08 May 2025 Legal Updates

S. 61(2) IBC | APPEAL FILED BEYOND 45 DAYS NOT CONDONABLE BY NCLAT: SUPREME COURT

(a) Case Title:

• Tata Steel Ltd. v. Raj Kumar Banerjee & Ors.

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• May 7, 2025

(d) Bench:

• Justice J.B. Pardiwala and Justice R. Mahadevan

Facts

Tata Steel Ltd. (appellant) was the successful resolution applicant for Rohit Ferro-Tech Limited (Corporate Debtor). The National Company Law Tribunal (NCLT), Kolkata approved Tata Steel's resolution plan on April 7, 2022.

Raj Kumar Banerjee (Respondent No. 1), an erstwhile minority shareholder of the Corporate Debtor, filed an appeal against this order before the National Company Law Appellate Tribunal (NCLAT). The appeal was filed on May 24, 2022. The Respondent No. 1 also filed an application for condonation of delay, which was allowed by the NCLAT.

Tata Steel challenged the NCLAT's order condoning the delay.

Legal Issues

• Whether the appeal filed by Respondent No. 1 was within the prescribed limitation period under Section 61(2) of the Insolvency and Bankruptcy Code (IBC)?
• Whether the NCLAT has the power to condone delay beyond the statutorily prescribed period under the IBC?

Judgment

On Limitation Period under Section 61(2) IBC:

• Section 61(2) IBC provides a limitation period of 30 days for filing an appeal against NCLT orders, with a provision for condonation of delay up to an additional 15 days.
• The total permissible period for filing an appeal is thus 45 days.
• The Court clarified that the limitation period starts running from the date of pronouncement of the order (April 7, 2022 in this case).
• Since the appeal was filed on May 24, 2022 (47th day), it was beyond the statutorily permissible period of 45 days.

On Application of Section 4 of the Limitation Act

• The Court analyzed whether Section 4 of the Limitation Act (which extends the limitation period to the next working day if it expires on a holiday) applies to this case.
• The Court held that the benefit of Section 4 is available only for the "prescribed period" (30 days) and not for the "condonable period" (additional 15 days).
• Even if the benefit of Section 4 were granted, Respondent No. 1's appeal would still be time-barred.

On NCLAT's Power to Condone Delay

• The Court emphatically held that the NCLAT has no power to condone delay beyond the 15-day period expressly provided in Section 61(2) IBC.
• The IBC prescribes strict timelines to ensure timely resolution of insolvency proceedings.
• The Court cited previous judgments emphasizing that tribunals must operate within the bounds of the Code without adding equitable or discretionary powers not conferred by statute.

Decision

The Supreme Court set aside the NCLAT's order condoning the delay and allowed Tata Steel's appeal. The Court observed that time is of the essence in statutory appeals, and the prescribed limitation period must be strictly adhered to. Even a delay of a single day is fatal if the statute does not provide for its condonation.

HIGH COURT MAY GRANT ARTICLE 227 INTERIM RELIEF IN ARBITRATION PROCEEDINGS IN EXCEPTIONAL CASES: SUPREME COURT

(a) Case Title:

• M/S Jindal Steel and Power Ltd. & Anr. vs. M/S Bansal Infra Projects Pvt. Ltd. & Others

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• May 7, 2025

(d) Bench:

Justice J.B. Pardiwala and Justice R. Mahadevan

Facts

Jindal Steel issued a work order to Bansal Infra for construction of 400 flats worth approximately Rs. 44 crores. Jindal Steel provided an advance of Rs. 3.73 crores, secured by a bank guarantee from Bansal Infra. The project deadline was repeatedly extended due to delays. Jindal Steel terminated the work order citing poor performance, quality issues, and missed deadlines.

When Jindal Steel attempted to encash the bank guarantee, Bansal Infra filed a Section 9 petition under the Arbitration and Conciliation Act, 1996. The Commercial Court rejected Bansal's request for ex parte interim injunction.

Bansal then filed a writ petition under Article 227 of the Constitution before the High Court of Orissa. The High Court granted an interim order restraining Jindal Steel from encashing the bank guarantee until the disposal of the arbitration petition.

Issues

• Whether the High Court should exercise its supervisory jurisdiction under Article 227 to decide a matter on merits?
• Whether courts should interfere with encashment of an unconditional bank guarantee?
• Whether interim orders under Order 39 Rule 3 CPC in a Section 9 petition are appealable under Section 37(1)(b) of the Arbitration Act?
• Whether writ jurisdiction can be invoked when alternative remedies are available?

