Supreme Court Refuses to Entertain Appeal Filed with 253 Days Delay Under IBC [Read Order]

In a recent ruling, the Supreme Court of India refused to entertain an appeal filed by the Commercial Tax Department on the ground of a delay of 253 days beyond the permissible limit under the Insolvency and Bankruptcy Code, 2016.

In the insolvency proceedings of Shailendra Ajmera and another, the National Company Law Tribunal, Mumbai approved a resolution plan on 18 October 2023. In the approved plan, the Commercial Tax Department was treated as an operational creditor and not as a secured creditor. Aggrieved by this classification, the department filed an appeal before the National Company Law Appellate Tribunal.

Before the NCLAT, the department argued that under Section 33 of the MPVAT Act, tax dues create a first charge on the property of the debtor and it should be treated as a secured creditor. The respondents argued that the issue was already settled by earlier decisions of the Tribunal and that tax authorities fall within the category of operational creditors under the IBC.

The NCLAT observed that the issue was covered by its earlier judgment in Commercial Tax Department v. Teena Saraswat Pandey. It explained that provisions of state tax laws are subject to the Insolvency and Bankruptcy Code, which provides a complete framework for distribution of assets.

The Tribunal pointed out that the waterfall mechanism under Section 53 of the IBC governs priority of payments and tax dues do not automatically become secured debts under this framework.

Based on this reasoning, the NCLAT held that the Commercial Tax Department was correctly treated as an operational creditor in the resolution plan and found no ground to interfere with the order of the NCLT. The appeal was dismissed.

The department then approached the Supreme Court challenging the NCLAT judgment dated 28 March 2025. However, the appeal was filed with a delay of 253 days.

The Bench comprising Justice Manoj Misra and Justice Manmohan observed that under Section 62(2) of the IBC, an appeal must be filed within 45 days with a maximum extension of 15 days. The court explained that the delay in the present case was far beyond the statutory limit and could not be condoned.

In view of this, the Supreme Court dismissed the appeal on the ground of delay. It also directed that all pending applications, if any, shall stand disposed of.

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