 2024,

the third Member, by a judgment dated 9 July 2024, agreed with the

Judicial Member in dismissing the application for condonation of delay.

2. The facts, insofar as they are relevant for the disposal of the Appeal,

fall in a narrow compass.

3. The appellant, State Bank of India, instituted an application under

Section 7 of the Insolvency and Bankruptcy Code 20162 against the

respondent. The National Company Law Tribunal3 at Hyderabad

rejected the petition on the ground of maintainability by an order

dated 30 October 2023.

4. The appeal before the NCLAT, Chennai was filed on 2 December

2023. The appellant filed an application for condonation of delay on

the ground that the appeal had been lodged with a delay of 3 days

beyond the 30 day period prescribed in Section 61(2).

1 “NCLAT”

2 “IBC”

3 “NCLT”

[2024] 10 S.C.R. 387

State Bank of India v. India Power Corporation Limited

5. A divergence arose between the two members of the NCLAT on 1

May 2024. The Judicial Member held that the certified copy which

was filed by the appellant was a “free of cost” copy and hence in the

absence of an application for the grant of a certified copy, the delay

of three days could not be condoned. The Technical Member, on the

other hand, held that no distinction could be made between certified

copies obtained through the payment of fee and a free copy and

sufficient cause was shown for condoning the delay of three days.

6. The divergence was, thereafter, referred to a third Member of the

NCLAT who has ruled that the free copy provided under Rule 50 of

the National Company Law Tribunal Rules 20164 cannot be treated

as a certified copy which is referred to in Rule 22(2) of the National

Company Law Appellate Tribunal Rules 2016.5

7. The appeal has been consequently dismissed on delay on 9 July 2024.

8. The issue which arises for consideration turns on the interpretation

of Rule 50 of the NCLT Rules and Rule 22 of the NCLAT Rules.

9. An appeal to the appellate authority is governed by the provisions

of Section 61(2) of the IBC which provides as follows :

“61.(2) Every appeal under sub-section (1) shall be filed

within thirty days before the National Company Law

Appellate Tribunal:

Provided that the National Company Law Appellate Tribunal

may allow an appeal to be filed after the expiry of the

said period of thirty days if it is satisfied that there was

sufficient cause for not filing the appeal but such period

shall not exceed fifteen days.”

10. Rule 50 of the NCLT Rules provides as follows :

“50. Registry to send certified copy.—The Registry shall

send a certified copy of final order passed to the parties

concerned free of cost and the certified copies may be

made available with cost as per Schedule of fees, in all

other cases.”

4 “The NCLT Rules”

5 “The NCLAT Rules”

388 [2024] 10 S.C.R.

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11. Rule 22 of the NCLAT Rules is in the following terms :

“22. Presentation of appeal.—(1) Every appeal shall be

presented in Form NCLAT-1 in triplicate by the appellant

or petitioner or applicant or respondent, as the case may

be, in person or by his duly authorised representative

duly appointed in this behalf in the prescribed form with

stipulated fee at the filing counter and non-compliance of

this may constitute a valid ground to refuse to entertain

the same.

(2) Every appeal shall be accompanied by a certified copy

of the impugned order.

(3) All documents filed in the Appellate Tribunal shall be

accompanied by an index in triplicate containing their

details and the amount of fee paid thereon.

(4) Sufficient number of copies of the appeal or petition or

application shall also be filed for service on the opposite

party as prescribed.

(5) In the pending matters, all other applications shall be

presented after serving copies thereof in advance on the

opposite side or his advocate or authorised representative.

(6) The processing fee prescribed by the rules, with required

number of envelopes of sufficient size and notice forms

as prescribed shall be filled along with memorandum of

appeal.”

12. Rule 22(1) provides for

(i) the presentation of an appeal in Form NCLAT-1;

(ii) the person by whom the appeal may be filed; and

(iii) the submission of the stipulated fee. Rule 22(2) stipulates that

“every appeal shall be accompanied by a certified copy of the

impugned order”.

13. Rule 50 of the NCLT Rules governs the furnishing of certified copies.

Rule 50 indicates that the Registry shall send a certified copy of the

final order which has been passed to the parties concerned free of

cost. It also indicates that certified copies may be made available

against the payment of costs in terms of the Schedule of Fees, in

[2024] 10 S.C.R. 389

State Bank of India v. India Power Corporation Limited

other cases. Rule 50 provides for a certified copy being provided free

of cost and that a certified copy may be made available against the

payment of costs, as indicated in the Schedule of Fees. The important

point to note is that both the certified copy which is provided free of

cost as well as the certified copy which is made on an application in

that behalf are treated as certified copies for the purposes of Rule 50

14. Ms Surbhi Khattar, counsel has appeared on behalf of the appellant.

The Solicitor General, Mr. Tushar Mehta, has also addressed the

Court.

15. Ms Khattar has submitted that Rule 50 of the NCLT Rules places

both the certified copy which is provided free of cost as well as the

certified copy which is made available against the payment of costs

as indicated in the Schedule of Fees on the same footing. It has

been urged that as a matter of fact, the free certified copy was made

available on 14 November 2023 and the appeal which was filed on

2 December 2023 was well within the condonable period of 15 days

beyond the period of 30 days which is stipulated in Section 61(2).

16. On the other hand, Dr Abhishek Manu Singhvi, senior counsel

appearing on behalf of the respondents placed reliance on the

decision of the three Judge Bench in V Nagarajan Vs SKS Ispat

and Power Limited & Ors6 (paragraphs 23 and 29).

