201803.15
0
0

Companies Act Vs Limitation Act

BENGAL CHEMIST AND DRUGGISTS ASSN. vs KALYAN CHOWDHURY

In the Supreme Court of India, Civil Appeal No. 684 of 2018

RATIO 1: Section 421(3) of the Companies Act, 2013 is peremptory in nature.

RATIO 2: Under Section 433 of the Companies Act, 2013 the provisions of the Limitation Act shall not apply”.

 

BRIEF FACTS:

 An Appeal was preferred before the NCLAT by the Appellant against the Order passed by the NCLT. The appeal before the NCLAT had been delayed by 9 days beyond the period of limitation (45 days) and the grace period (further 45 days) provided under Section 421(3) of the Companies Act, 2013.

The NCLAT via Order dated 31.07.2017 dismissed the appeal on the ground of being time barred. Hence, the present appeal has been preferred before the Supreme Court of India.

ISSUE:

Whether the provisions of Section 5 of the Limitation Act, 1963 shall apply in case of a special provision for limitation already available under Section 421(3) of the Companies Act, 2013.

 CONTENTIONS OF THE APPELLANT:

The Appellant, placed reliance on the case of Union of India vs Popular Construction Co. (2001) 8 SCC 470, and pointed out that the provisions of Section 421(3) of the Companies Act 2013 do not contain the language and phrase of the Section 34(3) proviso “but not thereafter” of the Arbitration Act, which would make it impossible to file an appeal in the present case beyond the period of limitation.

He further emphasized on Section 433 of the Companies Act 2013, stating that the provisions of the Limitation Act 1963 shall apply to the appeals and proceedings, and hence, Section 5 of the Limitation Act which provides for the condonation of delay for sufficient cause of appeals would be applicable to condone the delay of 9 days for filing of an Appeal under Section 421(3) of the Companies Act, 2013.

 

FINDINGS:

 The primary finding on which the honorable Court dismissed the present appeal is as follows:

“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. Section 433 obviously cannot come to the aid of the appellant because the provisions of the Limitation Act only apply “as far as may be”. In case like the present, where there is a special provision contained in Section 421(3) proviso, Section 5 of the Limitation Act obviously cannot apply.”

 Referring to Section 421(3) of the Companies Act, 2013, the Honorable Court states that:

“As has been held by us, it is the second period, which is a special inbuilt kind of Section 5 of the Limitation Act in the special statute, which lays down that beyond the second period of 45 days, there can be no further condonation of delay.”

The Court placed reliance on the case of Chattisgarh SEB v. Central Electricity Regulatory Commission, 2010 (5) SCC 23, rejected the contentions of the appellant and further stated that Section 421(3) of the Companies Act, 2013 is a peremptory provision which will be rendered ineffective if the provisions of the Limitation Act 1963 were to be invoked.

 HELD:

 The Supreme Court held that Section 433 of the Companies Act, 2013 which provides for invocation of the Limitation Act, 1962 provisions cannot be relied upon in the present case as it applied to a limited extent.

It also held that Section 421(3) of the Companies Act, 2013 is a special provision and so Section 5 of the Limitation Act, 1963 shall not apply.


Leave a Reply

Your email address will not be published. Required fields are marked *

Current day month ye@r *