CLB is not a ‘court’ for purpose of section 5 of the Limitation Act, 1963

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Shubham Budhiraja[1]

 

By virtue of probate of will in 1990, Mr. A in 2013 applied for registration of transmission of shares under Section 58 of Companies Act, 2013 with an application for condonation of delay.  The Ld. CLB condoned the delay and High Court upheld the same. The Hon’ble Supreme Court held that Companies Act, 2013 is enforced in the phase manner. Though Section 58 was enforced in 2013 but the appeal provision to NCLT, NCLAT was enforced in 2016. The Section 433 which enables application of limitation act was also enforced from 2016 only. Hence, as on 2013, the CLB was court only for limited purpose but not a ‘court’ for purpose of limitation because the provision of limitation act, 1963 was not made applicable to CLB under the Companies Act, 1956. Meaning thereby, the CLB was not empowered to condone the delay.

 

 

1.    In order to ensure a smooth transition into the new framework, the Act, 2013 was implemented in phases. Section 1 of the Act, 2013 came into force on 30.08.2013. Section 1, itself, indicated that different dates may be appointed for the coming into force of different provisions.

 

2.    A group of 98 sections or parts thereof was brought into force on 12.09.2013. It is noteworthy to mention that Section 58 of the Act, 2013 formed a part of this group.

 

3.    Much thereafter, on 01.06.2016, Chapter XXVII which contained several provisions relating to the constitution of the NCLT and NCLAT respectively and their powers, was brought into force. This included Section 433 as well.

 

4.    In the period between 12.09.2013 and 01.06.2016, a mix of provisions i.e., certain provisions from the Erstwhile Act and certain provisions from the Act, 2013 held the field. In other words, when the new provisions were being brought into force in phases, the provisions of the Erstwhile Act were also being repealed in phases.

 

5.    That during the period between 12.09.2013 and 01.06.2016, it was the CLB which was the adjudicating authority even as regards a proceeding initiated under the new provisions of the Act, 2013. We deem it necessary to reemphasize that there was no provision either akin to or corresponding to Section 433 of the Act, 2013 which empowered the CLB to apply the Act, 1963 during this period between 12.09.2013 and 01.06.2016. The legislature had very consciously timed the coming into force of Section 433 of the Act, 2013 with that of the creation of the NCLT and NCLAT respectively, which unambiguously revealed their intention to not confer the CLB with any power insofar as the issue of limitation was concerned.

 

6.    In the absence of a specific provision in the special legislation which expressly extends the application of the Act, 1963 to proceedings before the concerned quasi-judicial body or the system of quasi-judicial bodies, the thumb rule is that the rules of limitation, not only those that seek to lay down a prescribed period but also those envisaged under Sections 4 to 24 respectively of the Act, 1963, would remain inapplicable to quasi-judicial bodies.

 

7.    Insofar as the application of Section 5 of the Act, 1963 to quasi-judicial bodies is concerned, this Court has always indicated that the same can only be applied to ‘courts’. In Officer on Special Duty (Land Acquisition) and Another v. Shah Manilal Chandulal and Others reported in (1996) 9 SCC 414, this Court had categorically held that Section 5 of the Act, 1963 cannot be resorted to by statutory authorities which are not ‘courts’. Therein, this Court was concerned with whether the Collector or the Land Acquisition Officer could extend time.

 

8.    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.

 

9.    The mechanism envisaged under Section 5 is proximally bound and tethered to the discretion with which a civil court is empowered and that under Section 14 is anchored on restoring the right of a litigant to institute an appeal or application, as the case may be, within the prescribed period of limitation. Both provisions work in the interest of the litigant and seek to further the cause of substantive justice, however, the kind and nature of the power exercised under the two provisions, as well as the mechanism envisaged therein, are quite distinct.

 

10. Regulation 44 of the CLB Regulations which saves the inherent power of the CLB would not enable the CLB to extend time for the filing of the appeal or the application itself, as the case may be.

 

11. Section 433 of the Act, 2013 which empowers the NCLT and the NCLAT respectively to apply the provisions of the Act, 1963, as far as may be, to the proceedings and appeals before itself, cannot be borrowed to signify the existence of a similar power with respect to the CLB. Moreover, 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.

 


[1] Advocate, Delhi High Court [LLB, ACS, BCOM(H)], Budhirajalawchambers@gmail.com

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