2026 (1) TMI 400 - SC - Companies Law

CLB power to condone delay in company share-transfer refusal appeals u/s58(3), before s.433 began-rejected

The dominant issue was whether the CLB, while exercising jurisdiction under s.58(3) of the Companies Act, 2013 between 12.09.2013 and 01.06.2016, had ... Condonation of delay of 249 days in filing the appeal under Section 58(3) of the Companies Act, 2013 - power of CLB, being a quasi-judicial body to condone the delay in filing an appeal under Section 58(3) of the Act, 2013 - Section 433 of the Act, 2013 which was brought into force on 01.06.2016 in order to empower the NCLT and NCLAT respectively, to apply the provisions of the Act, 1963, could be given retrospective effect such that it applied to the CLB as well. The implementation of the provisions of the Act, 2013 in phases and the powers conferred upon the CLB in the period between 12.09.2013 and 01.06.2016 - HELD THAT:- It is deemed 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. Whether the CLB, being a quasi-judicial body, could be said to have the power to condone the delay in filing an appeal under Section 58(3) of the Act, 2013? - HELD THAT:- Section 433 of the Act, 2013 which specifically empowers the NCLT and the NCLAT respectively to apply the provisions of the Act, 1963 to proceedings or appeals before itself, must be given retrospective effect such that it applies to the CLB as well. Decisions of this Court as regards the application of Section 5 of the Act, 1963 to quasi-judicial bodies or tribunals - HELD THAT:- In the light of the ratio of Officer on Special Duty [1996 (2) TMI 538 - SUPREME COURT] and Prakash H. Jain [2003 (9) TMI 771 - SUPREME COURT] it can be seen that the CLB was also to be treated as a court but for very limited purposes which were enumerated under Section 10E(4C) of the Erstwhile Act. Therefore, the powers conferred under Section 10E(4C) must neither be conflated with nor extended to encompass the powers which a court would otherwise exercise under Section 5 of the Act, 1963. Whether the principles underlying certain provisions of the Act, 1963 could be made applicable to quasi-judicial bodies or tribunals? - HELD THAT:- Although the provisions of the Act, 1963 per say have been made inapplicable to applications or appeals before quasi-judicial bodies, yet the principles underlying the provisions of the Act, 1963, more specifically Section 14 thereof, have been made applicable to applications or appeals made before quasi-judicial bodies. This aspect of applying the principles underlying Section 14 of the Act, 1963 was discussed in Parson Tools [1975 (2) TMI 86 - SUPREME COURT] - Although the decision in Parson Tools did not apply the principles underlying Section 14 of the Act, 1963 to the facts of their case, based on how the concerned provision i.e., Section 10 of the U.P. Sales Tax Act, 1948, was phrased, yet it left open the possibility for future decisions to apply the said principles where a contrary intention could not be inferred or culled out from the provision to which the principles underlying Section 14 was sought to be applied. The difference between the principles underlying Sections 5 and 14 of the Act, 1963 respectively - HELD THAT:- The term “sufficient cause” under Section 5 must not be subject to undue rigidity and must be construed in a manner such that it can be contextualised in the facts and circumstances of each case. In other words, it must be kept sufficiently flexible and not be subject to an exhaustive set of circumstances or reasons. Courts must adopt a liberal and justice-oriented approach in assessing whether sufficient cause is made out. While there exists some outer boundaries within which the term “sufficient cause” must be construed, yet it is no doubt true that a significant amount of leeway is given to courts which are faced with an application under Section 5 of the Act, 1963 to ascertain whether the reasons assigned qualify the subjective test of the words “sufficient cause”. There are certain well-defined pre-requisites that must be satisfied for a party to take benefit of Section 14. Section 14(2) deals with computing the period of limitation for an application and the following are its requisite conditions – First, both the earlier and the subsequent proceedings must be civil proceedings; Secondly, both the earlier and the subsequent proceedings must be before a court; Thirdly, they must be between the same parties; Fourthly, they must be for the same relief; Fifthly, the previous proceedings must have been incapable of being entertained owing to a defect of jurisdiction or any other cause of a like nature; Lastly, the earlier proceedings must have been prosecuted with good faith and due-diligence. The argument that the principles underlying Sections 6 or 14 of the Act, 1963 respectively, could be applied to quasi-judicial bodies is not sufficient reason to hold the same insofar as Section 5 of the Act, 1963 is concerned. Whether the CLB Regulations confer any discretionary power to the CLB to extend time or condone delay under Section 5 of the Act, 1963? - HELD THAT:- Regulation 25 deals with the discretion given to the CLB to grant additional time on an altogether different aspect. It deals with granting time, upon showing that sufficient cause existed, for the ‘adjournment’ of a hearing of the petition or application, as the case may be. One must not conflate this with the power to enlarge or extend time for the filing of the petition or application itself with is dealt with by the Act, 2013 - when the question is as regards the “extension of time” in the filing of an appeal or application itself, before a quasi-judicial body, we must be careful to not overread between the silences and instead, must look at whether there is any express indication to that effect. Whenever and wherever the legislature deemed