CLB Doesn’t Have Power U/S 5 Limitation Act To Condone Delay In Filing Appeal U/S 58(3) Companies Act: Supreme Court
The Supreme Court said that Section 433 of the Companies Act which empowers the NCLT and NCLAT to apply the provisions of the Limitation Act, as far as may be, to proceedings and Appeals before itself, cannot be borrowed to signify the existence of a similar power with respect to the CLB.
Justice J.B. Pardiwala, Justice R. Mahadevan, Supreme Court
The Supreme Court held that the Company Law Board (CLB) does not have power under Section 5 of the Limitation Act, 1963 to condone the delay in filing an Appeal under Section 58(3) of the Companies Act, 2013.
The Court held thus in a Civil Appeal preferred against the Judgment of the Calcutta High Court, which affirmed the Order of the CLB, Kolkata Bench condoning the delay of 249 days in filing the Appeal under Section 58(3) of the Companies Act.
The two-Judge Bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed, “In light of the aforesaid, we find no merit in the submission put forth by Ms. Arora that even before the coming into force of Section 433 of the Act, 2013, there was no express exclusion of the provisions of the Act, 1963 and therefore, the CLB could be said to have the power under Section 5 of the Act, 1963 to condone the delay in preferring the appeal under Section 58(3) of the Act, 2013. The absence of express exclusion, by itself, cannot be said to have conferred the CLB with the power to condone delay.”
The Bench said that Section 433 of the Companies Act which empowers the NCLT (National Company Law Tribunal) and the NCLAT (National Company Law Appellate Tribunal) respectively to apply the provisions of the Limitation Act, as far as may be, to proceedings and Appeals before itself, cannot be borrowed to signify the existence of a similar power with respect to the CLB.
Advocate Nina R. Nariman appeared on behalf of the Appellant, while Senior Advocate Meenakshi Arora appeared on behalf of the Respondent.
Factual Background
The Appellant was a private limited company having a total of 631 fully paid-up equity shares. The Respondent’s mother was a shareholder, holding 20 shares of the Appellant company. She had passed away in 1989, however, two years prior to her demise, she had bequeathed the subject shares to the Respondent through her last will and testament. Eventually, the Respondent obtained a probate of her mother’s will in 1990. Vide letter in 2013, i.e., after a gap of about 23 years, the Respondent’s Advocate had sent a notice to the Appellant company seeking registration of the transmission of the subject shares. However, within a period of two months, vide communication, the company had replied to the notice and refused such registration.
During this period, it was Section 111 of the erstwhile Companies Act, 1956 which was in force. Sub-sections (2) and (3) respectively of Section 111 stipulated that the person giving intimation of the transmission of shares may prefer an Appeal against such refusal before the CLB, but that this must be done within a period of two months from the receipt of the notice of refusal from the company. The said period of two months lapsed in 2013 and the Respondent failed to take any action in this regard within the prescribed period. Yet another request was made to the company to register the transmission of the subject shares. It was informed that the Respondent would initiate appropriate legal action if the registration was not carried forward with. Meanwhile, the 2013 Act replaced the erstwhile Act.
Sections 111 and 111A of the erstwhile Act respectively, ceased to have any effect and were replaced by the new Sections 58 and 59 of the 2013 Act respectively. As there was no reply from the company, the Respondent filed a Petition under Section 111A of the erstwhile Act. The Bench Officer, CLB requested the same to be addressed and rectified within a period of 15 days. However, a fresh Appeal under Section 58 of the 2013 Act was filed before the CLB. An Application was also filed seeking condonation of delay of 249 days in preferring the Appeal under Section 58. The CLB held that the subsequent Petition was maintainable and being aggrieved, the Appellant company filed an Appeal before the High Court. However, the same was dismissed and hence, this was under challenge before the Apex Court.
Court’s Observations
The Supreme Court in view of the above facts, noted, “… it can be stated, without doubt, that the provisions of the Act, 1963 (provisions that lay down a prescribed period of limitation as well as Sections 4 to 24 of the Act, 1963 respectively) would only apply to suits, applications or appeals which are made under any law to ‘courts’ and not to those made before quasi-judicial bodies or tribunals, unless such quasi-judicial bodies or tribunals are specifically empowered in that regard.”
The Court emphasised that the discretionary power to adjust the period of limitation itself, must be specifically granted to the concerned quasi-judicial body or tribunal and there must be a reasonable indication from the language of the statute that such a discretion which is otherwise vested in civil courts, is also vested in the concerned quasi-judicial body.
