LEGAL ISSUE: Whether Section 5 of the Limitation Act, 1963 applies to appeals filed before the National Company Law Appellate Tribunal (NCLAT) under Section 421(3) of the Companies Act, 2013, after the expiry of the condonable delay period.
CASE TYPE: Company Law, Appeal, Limitation
Case Name: Bengal Chemists & Druggists Assn. vs. Kalyan Chowdhury
Judgment Date: 02 February 2018
Date of the Judgment: 02 February 2018
Citation: (2018) INSC 80
Judges: R.F. Nariman, J., Navin Sinha, J.
Can the National Company Law Appellate Tribunal (NCLAT) condone delays in filing appeals beyond a specific extended period, or is the limitation period under Section 421(3) of the Companies Act, 2013, absolute? The Supreme Court of India addressed this question in a recent case, clarifying the applicability of the Limitation Act, 1963, to appeals before the NCLAT. The Court held that the special limitation period under Section 421(3) is peremptory and does not allow for further condonation of delay beyond the stipulated 90 days. The judgment was delivered by a division bench comprising Justice R.F. Nariman and Justice Navin Sinha, with Justice R.F. Nariman authoring the opinion.
Case Background
The case arose from an appeal filed before the National Company Law Appellate Tribunal (NCLAT). The appellant, Bengal Chemists & Druggists Association, filed an appeal 9 days after the expiry of the initial 45-day limitation period and the further condonable period of 45 days as prescribed under Section 421(3) of the Companies Act, 2013. The NCLAT dismissed the appeal as not maintainable due to the delay. The appellant then approached the Supreme Court of India, challenging the NCLAT’s decision.
Timeline:
| Date | Event |
|---|---|
| [Date not specified in judgment] | Order of the Tribunal was made available to the aggrieved party. |
| [45 days after the order] | Initial period of limitation for filing appeal before NCLAT expired. |
| [Further 45 days after initial period] | Extended period for filing appeal with sufficient cause expired. |
| [9 days after extended period] | Appeal filed by Bengal Chemists & Druggists Association. |
| 31.07.2017 | NCLAT dismissed the appeal as not maintainable. |
| 02.02.2018 | Supreme Court dismissed the appeal. |
Course of Proceedings
The National Company Law Appellate Tribunal (NCLAT) dismissed the appeal filed by Bengal Chemists & Druggists Association, holding that the appeal was filed beyond the permissible period of limitation under Section 421(3) of the Companies Act, 2013. The NCLAT specifically noted that the appeal was filed 9 days after the expiry of the initial 45-day period and the further condonable period of 45 days. Consequently, the NCLAT held that it did not have the power to condone the delay beyond the 90-day period.
Legal Framework
The Supreme Court examined the following provisions of the Companies Act, 2013:
Section 421(3) of the Companies Act, 2013:
“Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved and shall be in such form, and accompanied by such fees, as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days from the date aforesaid, but within a further period not exceeding forty-five days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.”
This section specifies a 45-day limitation period for filing appeals, with a further condonable period of 45 days if sufficient cause is shown.
Section 433 of the Companies Act, 2013:
“The provisions of the Limitation Act, 1963 shall, as far as may be, apply to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case may be.”
This section states that the Limitation Act, 1963, applies to proceedings before the Tribunal and Appellate Tribunal, “as far as may be”.
The Court noted that Section 421(3) provides a specific limitation period different from the general provisions of the Limitation Act. The phrase “as far as may be” in Section 433 indicates that the Limitation Act applies only to the extent that it does not conflict with specific provisions in the Companies Act, 2013.
Arguments
Appellant’s Arguments:
- The appellant argued that Section 421(3) of the Companies Act, 2013, does not contain the phrase “but not thereafter,” unlike Section 34(3) of the Arbitration Act, 1996, which was considered in Union of India vs. Popular Construction Co. [(2001) 8 SCC 470]. This implies that the limitation period under Section 421(3) is not absolute.
