Is the Insolvency and Bankruptcy Code’s Section 61 Restriction Too Strict?

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Is the Insolvency and Bankruptcy Code's Section 61 Restriction Too Strict?

An appeal against a National Company Law Tribunal ruling must be filed within 30 days, as per Section 61 of India’s Insolvency and Bankruptcy Act (IBC) (NCLT). A delay of up to 15 days may be excused under this provision if the NCLAT determines that good reason exists.

The 30-day time limit has been regarded as overly restrictive. Some people have a view that setting a deadline for a insolvency case is essential to avoid dragging out the procedure for too long. They are also of the opinion that the grace period of 15 days is enough for most situations.

While others are of the opinion 30-day deadline is too short and it such restriction might discourage people from filing legitimate appeals. They give examples of delays in filing appeals, such as the necessity to get legal counsel or a certified copy of the ruling, that call for a change.

But, the Indian Supreme Court has not yet decided whether the 30-day deadline is reasonable. A recent judgement suggested that the Court would be open to revising the limitation period in exceptional circumstances.

The two opposing viewpoints both have some merit. It’s worth noting, though, that the IBC is a very new law, and the courts are still working out the kinks in how they apply it. The statute of limitations may one day be shortened.

You Can Also Read : Can I Retain My Company if I File for Bankruptcy Protection?

Some of the reasons why the 30-day rule should be loosened are as follows:

  • Appeals that have merit but are currently barred by the statute of limitations could be filed.
  • It would give the parties more time to consult with solicitors and organise their appeals.
  • That would cut down on the number of baseless appeals that are submitted.

Some reasons why the 30-day rule shouldn’t be changed are as follows:

  • That would cause the bankruptcy procedure to be extended.
  • That might put debtors at a disadvantage because creditors would have more time to submit claims.
  • It would slow down the NCLT’s ability to resolve cases.

Whether to suspend the 30-day time limit is a difficult decision to make. The two opposing viewpoints both have some merit. The court will have to give careful consideration to both sides of the issue.

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