No Time Limit in IBC for Rectification, Says NCLAT, Citing NCLT Rules

No Time Limit in IBC for Rectification, Says NCLAT, Citing NCLT Rules

Introduction

The National Company Law Appellate Tribunal (NCLAT) has held that there is no fixed time limit under the Insolvency and Bankruptcy Code, 2016 (IBC) for seeking rectification of an adjudicating authority’s order — and that such rectification must instead be guided by Rule 154 of the NCLT Rules, 2016.

Factual Background

The erstwhile Resolution Professional (RP) of a corporate debtor filed an application before the adjudicating authority seeking rectification of certain figures in the resolution plan after its approval. The Committee of Creditors (CoC) had approved the rectified figures, but this rectification was inadvertently omitted when the plan was placed before the adjudicating authority. The adjudicating authority nevertheless approved the resolution plan without the updated figures.

Procedural Background

When the RP moved an application for rectification, the adjudicating authority dismissed it on the ground that it was filed beyond the 30-day period for rectification. Aggrieved by this, the RP appealed to the NCLAT.

Contentions of the Parties

Appellant’s Contentions:

• The IBC does not impose any specific time limit for rectification of an order once passed by the adjudicating authority.
• Under Rule 154 of the NCLT Rules, 2016, a final order can be rectified within two years, and the RP’s application was filed within about three months from the date of the order.

Respondent’s Contentions:

• The adjudicating authority rightly dismissed the rectification plea as it was filed after the purported 30-day time limit.

Reasoning and Analysis

The Bench comprising Justice N. Sesha Sayee (Judicial Member) and Barun Mitra (Technical Member) agreed with the appellant’s arguments and noted that the adjudicating authority did not cite any specific provision under the IBC imposing a 30-day rectification period. The NCLAT emphasized that Rule 154 of the NCLT Rules expressly provides a two-year window to rectify a final order. Since the appellant’s application was filed well within this limit, the Tribunal held that the adjudicating authority should have entertained the rectification plea on its merits.

Implications

This ruling clarifies that rectification of errors in final orders is not strictly bound by any separate IBC timeline but must follow the NCLT procedural framework. It also ensures that inadvertent errors in approved resolution plans can be corrected if moved within the two-year window under Rule 154.

Outcome

The NCLAT allowed the appeal, set aside the impugned order of the adjudicating authority, and directed it to hear the rectification application on merits.

In this matter, the appellant was represented by Mr. Ankur Mittal and Ms. Sabhya Jain, Advocates. The respondent was represented by Mr. Kunal Godhwani, Advocate for the Successful Resolution Applicant (SRA).