- The appellant contended that Section 433 of the Companies Act, 2013, makes the Limitation Act, 1963, applicable to appeals before the NCLAT. Therefore, Section 5 of the Limitation Act, which allows for condonation of delay, should also apply.
- The appellant relied on several Supreme Court judgments to support their argument that the Limitation Act should apply to proceedings before the NCLAT.
Respondent’s Arguments:
- The respondent argued that Section 421(3) of the Companies Act, 2013, provides a specific limitation period of 45 days, with a further condonable period of 45 days. This is a special provision that overrides the general provisions of the Limitation Act, 1963.
- The respondent contended that the phrase “as far as may be” in Section 433 of the Companies Act, 2013, means that the Limitation Act applies only to the extent that it does not conflict with specific provisions in the Companies Act.
- The respondent argued that allowing further condonation of delay beyond the 90-day period would render the second 45-day period under Section 421(3) otiose.
Submissions Table:
| Main Submission | Sub-Submission (Appellant) | Sub-Submission (Respondent) |
|---|---|---|
| Applicability of Limitation Act | Section 421(3) does not contain “but not thereafter,” unlike Arbitration Act. | Section 421(3) is a special provision with a specific limitation period. |
| Applicability of Section 5 of Limitation Act | Section 433 of Companies Act makes Limitation Act applicable. | “As far as may be” in Section 433 limits the applicability of Limitation Act. |
| Interpretation of Limitation Period | Section 5 of Limitation Act should apply to condone delay beyond 90 days. | Allowing further condonation would render the second 45-day period meaningless. |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether Section 5 of the Limitation Act, 1963, can be invoked to condone the delay in filing an appeal under Section 421(3) of the Companies Act, 2013, beyond the initial 45-day period and the further condonable period of 45 days.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether Section 5 of the Limitation Act applies to appeals under Section 421(3) of the Companies Act, 2013, beyond the 90-day period? | No. | The court held that the special limitation period under Section 421(3) is peremptory and does not allow for further condonation of delay beyond the stipulated 90 days. The proviso to Section 421(3) provides a specific period of limitation, and the phrase “as far as may be” in Section 433 does not extend the applicability of the Limitation Act when it conflicts with the specific provisions of the Companies Act. |
Authorities
The Supreme Court considered the following authorities:
Cases:
- Union of India vs. Popular Construction Co. [(2001) 8 SCC 470] – Supreme Court of India
This case was cited by the appellant to argue that the absence of the phrase “but not thereafter” in Section 421(3) of the Companies Act, 2013, implies that the limitation period is not absolute. However, the Supreme Court distinguished this case, holding that the mandatory language of the proviso to Section 421(3) has the same effect as the phrase “but not thereafter”.
- Chhattisgarh SEB v. Central Electricity Regulatory Commission [2010 (5) SCC 23] – Supreme Court of India
The Court relied on this case, which dealt with Section 125 of the Electricity Act, 2003, which has similar language to Section 421(3) of the Companies Act, 2013. It was held that Section 5 of the Limitation Act does not apply to Section 125 of the Electricity Act. The Court reiterated that the outer limit for filing an appeal is 120 days and that there was no provision in the Act to entertain an appeal beyond 120 days.
- ONGC v. Gujarat Energy Transmission Corporation Limited [2017 (5) SCC 42] – Supreme Court of India
The Court reiterated and followed the decision in Chhattisgarh SEB v. Central Electricity Regulatory Commission.
- Guda Vijayalakshmi vs. Guda Ramachandra Sekhara Sastry [(1981) 2 SCC 646] – Supreme Court of India
This case was cited by the appellant to argue that Section 21 of the Hindu Marriage Act, 1955, would not apply to substantive provisions of the Code of Civil Procedure, 1908. The Supreme Court held that this case was not relevant to the issue of limitation under Section 421(3) of the Companies Act, 2013.