17. In order to consider the submissions which has been urged on behalf

of the respondent, it would be necessary to extract paragraphs 23

and 29 of the above decision which read as follows :

“23. Therefore in a field which is not covered by a special

law which invests NCLT with jurisdiction, the general

principle for the computation of limitation for filing an

appeal against an order of NCLT is governed by the

statutory mandate of Section 420(3) of the Companies

Act read with Rule 50 of the NCLT Rules, which enables

a party to compute limitation from the date of receipt of

the statutorily mandated free certified copy, without having

to file its own application. However, the decision of this

Court in Sagufa Ahmed [Sagufa Ahmed v. Upper Assam

Plywood Products (P) Ltd., (2021) 2 SCC 317 : (2021) 2

6 [2021] 14 SCR 736 : (2022) 2 SCC 244

390 [2024] 10 S.C.R.

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SCC (Civ) 178] clarifies that the statutory mandate of a

free copy is not to enable litigants to take two bites at the

apple where they could compute limitation from either when

the certified copy is received on the litigant’s application

or received as a free copy from the Registry—whichever

is later.

XXX XXX XXX

29. On the question of a certified copy for filing an appeal

against an order passed by NCLT under IBC, Rule 22(2)

of the NCLAT Rules mandates that an appeal has to be

filed with a certified copy of the “impugned order”:

“22. Presentation of appeal.— (1) Every appeal shall

be presented in Form Nclat-1 in triplicate by the

appellant or petitioner or applicant or respondent, as

the case may be, in person or by his duly authorised

representative duly appointed in this behalf in the

prescribed form with stipulated fee at the filing counter

and non-compliance of this may constitute a valid

ground to refuse to entertain the same.

(2) Every appeal shall be accompanied by a certified

copy of the impugned order.”

(emphasis supplied)

Therefore, it cannot be said that the parties can

automatically dispense with their obligation to apply for

and obtain a certified copy for filing an appeal. Any delay

in receipt of a certified copy, once an application has

been filed, has been envisaged by the legislature and

duly excluded to not cause any prejudice to a litigant’s

right to appeal.”

18. In V Nagarajan, the order of the NCLT was dated 31 December 2019

and was uploaded on the website on 12 March 2020. There was a

correction in the name of the Judicial Member who had passed the

order on 20 March 2020. The appellant before this Court claimed

to have awaited the issue of a free copy and allegedly sought a

free copy on 23 March 2020 under the provisions Section 420(3)

of the Companies Act 2013 read with Rule 50 of the NCLT Rules.

[2024] 10 S.C.R. 391

State Bank of India v. India Power Corporation Limited

He claimed that the free copy had not been made available to him

until that date and that in the meantime, the COVID-19 pandemic

had intervened. The NCLAT, by its order dated 13 July, 2020, relied

on Section 61(2) and came to the conclusion that the appeal was

barred by limitation. It is in this context that this Court in paragraph

23 of its decision (extracted above) observed that the mandate of

a free copy was not to enable litigants to take “two bites at the

apple where they could compute limitation from either when the

certified copy is received on the litigant’s application or received

as a free copy from the Registry—whichever is later”. This Court,

therefore, held that parties could not automatically dispense with

their obligation to apply for and obtain a certified copy for filing an

appeal.

19. Rule 22(2) of the NCLAT Rules requires that every appeal shall be

accompanied by a certified copy of the impugned order. Rule 50 of

the NCLT Rules prescribes that the Registry shall send a certified

copy of the final order free of cost and certified copies may be made

available on payment of costs in terms of the Schedule of Fees in

all other cases. Both the certified copy which is made available free

of cost as well as the certified copy which is made available on the

payment of costs, are treated as certified copies for the purpose of

Rule 50. A litigant who does not apply for a certified copy cannot then

fall back and claim that he was awaiting the grant of a free copy to

obviate the bar of limitation. This was the position in the decision of

this Court in V Nagarajan.

20. The facts of the present case are completely distinguishable. The free

copy was made available on 14 November 2023 after the decision

of the NCLT was pronounced on 30 October 2023. The appeal was

lodged on 2 December 2023. The appeal was lodged with a delay of

only three days beyond the statutory period of 30 days and, therefore,

fell within the condonable period of 15 days. Sufficient cause was

shown for condoning the delay of three days.

21. A Schedule of Fees is prescribed by the NCLT Rules. Entry 31 of

the Schedule stipulates that the fee for obtaining true certified copies

of final orders passed to parties other than the concerned parties

under Rule 50 shall be Rupees five per page. The stipulation of

Rupees five per page in Entry 31 excludes “the concerned parties

under Rule 50”.

392 [2024] 10 S.C.R.

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22. The provisions of Rule 50 of the NCLT Rules place both the free

certified copy as well as the certified copy which is applied for on

payment of fees on the same footing. The appeal in the present case

was filed within the condonable period of 15 days, which should

have been condoned.

23. We accordingly allow the appeal and set aside the impugned judgment

and order of the NCLAT dated 7 May 2024. The delay of three days

in filing the appeal shall stand condoned. The appeal shall stand

restored to the file of the NCLAT.

24. The Court would wish to record its appreciation of the meticulous

manner in which Ms Surbhi Khattar, appearing for the appellant had

prepared the case and made submissions.

25. Pending applications, if any, stand disposed of.

Result of the Case: Appeal allowed.

†Headnotes prepared by: Ankit Gyan