2025 (5) TMI 1763 - AT - Companies Law

Appeal dismissed for 2659-day delay in filing under Section 421(3) Companies Act limitation period expired

NCLAT Chennai dismissed an appeal challenging delay condonation under Section 421(3) of Companies Act, 1956. The maximum limitation period including ... Limitation period for filing an appeal under Section 421(3) of the Companies Act, 1956 - permissibility of condoning delay beyond the prescribed statutory period - sufficient cause for delay or not - HELD THAT:- The maximum period of limitation for preferring of an Appeal under Section 421 of the Companies Act, including the extension which has been contemplated under the proviso to Sub-Section (3) of Section 421 of the Companies Act would be for a maximum period of 90 days. In the Condone Application which has been thus preferred by the Appellant, few very remarkable features are required to be considered for the purposes of dealing with an aspect of seeking Condonation of Delay in filing the Appeal. The facts which could be apparently borne out from the pleadings raised in the Appeal are that, when the Company Petition was instituted, the Appellant herein had already put an appearance and was contesting the proceedings before the Tribunal, till the same was dismissed in default on 31.08.2016. One of the arguments of the Learned Counsel for the Appellant is that, the order of 31.08.2016, dismissing the Company Petition for want of prosecution, was restored behind his back on 17.10.2016, in an exparte manner without the knowledge of the Appellant and the second limb of the argument is that despite there being a direction issued by an order of 17.10.2016 while restoring the petition to supply the copy of the restoration order to the Appellant, the same was not complied with by the Respondent. The issue would be whether this factor could at all have any bearing in the instant Appeal at this stage, particularly when it is under altogether a different complexion, when the Delay Condonation Application is being considered. On a simpliciter determination of the period of limitation the same would be expiring on 26.12.2017, but however admittedly no appeal was preferred within the aforesaid period. Under the given legal precedents, at least the application for procuring the Certified Copy of the order was required to be preferred within the principal period of limitation prescribed under law for preference of an Appeal. Admittedly, that was not done in the instant case; the application for procuring the Certified Copy was filed only on 25.10.2024 i.e., after 80 days from the date of knowledge, which is well beyond the limitation period. A diligence in participating in the proceedings was expected from him and it was rather his responsibility to ascertain as to up to what stage the proceedings of Company Petition has reached, which was absolutely lacking on part of the Appellant as he was appearing in the proceedings, in the Company Petition, even prior to its dismissal in default on 31.08.2016 - the alleged prayer that, there happens to be a delay of 25 days as prayed for by the Appellant in his Application being IA No.604/2025, is not acceptable by us because the limitation cannot be permitted to be calculated from date of receipt of Certified Copy and it has to be determined from 27.09.2017, because the Certified Copy of the Order itself was not applied within the period of limitation. Hence, the delay would be of 2659 days and not 25 days as pleaded by the Appellant. The Condone Delay Application being IA No.604/2025, is not borne out to be justifiable from the facts, which have been placed on record, and the delay being inordinate, falling outside the scope of the proviso of Sub-Section (3) of Section 421 of the Companies Act, 1956, the same cannot be condoned - Appeal dismissed. The core legal questions considered by the Tribunal in this appeal primarily revolved around the limitation period for filing an appeal under Section 421(3) of the Companies Act, 1956, and the permissibility of condoning delay beyond the prescribed statutory period. Specifically, the issues were:1. Whether the delay in filing the appeal, as contended by the appellant, was within the permissible statutory limit, and if not, whether the delay could be condoned under the proviso to Section 421(3) of the Companies Act, 1956.2. The legal effect of knowledge or lack thereof of the impugned order on the limitation period for filing the appeal.3. The relevance and timing of the application for certified copy of the impugned order in relation to the limitation period.4. The applicability of precedent authorities regarding limitation and condonation of delay, particularly in the context of ex parte orders and knowledge of the order.Issue 1: Limitation Period and Condonation of Delay under Section 421(3) of the Companies Act, 1956The relevant legal framework was Section 421(3) of the Companies Act, 1956, which mandates that every appeal must be filed within 45 days from the date on which a copy of the Tribunal's order is made available to the aggrieved person. The proviso to this subsection allows the Appellate Tribunal