- Dr. Partap Singh and Another vs. Director of Enforcement, Foreign Exchange Regulation Act and Others [(1985) 3 SCC 72] – Supreme Court of India
This case was cited by the appellant to argue that the expression “so far as may be” means to the extent possible. The Supreme Court held that this case did not apply to the issue of limitation under Section 421(3) of the Companies Act, 2013, as the language of the provision is peremptory.
- Mangu Ram vs. Municipal Corporation of Delhi [(1976) 1 SCC 392] – Supreme Court of India
This case was cited by the appellant to argue that Section 5 of the Limitation Act would not be impliedly excluded despite the mandatory language of Section 417(4) of the Code of Criminal Procedure, 1898. The Supreme Court distinguished this case, stating that it applies only to periods of limitation where there is no further provision for condonation of delay beyond the stated period. In the present case, Section 421(3) provides for a specific grace period, which cannot be exceeded.
Legal Provisions:
- Section 421(3) of the Companies Act, 2013 – This provision specifies the limitation period for filing appeals before the NCLAT.
- Section 433 of the Companies Act, 2013 – This provision states that the Limitation Act, 1963, applies to proceedings before the Tribunal and Appellate Tribunal, “as far as may be”.
- Section 34(3) of the Arbitration Act, 1996 – This provision was referred to for comparison regarding the phrase “but not thereafter”.
- Section 125 of the Electricity Act, 2003 – This provision was referred to as having similar language to Section 421(3) of the Companies Act, 2013.
- Section 5 of the Limitation Act, 1963 – This provision allows for condonation of delay in certain cases.
- Section 25 of the Code of Civil Procedure, 1908 – This provision was referred to in Guda Vijayalakshmi vs. Guda Ramachandra Sekhara Sastry.
- Sections 21 and 21A of the Hindu Marriage Act, 1955 – These provisions were referred to in Guda Vijayalakshmi vs. Guda Ramachandra Sekhara Sastry.
- Section 37 of the Foreign Exchange Regulation Act, 1973 – This provision was referred to in Dr. Partap Singh and Another vs. Director of Enforcement, Foreign Exchange Regulation Act and Others.
- Section 417 of the Code of Criminal Procedure, 1898 – This provision was referred to in Mangu Ram vs. Municipal Corporation of Delhi.
Authority Table:
| Authority | Court | How Treated |
|---|---|---|
| Union of India vs. Popular Construction Co. [(2001) 8 SCC 470] | Supreme Court of India | Distinguished |
| Chhattisgarh SEB v. Central Electricity Regulatory Commission [2010 (5) SCC 23] | Supreme Court of India | Followed |
| ONGC v. Gujarat Energy Transmission Corporation Limited [2017 (5) SCC 42] | Supreme Court of India | Followed |
| Guda Vijayalakshmi vs. Guda Ramachandra Sekhara Sastry [(1981) 2 SCC 646] | Supreme Court of India | Distinguished |
| Dr. Partap Singh and Another vs. Director of Enforcement, Foreign Exchange Regulation Act and Others [(1985) 3 SCC 72] | Supreme Court of India | Distinguished |
| Mangu Ram vs. Municipal Corporation of Delhi [(1976) 1 SCC 392] | Supreme Court of India | Distinguished |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Party | Court’s Treatment |
|---|---|---|
| Section 421(3) does not contain “but not thereafter,” unlike Arbitration Act. | Appellant | Rejected. The Court held that the mandatory language of the proviso to Section 421(3) has the same effect as the phrase “but not thereafter”. |
| Section 433 of Companies Act makes Limitation Act applicable. | Appellant | Partially accepted. The Court acknowledged the applicability of the Limitation Act but held that it does not override the specific limitation period under Section 421(3). |
| Section 5 of Limitation Act should apply to condone delay beyond 90 days. | Appellant | Rejected. The Court held that the special limitation period under Section 421(3) is peremptory and does not allow for further condonation of delay beyond the stipulated 90 days. |
| Section 421(3) is a special provision with a specific limitation period. | Respondent | Accepted. The Court held that the special limitation period under Section 421(3) is peremptory and does not allow for further condonation of delay beyond the stipulated 90 days. |
| “As far as may be” in Section 433 limits the applicability of Limitation Act. | Respondent | Accepted. The Court held that the phrase “as far as may be” in Section 433 means that the Limitation Act applies only to the extent that it does not conflict with specific provisions in the Companies Act. |
| Allowing further condonation would render the second 45-day period meaningless. | Respondent | Accepted. The Court held that allowing further condonation of delay beyond the 90-day period would render the second 45-day period under Section 421(3) otiose. |
How each authority was viewed by the Court?
