The Supreme Court of India has delivered a significant ruling regarding the filing of appeals under the Insolvency and Bankruptcy Code (IBC). The Court held that simply e-filing an appeal without attaching a certified copy of the challenged order is "incurably tainted" and cannot be considered a valid filing in the eyes of the law.
A Bench comprising Justice Sanjay Kumar and Justice K. Vinod Chandran set aside an order of the National Company Law Appellate Tribunal (NCLAT) which had previously shown leniency toward a litigant who failed to follow these essential procedural requirements.
The matter arose from a dispute involving the Angelwoods Apartment Allottees Association. The NCLT Kochi had approved a resolution plan submitted by the Association. This approval was challenged by Respondent No. 1, M Lalitha (the mother of a suspended director of the corporate debtor), before the NCLAT Chennai.
While the appeal was e-filed on the very last day of the limitation period (September 28, 2024), it was riddled with defects. Most importantly, the appellant had not attached a certified copy of the NCLT order. Despite these glaring issues, the NCLAT condoned a 150-day delay in "re-filing" the appeal, treating it as a procedural matter between the court and the appellant.
The Supreme Court scrutinized the record and found that the appellant had not even applied for a certified copy until April 2025 long after the appeal was supposed to have been finalized.
1. Rules are Mandatory, Not Optional The Court referred to Rule 22(2) of the NCLAT Rules, 2016, which categorically states that every appeal must be accompanied by a certified copy of the impugned order. The Bench noted that while the NCLAT has the power to exempt parties from certain rules, this does not give litigants an "automatic right" to ignore the rules entirely.
2. Diligence is Key Citing the famous V. Nagarajan vs. SKS Ispat case, the Bench emphasized that applying for a certified copy is not just a technicality. It is a "litmus test" for the diligence of a litigant. A person wishing to appeal must show they were active in pursuing the case by applying for the copy before the limitation period expires.
3. Incompetent vs. Defective The Court made a sharp distinction between a "defective" appeal (where minor errors like typos can be fixed) and an "incompetent" appeal. Since the appeal lacked the most basic legal requirement the order being challenged it was deemed a "wholly incompetent appeal" that should have been rejected at the very start.
The Supreme Court criticized the NCLAT for extending "indulgence" to a non-diligent litigant. The Bench observed:
"The filing/refiling of the appeal by respondent No. 1 was incurably tainted and the same ought to have been rejected at the threshold."
By allowing the Association's appeal, the Supreme Court set aside the NCLAT's order, effectively dismissing the challenge against the resolution plan.