to entertain an appeal beyond this 45-day period but not exceeding an additional 45 days, provided the appellant was prevented by sufficient cause from filing the appeal within the initial period. The Tribunal emphasized that the maximum permissible period for filing an appeal, including extension, is 90 days.The Court analyzed the appellant's contention that there was only a 25-day delay in filing the appeal and that the delay should be condoned. However, the Tribunal found that the appeal was filed on 08.01.2025 against an order dated 27.09.2017, resulting in a delay of approximately 2659 days, far exceeding the statutory maximum of 90 days.The Tribunal rejected the appellant's calculation of delay based on the date of receipt of the certified copy of the order, noting that the application for the certified copy itself was filed well beyond the limitation period. Hence, the delay was not justifiable for condonation under the statute.Issue 2: Effect of Knowledge of the Order on LimitationThe appellant argued that he became aware of the impugned order only on 06.08.2024, which was after the order had been restored ex parte on 17.10.2016 without his knowledge. The appellant contended that this lack of knowledge should affect the limitation calculation.The Tribunal referred to binding precedent which clarified that limitation under Section 421(3) of the Companies Act, 1956, runs from the date of the order and not from the date of knowledge of the order. The Tribunal quoted a principal bench judgment stating: 'The Hon'ble Supreme Court having held that limitation is to be counted from the date of the order and not date of knowledge of the order, it is irrelevant whether the impugned order was issued ex parte or in the presence of the parties.'This principle was applied strictly, rejecting the appellant's argument that lack of knowledge could extend the limitation period.Issue 3: Timing of Application for Certified Copy and Its Effect on LimitationThe appellant filed an application for the certified copy of the impugned order on 25.10.2024, which was 80 days after he claimed to have become aware of the order on 06.08.2024. The Tribunal held that the application for the certified copy should have been made within the principal limitation period for filing an appeal.The Tribunal further noted that the appellant received the certified copy on 30.10.2024, and even allowing for the exclusion of the period between the application and receipt of the certified copy under Section 12 of the Limitation Act (a maximum of 5 days), the appeal was still filed well beyond the statutory limitation period.Issue 4: Applicability of Precedents on Limitation and CondonationThe Tribunal relied on authoritative precedents, including a recent judgment from the Principal Bench, which clarified the strictness of limitation under Section 421(3) of the Companies Act and distinguished it from other statutes like the Insolvency and Bankruptcy Code (IBC), where knowledge of the order does not affect limitation.The Tribunal emphasized that the appellant's arguments based on ignorance of the order or procedural lapses by the respondents could not justify condonation of delay beyond the statutory maximum period.Conclusions on IssuesThe Tribunal concluded that:The appeal was filed after an inordinate delay of approximately 2659 days, far exceeding the maximum permissible 90 days under Section 421(3) of the Companies Act, 1956.Knowledge of the order or lack thereof does not extend the limitation period; limitation runs from the date of the order.The appellant's failure to apply for the certified copy within the limitation period further disentitles him from claiming condonation.The delay condonation application was not justified and was rightly rejected.Consequently, the appeal itself was dismissed on the ground of limitation.Significant Holdings and Core PrinciplesThe Tribunal's reasoning crystallizes important principles regarding limitation and condonation under Section 421(3) of the Companies Act, 1956:'The maximum period of limitation for preferring an Appeal under Section 421 of the Companies Act, including the extension which has been contemplated under the proviso to Sub-Section (3) of Section 421 of the Companies Act would be for a maximum period of 90 days.''Knowledge is not a factor which can be taken as to be a rescue for Condonation of Delay, owing to the principles laid down by the Principal Bench... The Hon'ble Supreme Court having held that limitation is to be counted from the date of the order and not date of knowledge of the order, it is irrelevant whether the impugned order was issued ex parte or in the presence of the parties.''The appellant was appearing in the proceedings even prior to its dismissal in default. Diligence in participating in the proceedings was expected from him... it was his responsibility to ascertain the status of the proceedings and to file Appeal within the stipulated time.'These holdings reinforce the strict and non-extendable nature of limitation under Section 421(3) of the Companies Act, and the necessity for appellants to act diligently and timely in pursuing appeals.