- Union of India vs. Popular Construction Co. [(2001) 8 SCC 470]*: The Court distinguished this case, stating that the mandatory language of the proviso to Section 421(3) has the same effect as the phrase “but not thereafter” used in Section 34(3) of the Arbitration Act, 1996.
- Chhattisgarh SEB v. Central Electricity Regulatory Commission [2010 (5) SCC 23]*: The Court relied on this case, which dealt with Section 125 of the Electricity Act, 2003, which has similar language to Section 421(3) of the Companies Act, 2013. It was held that Section 5 of the Limitation Act does not apply to Section 125 of the Electricity Act.
- ONGC v. Gujarat Energy Transmission Corporation Limited [2017 (5) SCC 42]*: The Court reiterated and followed the decision in Chhattisgarh SEB v. Central Electricity Regulatory Commission.
- Guda Vijayalakshmi vs. Guda Ramachandra Sekhara Sastry [(1981) 2 SCC 646]*: The Court held that this case was not relevant to the issue of limitation under Section 421(3) of the Companies Act, 2013.
- Dr. Partap Singh and Another vs. Director of Enforcement, Foreign Exchange Regulation Act and Others [(1985) 3 SCC 72]*: The Court held that this case did not apply to the issue of limitation under Section 421(3) of the Companies Act, 2013, as the language of the provision is peremptory.
- Mangu Ram vs. Municipal Corporation of Delhi [(1976) 1 SCC 392]*: The Court distinguished this case, stating that it applies only to periods of limitation where there is no further provision for condonation of delay beyond the stated period.
What weighed in the mind of the Court?
The Supreme Court emphasized the peremptory nature of the limitation period under Section 421(3) of the Companies Act, 2013. The Court reasoned that the specific provision for a 45-day limitation period, with a further condonable period of 45 days, indicates a clear legislative intent to limit the time within which appeals can be filed. Allowing further condonation of delay would render the second 45-day period meaningless, undermining the statutory scheme.
The Court also highlighted that the phrase “as far as may be” in Section 433 of the Companies Act, 2013, does not extend the applicability of the Limitation Act when it conflicts with specific provisions of the Companies Act. The Court found that the special provision in Section 421(3) overrides the general provisions of the Limitation Act.
Sentiment Analysis Table:
| Reason | Percentage |
|---|---|
| Peremptory nature of the limitation period under Section 421(3) | 40% |
| Specific provision for a 45-day limitation period, with a further condonable period of 45 days | 30% |
| The phrase “as far as may be” in Section 433 does not extend the applicability of the Limitation Act | 20% |
| Allowing further condonation of delay would render the second 45-day period meaningless | 10% |
Fact:Law Ratio Table:
| Category | Percentage |
|---|---|
| Fact | 20% |
| Law | 80% |
Logical Reasoning:
Issue: Applicability of Section 5 of the Limitation Act to Section 421(3) of the Companies Act, 2013
Section 421(3) provides a specific limitation period of 45 days + further 45 days
Section 433 states Limitation Act applies “as far as may be”
Special provision in Section 421(3) overrides general provisions of Limitation Act
Allowing further condonation would render the second 45-day period meaningless
Conclusion: Section 5 of Limitation Act does not apply beyond the 90-day period
The Court considered alternative interpretations, such as the argument that the absence of the phrase “but not thereafter” in Section 421(3) means that the limitation period is not absolute. However, the Court rejected this interpretation, holding that the mandatory language of the proviso to Section 421(3) has the same effect. The Court also rejected the argument that Section 433 of the Companies Act, 2013, extends the applicability of the Limitation Act to override the specific limitation period under Section 421(3).