it fit, it has granted either a limited or an unlimited power to extend time. How Section 58(3) of the Act, 2013 which is a simpliciter provision prescribing a limitation period, must be construed? - HELD THAT:- Section 58(3) of the Act, 2013 uses the expression “The transferee may appeal to the Tribunal”. As elucidated in Fairgrowth [2004 (10) TMI 328 - SUPREME COURT] the use of this word does not directly give rise to any inference that the limitation period prescribed therein is only directory - the respondent herein must have preferred his appeal under Section 58(3) of the Act, 2013 before the CLB, strictly within the time-limit prescribed therein. Whether Section 433 of the Act, 2013 must be made retrospectively applicable or the change in law during the pendency of the appeal must be taken into account in the facts and circumstances of the present case? - HELD THAT:- Section 433 of the Act, 2013 was brought into force w.e.f 01.06.2016 i.e., from the same date on which the NCLT and the NCLAT respectively came to be constituted. In the phased manner of implementation of the provisions of the Act, 2013, such a decision to time the coming into force of Section 433 in a way that coincides with the creation of the NCLT and NCLAT respectively, was clear and conscious. This, by itself, is a good indication to steer away from the retrospective application of Section 433 in favour of the CLB. It is concluded that 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. The impugned judgement and order of the High Court is set-aside - appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1) Whether the Company Law Board (a quasi-judicial body) had jurisdiction to condone delay in filing an appeal under Section 58(3) of the Companies Act, 2013, including by invoking the Limitation Act, 1963 or by applying the 'principles' underlying Section 5 of the Limitation Act, 1963, or by relying on inherent powers under the CLB Regulations. 2) Whether Section 433 of the Companies Act, 2013 (making the Limitation Act applicable to proceedings/appeals before the NCLT/NCLAT) could be applied retrospectively or otherwise used to validate condonation of delay by the CLB for a Section 58(3) appeal filed before the constitution of the NCLT/NCLAT. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: CLB's power to condone delay under Section 58(3) of the Companies Act, 2013 Legal framework (as discussed by the Court): The Court examined that, during the relevant period, the CLB's powers as a 'court' were limited to those expressly enumerated under the then-governing provision conferring CPC-type powers, and there was no provision empowering the CLB to apply the Limitation Act, 1963 or to extend limitation for filing a statutory appeal under Section 58(3). The Court also examined the distinction between (i) statutory inclusion of Limitation Act powers, and (ii) attempting to import 'principles' of limitation without such statutory conferral. Interpretation and reasoning: The Court held that the Limitation Act, 1963 applies to courts and not to quasi-judicial bodies unless the statute expressly provides otherwise. The CLB, being a quasi-judicial body and only a 'court' in a restricted sense for specified purposes, could not assume Section 5 power. Further, the Court rejected the argument that 'principles' underlying Section 5 could be applied by analogy, distinguishing Section 5 (extension of limitation through discretionary condonation) from provisions like Section 14 (exclusion of time), whose principles have been applied in limited contexts because exclusion does not involve discretionary enlargement of the limitation period itself. Because condonation under Section 5 depends upon discretionary enlargement of time-an attribute that must be specifically conferred-the Court ruled that such power cannot be inferred for the CLB. The Court also held that Regulation 44 (inherent powers) could not be used to override or circumvent a statutory limitation period for instituting the proceeding itself, as there is no inherent power to extend limitation absent legislative authorization. Conclusions: The CLB lacked authority to condone delay in filing a Section 58(3) appeal. Neither Section 5 of the Limitation Act nor its underlying principles could be invoked, and inherent powers under the CLB Regulations could not be used to extend a statutory filing period. The limitation period in Section 58(3) was treated as mandatory and not merely directory. Issue 2: Retrospective application or pendency-based application of Section 433 of the Companies Act, 2013 to validate CLB condonation Legal framework (as discussed by the Court): The Court considered the phased commencement of the Companies Act, 2013 provisions and noted that Section 433 came into force when the NCLT/NCLAT were constituted. It addressed whether this later provision could retrospectively empower the CLB or be applied because an appeal was pending. Interpretation and reasoning: The Court held that Section 433 could not be 'borrowed' to confer Limitation Act powers on the CLB, because the applicability of limitation provisions is institution-specific and depends on express legislative conferral. The timing of Section 433's commencement alongside the creation of NCLT/NCLAT showed a conscious legislative choice not to clothe the CLB with such power earlier. Additionally, on the facts, the Court found the remedy had already become time-barred even under the prior regime before Section 58(3) itself came into force; therefore, a later change empowering a different forum could not revive a dead remedy or defeat accrued rights. Conclusions: Section 433 was not retrospectively applicable to the CLB and could not validate condonation of delay for a Section 58(3) appeal filed before the NCLT/NCLAT framework. The change in law could not revive an already time-barred remedy.