Vigilantibus, et non dormientibus, jura subveniunt is a noted maxim which means ‘the laws assist those who are vigilant, not those who sleep over their rights[1]‘ . This is a pertinent principle which applies predominantly while determining if a particular cause of action has been espoused within the limitation period.
Insofar as matters under the Insolvency and Bankruptcy Code, 2016 (‘Code’) are concerned, time is of the essence and the Supreme Court has recently implored all litigants to exercise vigilance. While the Code itself is based on strict timelines, the Supreme Court in V. Nagarajan v. SKS Ispat and Power Limited and Others[2] emphasized that the onus to exercise vigilance is upon the litigant while deciding the commencement of limitation period for filing appeals against Orders passed by the National Company Law Tribunal (‘NCLT’). The decision is an eye-opener on the adage of Vigilantibus, et non dormientibus, jura subveniunt as it stirs the hornet’s nest on the traditional understanding of limitation and from whence it would commence.
Background facts
M/s. Cethar Ltd, a corporate entity engaged in engineering and project consultancy, was undergoing liquidation under the Code. The liquidator had moved a Civil Appeal before the Supreme Court being aggrieved by an order of the National Company Law Appellate Tribunal (‘NCLAT’) which upheld the NCLT (Chennai Bench)’s Order refusing to grant an injunction against the invocation of bank guarantee by a creditor while liquidation proceedings were ongoing before the NCLT.
The NCLT had refused to grant an injunction against the invocation of the bank guarantee until the liquidation proceedings were completed and held that performance guarantees were not ‘Security Interest’ as defined under Section 3(31)[3] of the Code. The NCLT Order was dated 19 December 2019 (‘impugned order’) but was uploaded on the website of the NCLT on 12 March 2020 and subsequently corrected and re-uploaded on 20 March 2020, basis which an appeal was preferred before the NCLAT under Section 61(1)[4] of the Code. On appeal before the NCLAT, the liquidator/appellant is shown to have awaited the issue of a free copy and to have sought such free copy on 23 March 2020 under Section 420(3)[5] of the Companies Act, 2013 read with Rule 50[6] of the National Company Law Tribunal Rules, 2016. The liquidator prayed for exemption from filing a certified copy of the order claiming that it had not been issued, citing the lockdown announced due to the COVID-19 pandemic.
The NCLAT vide its Order dated 13 June 2020 (‘NCLAT Order’), relied on Section 61(2)[7] of the Code and declined to interfere with the impugned order as the Appeal had been filed beyond the statutory time limit of thirty days without any accompanying application for condonation of delay. The Hon’ble NCLAT also noted that no evidence was offered in support the stand of that the certified copy was not issued. The issues that fell for determination before the Hon’ble Supreme Court were simple, and yet carried huge ramifications, namely -
- When will the clock begin ticking for calculating the limitation period for appeals filed under the Code; and
- Is the annexing of a certified copy mandatory for filing an appeal to the NCLAT, against an order passed under the Code?
The primary question that fell for consideration was as to the commencement of limitation period to prefer an appeal against the order of the NCLT to the NCLAT. The Supreme Court, after examining various provisions reiterated that the IBC is a complete code in itself which over-rides any inconsistencies that may arise in the application of other laws. The Hon’ble Apex Court underscored how Section 61 of the Code begins with a non-obstante provision when providing for the right of an aggrieved party to file an appeal before the NCLAT, while prescribing the period of limitation. The Court further drew out a distinction between Section 61(2) of the Code and Section 421(3)[8] of the Companies Act, 2013 to accentuate the absence of the words ‘from the date on which a copy of the order of the Tribunal is made available to the person aggrieved’ in Section 61(2) of the Code. The Court opined that construing the deliberate phrasing of Section 61(2) of the Code as a mere omission which can be supplemented with a right to a free copy under Section 420(3) of the Companies Act read with Rule 50 of the NCLT Rules for the purposes of reckoning limitation would ignore the very context of the Code’s provisions and its purpose as a watershed legislation aimed to overhaul the previous bankruptcy regime which was afflicted by delays and indefinite legal proceedings. It was observed that an appeal, if considered necessary and expedient by an aggrieved party, is expected to be filed forthwith without awaiting a free copy which may be received at an indefinite stage. Hence, the absence of any qualification as to date of receipt of the Order for the purposes of computing limitation in Section 61(2) of the Code, was held as a consistent signal of legislative intent to nudge parties to be proactive and facilitate timely resolution.
As for the ancillary question as to whether the annexation of a certified copy of the impugned order was mandatory to file an appeal, the Hon’ble Court interpreted Rule 14[9] of the NCLAT Rules to opine that the discretionary power to waive production of certified copy does not act as an automatic exception where litigants make no efforts to pursue timely resolution of their grievance. It was further observed that the act of filing an application for a certified copy is not just a technical requirement for computation of limitation but also an indication of the diligence of the aggrieved party in pursuing the litigation in a timely fashion.
Therefore, for filing of any appeal, it has been held that it is on the aggrieved party to approach the NCLT and apply for the certified copy of the impugned order. The contentions that the aggrieved person was awaiting for the certified copy of the order would not be tenable and the Court held that such a stand would defeat the substantive objective of the Code and would impact the economic health of a nation.