The Court’s decision was based on the principle that when a statute provides a specific limitation period, it must be strictly adhered to, and the general provisions of the Limitation Act cannot be invoked to circumvent the statutory scheme. The Court emphasized that the legislature’s intent was to provide a limited period for filing appeals, and allowing further condonation of delay would defeat this purpose.
The Supreme Court’s decision was unanimous. There were no dissenting opinions.
The Court’s reasoning was based on a strict interpretation of the statutory language and the legislative intent behind the specific limitation period under Section 421(3) of the Companies Act, 2013. The Court’s analysis of the authorities cited by the appellant was thorough and well-reasoned. The Court’s decision has significant implications for future cases involving appeals before the NCLAT.
“A cursory reading of Section 421(3) makes it clear that the proviso provides a period of limitation different from that provided in the Limitation Act, and also provides a further period not exceeding 45 days only if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.”
“According to us, this is a peremptory provision, which will otherwise be rendered completely ineffective, if we were to accept the argument of learned counsel for the appellant.”
“For the reasons given above, we are of the view that this would also make no difference in view of the language of the proviso to Section 421(3) which contains mandatory or peremptory negative language and speaks of a second period not exceeding 45 days, which would have the same effect as the expression “but not thereafter” used in Section 34(3) proviso of the Arbitration Act, 1996.”
Key Takeaways
- The limitation period for filing appeals before the National Company Law Appellate Tribunal (NCLAT) under Section 421(3) of the Companies Act, 2013, is absolute.
- The NCLAT cannot condone delays beyond the initial 45-day period and the further condonable period of 45 days, totaling 90 days.
- Section 5 of the Limitation Act, 1963, does not apply to appeals under Section 421(3) of the Companies Act, 2013, beyond the 90-day period.
- The phrase “as far as may be” in Section 433 of the Companies Act, 2013, does not extend the applicability of the Limitation Act when it conflicts with specific provisions of the Companies Act.
- The judgment emphasizes the importance of adhering strictly to statutory limitation periods.
The judgment is likely to have a significant impact on the practice of filing appeals before the NCLAT. Litigants must be diligent in ensuring that appeals are filed within the prescribed time limits. The judgment clarifies that the NCLAT does not have the power to condone delays beyond the 90-day period, even if sufficient cause is shown. This decision reinforces the importance of adhering to statutory timelines in legal proceedings.
Directions
No specific directions were given by the Supreme Court in this case.
Development of Law
The ratio decidendi of this case is that the special limitation period under Section 421(3) of the Companies Act, 2013, is peremptory and does not allow for further condonation of delay beyond the stipulated 90 days. This decision clarifies that the general provisions of the Limitation Act, 1963, do not override specific provisions in special statutes that prescribe a specific limitation period. This case reinforces the principle that when a statute provides a specific limitation period, it must be strictly adhered to, and the general provisions of the Limitation Act cannot be invoked to circumventthe statutory scheme.
Conclusion
The Supreme Court’s judgment in Bengal Chemists & Druggists Assn. vs. Kalyan Chowdhury is a significant ruling that clarifies the limitation period for appeals under Section 421(3) of the Companies Act, 2013. The Court held that the special limitation period under Section 421(3) is peremptory and does not allow for further condonation of delay beyond the stipulated 90 days. This decision reinforces the importance of adhering strictly to statutory limitation periods and clarifies the interplay between specific provisions in the Companies Act and the general provisions of the Limitation Act, 1963. The judgment is likely to have a significant impact on the practice of filing appeals before the NCLAT and serves as a reminder to litigants to be diligent in ensuring that appeals are filed within the prescribed time limits.