Supreme Court on Delay in Filing Appeal from Orders of the NCLT

[Maneck Mulla is the Proprietor of M Mulla Associates, Mumbai]

In Bengal Chemists and Druggist Association Vs Kalyan Chowdhury, the Supreme Court discussed the provisions of section 421 of the Companies Act, 2013 (the Act) which provides for filing of an appeal from orders of the National Company Law Tribunal (NCLT) within a period of 45 days with a further grace period of 45 days, (i.e. 90 days), subject to the National Company Law Appellate Tribunal (NCLAT) being satisfied that the appellant was prevented by a sufficient cause from filing an appeal within 45 days (without the grace period). Therefore, it was held that the provision is peremptory in nature, and once the period of 90 days expires the appeal becomes time barred and the delay cannot be condoned by invoking the provisions of the Limitation Act, 1963.

In the Bengal Chemists case, the appeal was preferred by the Appellant from an order of the NCLT to the NCLAT. However, the appeal was filed with a delay of 9 days after expiry of the period of limitation provided under section 421(3) of the Act. Accordingly, the appeal was dismissed by the NCLAT. Assailing this order of the NCLAT the Appellant preferred and appeal before the Supreme Court. 

Relying upon section 433 of the Act, it was submitted by the Appellant that the provisions of Limitation Act, 1963 apply to the proceedings or appeals before the NCLT or the NCLAT, and therefore section 5 of the Limitation Act, 1963 (which provides for condonation of delay for sufficient cause in case of appeals) would be applicable to condone the delay beyond the period of the 90 days provided under section 421(3) of the Act.

It was also pointed out that the provisions of section 421(3) of the Act do not contain language like that of section 34(3) of the Arbitration and Conciliation Act, 1996 which is a similar provision and provides for a 3-month period with an extended period of 30 days. But the proviso to section 34(3) explicitly states that if the application is not preferred within the prescribed time i.e. 3 months + 30 days, the application would become time barred.

The Supreme Court discussed in detail the language of the provisions of section 421(3) and Section 433 of the act which are as follows:

“421. Appeal from orders of Tribunal. –

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(3) 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.

Section 433. Limitation. – 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.”

It was observed by the Supreme Court that a cursory reading of section 421(3) makes it clear that proviso provides a limitation different from that provided in the Limitation Act, 1963. Further, the proviso provides a further period not exceeding 45 days subject to the NCLAT being satisfied that the appellant was prevented by a sufficient cause from filing an appeal within 45 days. Therefore, reliance cannot be placed upon the section 433 of the Act, to invoke the provisions of the Limitation Act, 1963 as it applies to a limited extent possible in view of the words “as far as maybe” contained in the section 433 of the act. it was also observed that since proviso to section 421(3) of the act is a special provision, therefore general provisions like section 5 of the Limitation Act, 1963 cannot apply. As the second period of 45 days provided under section 421(3) of the Act is a special inbuilt kind of section 5 of the Limitation Act, 1963 which lays down that beyond the second period of 45 day, there can be no further condonation of delay.

Analysis: In Bengal Chemists case reliance was placed by the Supreme Court on the judgment of Chhattisgarh SEB Vs Central Electricity Regulatory Commission, (2010 (5) SCC 23), where language similar to section 421(3) of the Act was interpreted by the Supreme Court. In this judgment, it was held that section 5 of the Limitation Act, 1963 cannot apply to section 125 of the Electricity Act as the section specifically provides a limitation period of 60 days with an extension of 60 days on sufficient cause being shown. Further, in view of the language of the proviso to section 125 of the Electricity Act which uses the expression “within a further period not exceeding 60 days”, the Supreme Court had no hesitation to hold that the outer limit for filing an appeal is 120 days and an appeal filed after the expiry of 120 days cannot be entertained. This ratio was also reiterated and followed by the Supreme Court in ONGC v. Gujarat Energy Transmission Corporation Limited, (2017 (5) SCC 42 at Para 5).

It is worth noting that aforesaid decision of the Supreme Court duly supports the principle that the right to appeal is not a natural or inherent right and it is only a right provided by the statue and therefore it will be governed by the specific provisions provided in the statute limiting the same. (Anant Mills Co. Ltd Vs State of Gujarat, (AIR 1975 SC 1234).

It was also noted by the Supreme Court in Bengal Chemists case that although there is difference between the expressions used in section 34 of the Arbitration and Conciliation Act, 1966 and in the proviso to section 431(3)  of the Act, it would make no difference as the proviso section 431(3)  of the Act contains a mandatory peremptory negative language in view of the words used for setting out the outer limit while providing the second period of 45 days particularly the words “not exceeding 45 days”. It was noted that these words have the same effect as the expression “but not thereafter” used in proviso to section 34 of the Arbitration and Conciliation Act, 1996.

Conclusion: After discussing the provisions of the Companies Act, 2013 at length, the Supreme Court held that the limitation period to file an appeal from an order of NCLT is 45 days, and a further period not exceeding 45 days is provided only if sufficient cause is made out for filing the appeal within the extended period. This is a peremptory provision, which will otherwise be rendered completely ineffective, if the section 5 of the Limitation Act, 1963 is held to be applicable, which in effect would mean that notwithstanding that the further period of 45 days had elapsed, the NCLAT may, if the facts so warrant, condone the delay. This conclusion would render otiose the second-time limit of 45 days, therefore once the period of 90 days expires the appeal becomes time barred and the delay cannot be condoned by NCLAT.

– Maneck Mulla 

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