Appeals from the NCLT: NCLAT, the Supreme Court and the Time Allowed

An order of the National Company Law Tribunal in an insolvency matter, whether it admits an application, approves a plan or orders liquidation, can be appealed. The time allowed is short and, in most cases, cannot be extended beyond a fixed limit. A creditor who has been affected by an order needs to know quickly where to go and by when. This note sets out the structure of appeals under the Insolvency and Bankruptcy Code, 2016. It is general information, not advice on a particular order.

The first appeal: NCLAT

Section 61(1) provides that any person aggrieved by an order of the Adjudicating Authority under Part II of the Code may prefer an appeal to the National Company Law Appellate Tribunal. The appeal must be filed within thirty days of the order being made available to the appellant. Under the proviso to Section 61(2), the Appellate Tribunal may allow a further period not exceeding fifteen days if it is satisfied that there was sufficient cause for the delay. Beyond forty-five days it has no power to condone the delay, a point on which the Supreme Court has been firm.

Appeals against approval of a plan

Section 61(3) restricts the grounds of an appeal against an order approving a resolution plan under Section 31. The grounds are that:

• the approved plan is in contravention of the provisions of any law for the time being in force;
• there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
• the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board;
• the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or
• the resolution plan does not comply with any other criteria specified by the Board.

An appellant that cannot place its complaint within these grounds is unlikely to succeed. A disagreement with the committee's commercial decision is not a ground.

The second appeal: the Supreme Court

Section 62 provides that any person aggrieved by an order of the Appellate Tribunal may file an appeal to the Supreme Court within forty-five days of receiving the order, on a question of law arising out of the order. The Court may allow a further period not exceeding forty-five days for sufficient cause. The appeal is limited to questions of law, and the Court has stated that it will not ordinarily examine the commercial wisdom of the committee of creditors.

Other appellate routes

• An appeal against an order of the Debts Recovery Tribunal in a matter concerning personal insolvency lies to the Debts Recovery Appellate Tribunal under Section 181.
• Section 63 bars a civil court from entertaining a suit or proceeding in respect of any matter on which the Adjudicating Authority has jurisdiction under the Code, and Section 231 bars injunctions by other courts in such matters.
• Writ jurisdiction under Articles 226 and 227 of the Constitution remains available for exceptional cases, but the High Courts are reluctant to entertain a petition where a statutory appeal exists.

Stay and interim relief

An appeal does not stop an order automatically. An appellant who wishes to prevent the order taking effect must apply for a stay, and the Appellate Tribunal considers whether a case is made out. Where a moratorium has begun, a stay may unsettle the process, and the Tribunals are slow to grant one without clear reasons.

A routine for an affected creditor

1. On the day an order is made, note the date it was pronounced and when it was made available.
2. Apply for the certified copy at once. The Supreme Court has held that where an order is pronounced in open court the period generally runs from the date of pronouncement, so a copy applied for late does not postpone the limit.
3. Decide within a few days whether to appeal, and which ground applies.
4. File well before the thirty-day limit, since the fifteen-day extension is discretionary.