Court's Reasoning and Decision

The Supreme Court acknowledged the principle that courts should generally not interfere with bank guarantee encashments except in cases of fraud or irretrievable injustice, citing several precedents including Hindustan Construction Co. Ltd. v. State of Bihar. However, the Court noted that:

• The arbitration proceedings were already underway
• The matter was already partly heard before the Commercial Court
• Bansal had extended the bank guarantee's validity
• No prejudice was being caused to Jindal Steel by maintaining status quo

The Court did not decide on the legal questions raised but left them open for future consideration. It directed:

• The parties to proceed with arguments before the Commercial Court
• The Commercial Court to pass appropriate orders within eight weeks
• The bank guarantee to remain valid until the resolution of the Section 9 arbitration petition

S.319 CRPC SUMMONING ORDER CAN'T BE QUASHED BASED ON ALIBI EVIDENCE OF ADDITIONAL ACCUSED: SUPREME COURT

(a) Case Title:

• Harjinder Singh v. The State of Punjab & Anr.

(b) Date of Decision:

• May 6, 2025

(c) Court:

• Supreme Court of India

(d) Bench:

Justice Vikram Nath and Justice K.V. Viswanathan

Facts

The appellant is the father of Dharminder Singh (deceased), who died by suicide after an alleged incident of taunting. On March 13, 2016, Dharminder Singh was a victim of an acid attack by ten persons. Respondent No. 2 (Varinder Singh) was not named in this FIR.

On May 10, 2016, Varinder Singh and others allegedly taunted the deceased, stating he and his family "should die of shame" for not taking action against the acid attackers.

Following this incident, the deceased locked himself in a room, left home in the afternoon, and his body was later recovered from a canal. This led to FIR being filed under Sections 306/34 IPC (abetment to suicide).

During investigation, police accepted Varinder Singh's alibi that he was at PGI Chandigarh on May 10, 2016, and classified him as "innocent" in the final report.

During trial, the deceased's father testified about Varinder Singh’s involvement, leading to an application under Section 319 CrPC to summon him. The Trial Court allowed the application, but the High Court set aside this order upon challenge by Respondent No. 2.

Legal Issues

• Whether the evidence presented justified the Trial Court's exercise of power under Section 319 CrPC to summon Respondent No. 2.
• Whether the High Court was correct in setting aside the Trial Court's summoning order.
• Scope and application of Section 319 CrPC when new evidence emerges during trial.

Court's Analysis

1. The Supreme Court extensively analyzed Section 319 CrPC, which allows courts to proceed against persons not initially accused but who appear from evidence to have committed an offense.

2. The Court cited Hardeep Singh v. State of Punjab (2014), which emphasized that Section 319 CrPC should be interpreted constructively to ensure real perpetrators don't escape trial.

3. The Court observed that deceased’s father’s sworn testimony in court constituted "evidence" sufficient to trigger Section 319 CrPC.

4. The Court rejected the assertion that Respondent No. 2's alibi should be accepted without formal proof, noting that:

• The alibi evidence had not yet been formally proven in court
• Even if proven, the timing gaps didn't conclusively establish impossibility of presence
• The distance of 90km between locations could be travelled within the time window

5. The Court emphasized that an investigating officer's earlier opinion doesn't bind the court once trial commences.

6. The Court criticized the High Court for characterizing the May 10 incident as mere "teasing," noting the serious nature of telling a physically challenged man that he and his family should die.

Decision

The Supreme Court allowed the appeal, setting aside the High Court's judgment. The Trial Court's order summoning Varinder Singh was revived. Varinder Singh was directed to appear before the Trial Court within four weeks.

Key Principles

• Section 319 CrPC: This provision empowers courts to summon additional accused persons during trial if evidence emerges of their involvement. The threshold is "appearance of guilt" rather than proof beyond reasonable doubt.
• Evidence vs. FIR: A sworn testimony in court is substantive evidence, unlike an FIR which is only an initial version of events.
• Alibi Defense: The burden to establish an alibi rests on the accused, and documents claimed as alibi must be formally proved in court.
• Abetment to Suicide: The Court recognized that abetment to suicide is not a single-moment offense but may consist of a build-up of psychological pressure culminating in self-destruction.