Summary of Opinion — Company Appeal (AT) (Insolvency) No. 751 of 2019

Factual and Procedural Background

This appeal was preferred by the Appellant, the Managing Director of the Corporate Debtor, against the order dated 14 June 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench, which admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by M/s. Randstad India Private Limited (Operational Creditor) against M/s. Camson Bio Technologies Limited (Corporate Debtor).

The Appellant filed an application for condonation of a delay of 360 days in filing the appeal. The main ground advanced was that the Corporate Debtor (not the Appellant personally) had filed Writ Petition No. 29393 of 2018 before the Hon'ble High Court of Karnataka challenging the admission order; initially the High Court granted a stay and permitted the Corporate Debtor to deposit the entire claimed amount of Rs. 36,83,660.30, which was deposited with the High Court. The High Court subsequently disposed of that writ on 1 July 2019, after which the present appeal was preferred. The Appellant prayed that the period of pendency of the writ before the High Court be excluded for the purpose of limitation under Section 14 of the Limitation Act, 1963.

Legal Issues Presented

1. Whether this Appellate Tribunal (National Company Law Appellate Tribunal) has jurisdiction to condone delay in filing the appeal beyond fifteen days after the expiry of the prescribed thirty-day period under the proviso to sub-section (2) of Section 61 of the Insolvency and Bankruptcy Code, 2016.
2. Whether the period during which a writ petition before the High Court of Karnataka was pending can be excluded in computing limitation under Section 14 of the Limitation Act, 1963, in circumstances where Section 238A of the I&B Code applies the Limitation Act "as far as may be".

Arguments of the Parties

Appellant's Arguments

• The Appellant sought condonation of a 360-day delay, asking that the period during which Writ Petition No. 29393 of 2018 was pending before the Hon'ble High Court of Karnataka be excluded for limitation purposes under Section 14 of the Limitation Act, 1963.
• The Appellant relied on the fact that the Corporate Debtor had obtained a stay and had deposited the claimed amount of Rs. 36,83,660.30 with the High Court; the High Court later disposed of the writ on 1 July 2019, after which the appeal was preferred.
• Learned counsel for the Appellant also submitted that the Appellant wished to settle the claim with the Operational Creditor, that the amount had already been deposited with the High Court of Karnataka, and that if given an opportunity the Appellant could move before the Committee of Creditors for a settlement in terms of Section 12A of the I&B Code.

The opinion does not record detailed arguments advanced by the Operational Creditor or other parties.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal applied statutory interpretation focusing on the interaction between the I&B Code and the Limitation Act. It noted Section 238A of the I&B Code, which provides that the provisions of the Limitation Act, 1963 shall, "as far as may be, apply" to proceedings and appeals under the I&B Code.

The Tribunal then considered the proviso to sub-section (2) of Section 61 of the I&B Code, which prescribes the time limit for filing appeals to the NCLAT: appeals must be filed within thirty days, and the NCLAT may allow an appeal after that period only if satisfied that there was sufficient cause, but such extended period "shall not exceed fifteen days." The full text of Section 61(2) was reproduced in the opinion.

The Tribunal held that, in the event of any inconsistency between the Limitation Act and the I&B Code, Section 61(2) of the I&B Code will prevail. On that basis the Tribunal concluded it had no jurisdiction to condone delay beyond fifteen days after the expiry of the thirty-day period, even if sufficient cause is shown. Consequently, the Tribunal found that it could not condone the 360-day delay claimed by the Appellant.

The Tribunal addressed the Appellant's settlement-related submissions by explaining procedural alternatives: the order would not prevent the Appellant or any shareholder/director from approaching the Adjudicating Authority (NCLT), Bengaluru Bench, to seek exercise of inherent power under Rule 11 of the NCLT Rules, 2016 (on the ground of intent to settle and deposit of the claimed amount) if the Committee of Creditors (CoC) had not yet been constituted. If the CoC had already been constituted, the Appellant could move an application under Section 12A before the CoC.

Holding and Implications

Holding: The Appeal is dismissed as barred by limitation. The Interlocutory Application No.2390 of 2019 (condonation of delay) is disposed of.

Implications:

• The NCLAT concluded it lacks jurisdiction to condone delay in filing appeals beyond fifteen days after the thirty-day limitation period prescribed by Section 61(2) of the I&B Code, notwithstanding any exclusions that might be sought under Section 14 of the Limitation Act, because Section 61(2) prevails.
• Direct effect on the parties: the Appellant's appeal was dismissed as time-barred; the condonation request for 360 days was refused.
• The Tribunal granted procedural liberty to the Appellant (and other shareholders/directors) to approach the NCLT under Rule 11 of the NCLT Rules, 2016 if the CoC is not constituted, or to move the CoC under Section 12A if the CoC has been constituted, to pursue settlement given the deposit of the claimed amount with the High Court.
• The opinion does not set out any broader precedent beyond its statutory interpretation that Section 61(2) will prevail over Section 14 in case of inconsistency; no additional wider implications were discussed in the text.

Bench: [Justice S. J. Mukhopadhaya] Chairperson; [Justice A.I.S. Cheema] Member (Judicial); [Kanthi Narahari] Member (Technical).