LIMITATION PERIOD FOR FILING APPEAL UNDER SECTION 61 OF THE INSOLVENCY AND BANKRUPTCY CODE 2016

Introduction:

The Insolvency and Bankruptcy Code, 2016 ("IBC") lays down clear timelines regarding how insolvency matters shall move forward. One of the important provisions in this regard is section 61, which allows a party to file an appeal before the NCLAT against an order passed by the NCLT, which is subject to a 30 days limit, and in certain situations, if the NCLAT is satisfied with the explanations fo the delay, a 15-day extension is permitted. Hence, this sums up the delay to be allowed till 45 days.

The Limitation Period:

Section 61 (1) of the IBC, 2016 talks about the statutory right of a party to appeal against an order passed by an adjudicating authority before the NCLAT. To that effect, Section 61 (2) of the said Act provides for a limitation period of 30 days, with an extensible period of 15 days provided there is a reason for the NCLAT to conclude that there was a good reason for non filling of the appeal.  dismiss the appeal.

In numerous cases, the NCLAT has denied appeals that were filed after the allotted 15 days because they stretched the 30-plus-15-day term.[1]. The limitation period set out for filling the appeal has rigorously been upheld by the Tribunal and no inherent power of the NCLAT has ever been invoked to condone an appeal filed after the limitation period of 45 days.[2]

The Supreme Court in the case of V. Nagarajan v. SKS Ispat & Power Ltd. held that the calculation of the limitation period must be computed from the date the impugned order is pronounced[3]. This is inclusive of the Summer and winter breaks of the NCLAT as the registry is open for both e-filling and physical filing[4]. Also, the date on which the order is pronounced is to be excluded from the calculation of limitation in terms of Section 12(1) of the Limitation Act[5].

The NCLAT in the case of Kotak Mahindra Bank Ltd. Vs. Mohit Kumar Legal Heir of Mr. Naresh Kumar, Personal Guarantor [6] held that, in accordance with the Limitation Act, 1963 and Rule 3 of the NCLAT Rules, 2016, a public holiday on the last day of the limitation period is excluded from the calculation and the appellant is permitted to file the appeal on the next working day. [7] However, According to the NCLAT, all Saturdays and Sundays during the limitation period are not automatically excluded, even though holidays that fall on the last day of the period may be. Only holidays that fall on the last day of the statute of limitations are excluded. 

Conclusion:

The limitation period under Section 61 of the IBC, 2016 is strictly construed by both the NCLAT and the Supreme Court, offering a maximum of 45 days (30 days plus an additional 15 days upon sufficient cause) to file an appeal against NCLT orders. Courts have consistently reinforced that this deadline is non-negotiable, and no inherent powers may be invoked to extend it further. Therefore, it is imperative for appellants to act promptly, ensuring compliance with procedural timelines to avoid dismissal of appeals solely on grounds of limitation. A sound understanding of this time-bound mechanism is essential for safeguarding legal rights within the framework of the IBC.

References:

[1] Deepak Dahyalal v. Steel Resources, 2024 SCC OnLine NCLAT 383

[2] Jamal Ahmad v. Reliance Nippon Life Asset Management, 2020 SCC OnLine NCLAT 1093.

[3] V. Nagarajan v. SKS Ispat & Power Ltd., (2022) 2 SCC 244

[4]  44 Noida Infratech (Two) (P) Ltd. v. Enforcement Directorate Kolkata Zone Office, 2022 SCC OnLine NCLAT 3724; Raiyan Hotels & Resorts (P) Ltd. v. Unrivalled Projects (P) Ltd., 2023 SCC OnLine NCLAT 734

[5] Deepak Dahyalal v. Steel Resources and Anr. CA (AT) (Insolvency) No. 300 of 2024 & I.A. No. 1009 of 2024

[6] Kotak Mahindra Bank Ltd. v. Mohit Kumar Legal Heir of Naresh Kumar, Personal Guarantor, CA (AT) (Insolvency) No. 2242 of 2024 & I.A. No. 8422 of 2024

[7] BSE Ltd. vs Mrudula Brodie, CA (AT) (Insolvency) No. 1862 of 2024 & IA No. 6846 of 2024  Team Diaz Legal