Comparative analysis of key provisions across other legislations
On a comparative note, it is pertinent to refer to a few provisions under various other statutes that provide for time limits for preferring appeals. While some statutes contemplate the time limit for filing appeals to begin from the date of receipt of the order, in some cases, the time limit begins from the date of the order itself.
- Under the Arbitration & Conciliation Act, 1996, Section 34(3)[10] stipulates that an application for setting aside an arbitral award must be made within three months from the date on which the party making that application had received the arbitral award. Thus, as per Section 34(3), the trigger to file the appeal is pulled on the date of receipt of the arbitral award sought to be challenged, by the challenger.
- Section 129A[11] of the Customs Act, 1962 posits that appeals may be filed to the Appellate Tribunal within 3 months from date of communication of the Order.
- Sections 35B(3)[12], 35G(2)[13] of the Central Excise Act, 1944 position the limitation to commence from the date of communication of the Order to the aggrieved party.
- Section 86(3)[14] in Chapter V the Finance Act, 1994 (dealing with service tax matters) provides for three months to file appeal, to be reckoned from date of receipt of the Order.
In contrast, Section 41[15] of the Consumer Protection Act, 2019 which provides for statutory appeals against Orders of the District Commission to the State Commission stipulates that the clock would begin ticking from the date of the Order. Similarly, Section 51(1)[16] of the Consumer Protection Act, 2019 which provides for appeals against Orders of State Commission to the National Commission also reckons limitation to commence from the date of the Order.
That Section 61(2) of the Code is silent on when limitation must be reckoned from is all the more thought-provoking because Section 62[17] of the Code requires an appeal to be filed before the Hon’ble Supreme Court within 45 days of receipt of the Order of the NCLAT. In the instant case, the Hon’ble Supreme Court has alleviated any ambiguity that may arise due to traditional practise, by highlighting the clear legislative intent in Section 61(2). In effect, the obligation is entirely on litigants to exercise diligence for preferring appeals before the Hon’ble NCLAT within the 30 days’ time limit, regardless of when the Order is communicated to the concerned parties.
The Limitation Act, 1963 and its applicability
The instant decision does not advert to the Limitation Act, 1963 (‘Limitation Act’) presumably because the provisions would apply only to ‘Courts’ and not to quasi-judicial bodies such as Tribunals[18]. In fact, even in the realm of Writ jurisdiction where the concept of limitation would not even apply[19], the Hon’ble Apex Court had cautioned High Courts against disregarding the limitation period as envisaged in the concerned statute[20].
However, the principles underlying the Limitation Act may be applied to orders of Tribunals so long as the relevant statutory scheme does not bar the applicability of such principles and if the principles sought to be borrowed advance the cause of justice[21]. Section 29(2)[22] of the Limitation Act saves the application of the Limitation Act to cases governed by special legislation that provides for limitation, unless Limitation Act is expressly excluded by the said special legislation.
In this context, Section 12[23] of the Limitation Act is significant, whereunder an allowance is made for excluding:
- the day on which the judgment was pronounced;
- the time requisite for obtaining a copy of the decree, sentence, order or judgment.
It is now trite law that limitation period prescribed by special law must be strictly applied without any consideration for equity, but while giving full effect to provisions such as Section 12, permitting the relaxation or extension of such limitation period[24]. Though Section 12 is always applied liberally, such leeway is granted only in the interest of justice and where the litigant had demonstrated due care - for delays caused by the Appellant’s negligence or lethargy could not be termed as ‘time requisite’ warranting exclusion under Section 12[25].
Suo Motu Writ Petition and the obligation of vigilance – A counterpoint
While an obligation of vigilance is cast on a litigant, it is also pertinent to view the obligation vis-à-vis the ongoing pandemic and the suo motu order[26] passed by the Apex Court whereby limitation period has been frozen on account of the Covid-19 pandemic. It is further imperative to note that despite this obligation being an all pervading element in litigation, with the suo motu order, there have been umpteen circumstances where Courts have applied the suo motu order to enlarge time in the interest of justice. In fact the said principle was recently applied by the Hon’ble Supreme Court in Prakash Corporates v. Dee Vee Projects Limited[27] wherein, time was enlarged for filing written statement in a suit by relying on the suo motu order and in the interest of advancing the cause of justice.
Therefore, though limitation is a matter where courts have always cast an obligation of vigilance upon the litigants, it is imperative to note the extraneous circumstances where interest of justice requires the strict application of the principle to be relaxed in interest of justice.
Conclusion
In the instant case, Section 12 of the Limitation Act was not applied to ascertain if the liquidator had tarried in obtaining a copy of the certified order from the Hon’ble NCLT.
The overarching principle that stems from the instant decision and the above discussions is that every party intending to file an appeal under the Code against orders of the NCLT is required to exercise due diligence, apply for a certified copy, and prefer their appellate remedies by appropriately computing time limit from the date of the order. Dispensation from production of the certified copy can be sought for only in circumstances where a certified copy is not received within the time limit available for preferring an appeal. That, however would not save limitation until the receipt of a certified copy.
