Supreme Court Clarifies NCLT Protocol on Order Pronouncement Date

SUPREME COURT LAW INSIDER

LI Network

Published on: December 16, 2023 at 12:49 IST

The Supreme Court has issued a directive stating that the National Company Law Tribunal (NCLT) must refrain from affixing the date of the hearing on an order if the matter is heard on a specific date but the order is pronounced later.

The court emphasized that the pronouncement of the order is a crucial step, and the NCLT should not violate the distinction between ‘hearing’ and ‘pronouncement’ as outlined in the NCLT Rules, 2016.

The case in question involved the NCLT hearing a matter on 17.05.2023, with the order being uploaded on 30.05.2023.

The appellant subsequently filed an appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 (IBC), raising a dispute over the commencement of the limitation period—whether it should be counted from 17.05.2023 or 30.05.2023.

The bench, comprising Chief Justice Dr Dhananjaya Y Chandrachud, Justice J B Pardiwala, and Justice Manoj Misra, underscored that adhering to the prescribed procedure is essential.

They stated, “Such an approach would be a violation of the NCLT Rules, which create a distinction between hearing and pronouncement and do not allow the NCLT to dispense with the requirement of pronouncement.”

The court also commended the NCLAT for taking proactive measures in response to previous observations related to filing procedures, emphasizing the need for a modernized and technology-friendly judiciary across all judicial forums in the country.

Background Facts:

The case originated from a petition filed by Vistra ITCL (India) Limited against Evirant Developers Pvt. Ltd. under Section 7 of the IBC, seeking the initiation of Corporate Insolvency Resolution Process (CIRP).

The appellant, the erstwhile Director of the Corporate Debtor, challenged the NCLT’s dismissal of their application, arguing that the order’s limitation period should commence from the date of upload on 30.05.2023, not the date of the hearing on 17.05.2023.

The Supreme Court ruled that the limitation period runs from the date of pronouncement of the order, emphasizing the importance of following the NCLT Rules, particularly Rule 89 of the NCLT Rules, 2016.

The court differentiated this case from previous judgments and urged the NCLT to avoid affixing the date of hearing on orders when pronounced on a later date.

The Bench, while acknowledging the appeal’s filing beyond the 30-day period, but within the condonable 15-day window, reinstated the appeal to the NCLAT for a reconsideration of whether the appellant had shown sufficient cause for condoning the delay beyond 30 days. The NCLAT’s original order was set aside.

Case Title: Sanjay Pandurang Kalate v Vistra ITCL (India) Limited and Others.

Related Post