Assistant Commissioner of Central Tax, CGST Division v. Sreenivasa Rao Ravinuthala & Anr.

What happened

The corporate debtor, Samyu Glass Private Limited, manufactured glass containers as an export oriented unit and stopped manufacturing around November or December 2016 after the Central Excise and Service Tax Department initiated several excise recovery proceedings against it between 2013 and 2017. A financial creditor, Andhra Bank (now Union Bank of India), filed a petition under section 7 of the Insolvency and Bankruptcy Code, 2016 and the corporate insolvency resolution process began. On 27 November 2019 the Deputy Commissioner of Central Tax filed a proof of claim for Rs. 22,60,32,948 after the resolution professional had pointed to the moratorium when the Department sought to fix a reserve price for auctioning attached machinery.

The resolution professional also proposed a settlement of Central Excise arrears under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 for Rs.4,32,80,741. On 13 August 2021 the National Company Law Tribunal, Hyderabad approved the resolution plan, which provided Rs. 1,34,657 towards the excise arrears. The Department's appeal to the NCLAT, Chennai in Company Appeal (AT) (CH) (Ins.) No. 346 of 2021 failed by the impugned order of 2 August 2023, and the Department filed its civil appeal under section 62 of the Code on 21 November 2023. The second respondent raised a preliminary objection on limitation.

Questions before the court

• When does limitation start for an appeal to the Supreme Court under section 62 of the Insolvency and Bankruptcy Code: on pronouncement of the NCLAT's order or on receipt of a certified copy?

Why the court ruled this way

The Department argued that, because section 62(1) says "from the date of receipt of such order", time ran from the day it received the certified copy on 11 October 2023, so that the appeal filed on 21 November 2023 was within 41 days. The respondent argued that the Code is a complete code, that the 45 days plus 15 condonable days began on 3 August 2023 and ended on 1 October 2023, and that even if the time taken to obtain a copy was excluded, the last date was 5 November 2023.

The Court relied on its decisions in Sagufa Ahmed v. Upper Assam Plywood Products, V. Nagarajan v. SKS Ispat and Power Limited, and CA Ramchandra Dallaram Choudhary v. Adani Infrastructure and Developers. These hold that the Code is a self-contained code, that the Limitation Act, 1963 applies under section 238-A only as far as may be and subject to section 29(2) of that Act, that no court may condone delay beyond the outer limit set by the Code, and that the right of appeal is extinguished at the end of 60 days. Section 12(2) of the Limitation Act excludes the time requisite for obtaining a copy, but its Explanation does not exclude any time before the application for a copy is made.

The Court said the words "date of receipt of the order" cannot mean the date on which a party chooses to apply for and collect a copy, as the period would otherwise fluctuate, and section 12(2) would be redundant. The NCLAT Rules require pronouncement of the order in open court, so knowledge and limitation begin on pronouncement. The Court therefore counted: the order was pronounced on 2 August 2023; the Department applied for a copy on 6 September 2023, the 35th day; the copy was delivered on 11 October 2023, and the 35 days in the Registry were excluded; after receipt the appeal was filed 41 days later. The actionable periods totalled 76 days against the ceiling of 60 days, so the appeal was 16 days late.

Controlling point

Limitation for an appeal under section 62 of the Insolvency and Bankruptcy Code starts on the date of pronouncement of the NCLAT order, and the Supreme Court cannot condone delay beyond 60 days.

Order and next steps

The preliminary objection was sustained and the civil appeal was dismissed as barred by limitation, with no order as to costs. Pending applications were disposed of.

Practical implications

A party aggrieved by an NCLAT order should diarise the 45th day from pronouncement and the 60th day as the outer limit, apply for the certified copy on the first working day, and file the appeal at once on receipt. Delay before the copy application cannot be excluded, and the outer limit cannot be extended.

Limits of this ruling

• The decision deals with limitation for appeals under section 62 of the Code and does not decide the correctness of the resolution plan or the Revenue's claim of Rs. 22,60,32,948. It applies the Court's earlier decisions and does not consider whether exceptional circumstances could ever justify delay beyond the 60 days.