Thus, this judgement reflects the intent and spirit of the Code i.e., that time is of essence while also straddling the very object of purport of the providing for limitation, i.e., to quicken diligence and to bury all acts which have become stale due to lapse of time[28].
[The authors are Executive Partner, Senior Associate and Principal Associate, respectively, in Lakshmikumaran & Sridharan Attorneys, Chennai]
[1] A Selection of Legal Maxims, Classified and Illustrated, by Herbert Broom, LLD, 7th American, from the 5th London Edition, T & J.W. Johnson and Co, 1874.
[2] 2021 SCC OnLine SC 959
[3] 3. Definitions.—In this Code, unless the context otherwise requires,-
…
(31) ‘security interest’ means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person: Provided that security interest shall not include a performance guarantee
[4] 61. Appeals and Appellate Authority.-(1) Notwithstanding anything to the contrary contained under the Companies Act, 2013, any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal.
[5] 420. Orders of Tribunal:
…
(3) The Tribunal shall send a copy of every order passed under this section to all the parties concerned.
[6] 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
[7] 61. Appeals and Appellate Authority.-
…
(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…….
[8] 421. Appeal from orders of Tribunal.—
…
(3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved and shall be in such form, and accompanied by such fees, as may be prescribed
[9] 14. Power to exempt.- The Appellate Tribunal may on sufficient cause being shown, exempt the parties from compliance with any requirement of these rules and may give such directions in matters of practice and procedure, as it may consider just and expedient on the application moved in this behalf to render substantial justice.
[10] 34. Application for setting aside arbitral award.—
…
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter
[11] SECTION 129A. Appeals to the Appellate Tribunal.—
…
(3) Every appeal under this section shall be filed within three months from the date on which the order sought to be appealed against is communicated to the [Principal Commissioner of Customs or Commissioner of Customs], or as the case may be, the other party preferring the appeal.
[12] SECTION 35B(3)-
(3) Every appeal under this section shall be filed within three months from the date on which the order sought to be appealed against is communicated to the [Principal Commissioner of Central Excise or Commissioner of Central Excise], or, as the case may be, the other party preferring the appeal.
[13]SECTION 35G. Appeal to High Court. –
…
(2) The Principal Commissioner of Central Excise or Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be -
(a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Principal Commissioner of Central Excise or Commissioner of Central Excise or the other party;
…
[14] 86- Appeals to the Appellate Tribunal:
(3) Every appeal under sub-section (1) or sub-section (2) shall be filed within three months of the date on which the order sought to be appealed against is received by the assessee, the Board or by the Collector of Central Excise, as the case may be.
[15] 41. Appeal against order of District Commission.—Any person aggrieved by an order made by the District Commission may prefer an appeal against such order to the State Commission on the grounds of facts or law within a period of forty-five days from the date of the order, in such form and manner, as may be prescribed:
[16] 51. Appeal to National Commission.—(1) Any person aggrieved by an order made by the State Commission in exercise of its powers conferred by sub-clause (i) or (ii) of clause (a) of sub-section (1) of Section 47 may prefer an appeal against such order to the National Commission within a period of thirty days from the date of the order in such form and manner as may be prescribed
[17] 62. Appeal to Supreme Court. - (1) Any person aggrieved by an order of the National Company Law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order.
[18] Kerala State Electricity Board v. T.P. Kunhaliumma, (1976) 4 SCC 634
[19] L.S. Synthetics Ltd. v. Fairgrowth Financial Services Ltd., (2004) 11 SCC 456
[20] Asst. Commr. (CT) vs Glaxo Smith Kline Consumer Health Care Ltd. 2020 (36) G.S.T.L. 305 (S.C.)
[21] M.P. Steel Corporation vs. CCE - 2017 (50) S.T.R. 205 (S.C.)
…
(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law.
[23] 12. Exclusion of time in legal proceedings.—(1) In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded.
(2) In computing the period of limitation for an appeal or an application for leave to appeal or for revision or for review of a judgment, the day on which the judgment complained of was pronounced and the time requisite for obtaining a copy of the decree, sentence or order appealed from or sought to be revised or reviewed shall be excluded.
(3) Where a decree or order is appealed from or sought to be revised or reviewed, or where an application is made for leave to appeal from a decree or order, the time requisite for obtaining a copy of the judgment shall also be excluded.
(4) In computing the period of limitation for an application to set aside an award, the time requisite for obtaining a copy of the award shall be excluded.
Explanation.—In computing under this section the time requisite for obtaining a copy of a decree or an order, any time taken by the court to prepare the decree or order before an application for a copy thereof is made shall not be excluded.
[24] India House v. Kishan N. Lalwani, (2003) 9 SCC 393
[25] Gopal Krishan Das v. Sailendra Nath Biswas, (1975) 1 SCC 815
[26] SMWP No. 3 of 2020
[27] 2022 SCCOnline SC 180
[28] N. Balakrishnan v. M. Krishnamurthy, (1998) 7 SCC 123