“It is well-established that although the exercise of inherent powers are in addition to the powers specifically conferred on the concerned body or institution, yet such an exercise of power must be complementary to and not be in conflict with any express provision or be contrary to the intention of the legislature. It is only when a provision is silent as regards some procedural aspect that the inherent power can come to the aid of the parties. One must be careful in ascertaining when there is an unintentional silence and when there exists a deliberate omission”, it reiterated.
The Court was of the view that when a special or a local law deals with the filing of a suit, application or appeal, as the case may be, before quasi-judicial bodies or tribunals, the savings provision in Section 29(2) of the Act, 1963 does not have any relevance.
“Hence, any quasi-judicial body or tribunal which otherwise does not fall within the ambit of Section 5 of the Act, 1963 and which is also not specifically empowered to condone delay, cannot extend time under the notion that the prescribed period is only directory”, it added.
The Court remarked that the Respondent must have preferred his Appeal under Section 58(3) of the Act, 2013 before the CLB, strictly within the time-limit prescribed therein.
“It is in this background that we are of the view that Section 433 which empowers the NCLT and the NCLAT respectively to apply the provisions of the Act, 1963, as far as may be, to proceedings and appeals before itself, cannot be borrowed to signify the existence of a similar power with respect to the CLB. Although much of what the CLB was doing earlier is being done by the NCLT presently, both are different bodies, created at different times and endowed with different powers”, it held.
The Court further noted that there existed no express provision which empowered the CLB to apply the provisions of the Act, 1963 to the proceedings and Appeals before itself.
“In multiple decisions of this Court, notable and significant emphasis has been placed on which institution/body is seeking to employ the provisions of the Act, 1963 or exercise the powers conferred under the Act, 1963. … The provisions of the Act, 1963 (provisions that lay down a prescribed period of limitation as well as Sections 4 to 24 of the Act, 1963 respectively) would only apply to suits, applications or appeals, as the case may be, which are made under any law to ‘courts’ and not to those made before quasi-judicial bodies or tribunals, unless such quasi-judicial bodies or tribunals are specifically empowered in that regard”, it observed.
The Court reiterated that the power to extend time under Section 5 of the Act, 1963 cannot be resorted to by statutory authorities, quasi-judicial bodies or tribunals, unless expressly indicated and when such authorities or bodies are deemed to be a Court for certain limited or specified purposes, such a legal fiction must not be extended beyond the purpose for which the fiction was created so as to confer powers under Section 5 of the Act, 1963 as well.
“… the principles underlying Section 14 of the Act, 1963 could be applied to the provisions relating to quasi-judicial bodies, unless there is any express indication to the contrary in the wording and scheme of the said provision. However, there exists a vital distinction between the principles underlying Sections 5 and 14 respectively”, it also said.
Conclusion
Furthermore, the Court elucidated that the principles underlying Sections 5 and 14 of the Act, 1963 respectively, cannot be analogously applied to proceedings before quasi-judicial bodies because in the former, the Courts exercise their discretion in extending and more specifically, adjusting the prescribed period of limitation itself to create a fresh period of limitation.
“No entitlement as a matter of right arises vis-à-vis extension of time. Whereas, in the latter, the prescribed period of limitation remains intact, no delay is attributed to the litigant and the time during which the abortive proceeding was being prosecuted is expunged in the eyes of the law to place the litigant back or restore his position within the prescribed period of limitation wherein he is entitled to file the appeal or application, as the case may be, as a matter of right”, it added.
The Court noted that the simpliciter limitation period prescribed under Section 58(3) of the Act, 2013 must not be read to be merely directory and the presence of any additional pre-emptory language in the form of “but not thereafter” or “shall” would not always be necessary to convey that the prescribed period is mandatory.
“… the remedy of the respondent was already time-barred before the coming into force of Section 58(3) of the Act, 2013, let alone the coming into force of Section 433 of the Act, 2013. Hence, the change in law cannot enure to the benefit of the present respondent. … the High Court could be said to have committed an error in dismissing the statutory appeal filed under Section 10F of the Erstwhile Act and thereby, affirming the order of the CLB condoning the delay of 249 days in filing the appeal under Section 58(3) of the Act, 2013”, it concluded.
Accordingly, the Apex Court allowed the Appeal and set aside the impugned Judgment.
Cause Title- The Property Company (P) Ltd. v. Rohinten Daddy Mazda (Neutral Citation: 2026 INSC 33)
Appearance:
Appellant: AOR R. N. Keswani, Advocates Nina R. Nariman, Ramesh N. Keswani, Pranav Singal, Ravi Raghunath Vachher, and Vinayak Sharma.
Respondent: Senior Advocate Meenakshi Arora, AOR Satya Mitra, Advocates Indranil Ghosh, and Palzer Moktan.
