The National Company Law Appellate Tribunal, Principal Bench, New Delhi (“NCLAT”) in Innovators Cleantech Private Limited v. Pasari Multi Projects Private Limited (I.A. No. 1622 & 1623 of 2024 in Company Appeal (AT) (Insolvency) No.115 of 2024, judgement dated July 24, 2024) held that the date of re-filing after curing defects of an appeal cannot be treated as the fresh date of filing for the purpose of limitation computation. 

Brief Facts:

Innovators Cleantech Private Limited (“Appellant”) sought to initiate the corporate insolvency resolution process (“CIRP”) against Pasari Multi Projects Private Limited (“Respondent”) under section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The Appellant filed an appeal before [insert court]after the National Company Law Tribunal (“NCLT”) rejected their application undersection 9 of the IBC by an order dated August 28, 2023. The appeal was initially filed on September 25, 2023. The registry communicated defects in the appeal on October 4, 2023. The Appellant then refiled the appeal on December 15, 2023. The appeal was still defective, and the defects were then communicated to the Appellant by the registry on January 3, 2024. Finally, the refiling of the appeal was done on January 16, 2024. The appeal was listed on January 25, 2024 and the application for condonation of refiling delay of 86 days was placed for consideration.

The Respondent contended that the appeal was barred by time, being that the 30 (thirty) days' time for filing of the appeal was expired, arguing that the re-filing date should be treated as a fresh filing for limitation purposes. The case raises questions about the computation of limitation in relation to the re-filing of appeals after curing defects.

Issue:

Whether the date of re-filing an appeal after curing defects should be considered as the fresh date of filing for the computation of limitation under the IBC.

Submissions of the Parties:

Appellant's Submissions:

1. The Appellant argued that the initial filing of the appeal on September 25, 2023 was valid, and was within the required 30 (thirty) days from the order dated August 28, 2023. Thus, there was no delay in filing the appeal.
2. It was also pointed out that the defects pointed out were subsequently cured.
3. The Appellant also emphasized that the appeal was filed in compliance with the National Company Law Appellate Tribunal Rules, 2016 (“NCLAT Rules”), particularly referencing an order dated December 24, 2022, which clarified that the date of e-filing should be considered the date of filing for limitation purposes.
4. It was also contended that the date of re-filing after clearing the defects cannot be treated as the fresh date for the purpose of limitation. For this, various precedents were also referred to. Reference was made to the larger bench judgment in V.R. Ashok Rao vs. TDT Cooper Limited (IA No.2095 of 2022 in Company Appeal (AT) (Insolvency) No.780 of 2022), which clarified that re-filing after curing defects does not reset the limitation period. Further, the judgements in Delhi Development Authority v. Durga Construction Co., and IRCON International Limited vs. Reacon Engineers India Private Limited ((2022) 4 HCC (Del) 507), were also relied upon.

Respondent's Submissions:

1. The Respondent contended that the initial filing on September 25, 2023 was non est (invalid) as it did not include the necessary documents, such as the copy of the impugned order and notarized affidavit.
2. They argued that the appeal was barred by time since the re-filing on January 16, 2024, wherein the defects were cured, occurred beyond the permissible period for filing under the IBC.
3. It was further submitted that the Appellant did not apply for a certified copy of the order, nor any certified copy of the order has been filed in the Appeal. Applying certified copy of the order is mandatory as per Rule 22(2) of NCLAT Rules, 2016, hence, the appeal also deserve to be dismissed, since it has been filed without applying certified copy of the order.
4. The Delhi High Court’s decision in the case of Indira Gandhi National Open University vs. Messrs Sharat Das & Associates Private Limited (OMP (COMM) No.26/2019) was relied upon wherein it was mentioned that a bunch of papers were merely filed in order to stop the period of limitation from running, and this could not be accepted.

NCLAT’s Analysis:

1. The NCLAT recognized that the appeal was e-filed on September 25, 2023, which was within the limitation period. It emphasized that the defects pointed out did not invalidate the filing of that appeal.
2. NCLAT then delved into Rules 22, 26 and 103 of the NCLAT Rules and reasoned that since the NCLAT Rules allow for the curing of defects, that the re-filing should not be treated as a fresh filing for limitation purposes. It highlighted that the intention of the Appellant to pursue the appeal was evident, and the procedural defects could be remedied without affecting the validity of the filing.
3. Reliance was placed upon the judgement of V.R. Ashok Rao vs. TDT Cooper Limited ((IA No.2095 of 2022 in Company Appeal (AT) (Insolvency) No.780 of 2022), which was referred to by the Appellant, and further reference was made to Jitendra Virman v. MRO-TEK and Arul Muthu Kumaara Samy v. Registrar of Companies wherein the view was taken that the computation of limitation was to be from the date of e-filing.
4. Reference to the apex court’s decision in Sanket Kumar Agarwal v. APG Logistics Private Limited, in this regard was also made. Here, it was averred that the computation of limitations has to be done from the date of e-filing of the appeal, and thus, any other interpretation is not permissible.
5. Finally, with regard to the Respondent’s submission pertaining to attaching a certified copy of the order, the NCLAT noted that there were precedents to be relied upon for this which noted that while the requirement for a certified copy of the order is important, the courts have the power to waive compliance of the same. Thus, the appeal should not be dismissed merely on the ground that the Appellant had not applied for the certified copy of the order.

Decision:

Based on the aforementioned rationale, NCLAT concluded that the appeal e-filed by the Appellant was within the period of limitation and that the Appellant had provided sufficient cause for condoning the delay in refiling of the Appeal. This was since the appeal, which was e-filed on September 25, 2023 was validly filed within the limitation period, i.e. within 30 (thirty) days from the order dated August 28, 2023.

Therefore, it was held that the order dated January 25, 2024 passed by the NCLT, which condoned the delay of 86 (Eighty-Six) days in refiling the appeal, warranted no interference, and was thus upheld.

This judgment is significant as it reiterates that the re-filing of an appeal after curing defects does not reset the limitation period, aligning with the intent of the IBC. However, one should also be mindful of NCLAT’s earlier order in Indira Gandhi National Open University vs. Messrs Sharat Das & Associates Private Limited (OMP (COMM) No.26/2019), which frowned upon the practice of purposely submitting flawed documents merely to halt the clock on limitation period.

Please find attached a copy of the judgement. 

This update has been contributed by Adity Chaudhury (Partner) and Mahek Shivnani (Associate).

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