The Supreme Court recently held that the Limitation Act of 1963 does not apply to quasi-judicial bodies or tribunals by default [The Property Company Vs Rohinton Daddy Mazda].
In a judgment delivered on January 7, The Court emphasised that these bodies are distinct from "courts" and do not possess inherent powers to condone delays unless specifically authorised by the statute that created them.
A Bench of Justices JB Pardiwala and R Mahadevan allowed the appeal filed by The Property Company (P) Ltd. and ruled that the Company Law Board (CLB), being a tribunal, lacked the power to condone delay in an appeal filed under Section 58(3) of the Companies Act, 2013.
"The provisions of the Act, 1963 (provisions that lay down a prescribed period of limitation as well as Sections 4 to 24 of the Act, 1963 respectively) would only apply to suits, applications or appeals, as the case may be, which are made under any law to ‘courts’ and not to those made before quasi-judicial bodies or tribunals, unless such quasi-judicial bodies or tribunals are specifically empowered in that regard," the Court held.
The case arose from a dispute over 20 equity shares in The Property Company (P) Ltd., a private limited firm. The shares were originally held by Mehroo Mazda, who bequeathed them to her son, the respondent Rohinten Daddy Mazda, via a will in 1987.
Following his mother’s death in 1989, the respondent obtained probate of the will in November 1990.
However, he did not formally seek to register the transmission of these shares for another 23 years, eventually sending a notice to the company in March 2013. The company officially refused the registration on April 30, 2013.
When the respondent finally appealed this refusal under Section 58(3) of the Companies Act, 2013, the filing was 249 days past the legal deadline.
While the CLB and the High Court initially condoned this delay, the Supreme Court now ruled that they lacked the legal authority to do so.
What did the Court hold?
1. Tribunals are not "Courts" under the Limitation Act: The Court clarified that the Limitation Act, 1963, is designed for the "court" as an institution. Quasi-judicial bodies like the CLB (and its successor, the NCLT) are creatures of statute. They cannot borrow the discretionary power to forgive delays under Section 5 of the Limitation Act unless their own governing Act explicitly says they can.
2. Mandatory nature of statutory deadlines: The Court addressed Section 58(3) of the Companies Act, 2013, which sets the timeframe for appealing share registration refusals. It clarified that these deadlines are mandatory even if the law does not use strict language like "but not thereafter". The absence of such "pre-emptory" wording does not mean the tribunal has a "free hand" to ignore the clock.
"Additional pre-emptory language in the form of 'but not thereafter' or 'shall' would not always be necessary to convey that the prescribed period is mandatory," the judgment said.
3. No Retrospective "Lifelines" for time-barred claims: While the new Companies Act (under Section 433) now allows the NCLT to apply the Limitation Act, the Court clarified this cannot be applied retrospectively. If a claim was already time-barred before these new rules came into force, the party cannot use the newer, more lenient laws to revive a dead remedy.
"Section 433 of the Act, 2013 which empowers the NCLT and the NCLAT respectively to apply the provisions of the Act, 1963, as far as may be, to the proceedings and appeals before itself, cannot be borrowed to signify the existence of a similar power with respect to the CLB. Moreover, the remedy of the respondent was already time-barred before the coming into force of Section 58(3) of the Act, 2013, let alone the coming into force of Section 433 of the Act, 2013. Hence, the change in law cannot enure to the benefit of the present respondent," the apex court ruled.
In view of its findings, the Supreme Court allowed the appeal, set aside the orders passed by the Company Law Board and the Calcutta High Court, and held that the appeal filed under Section 58(3) of the Companies Act, 2013 was barred by limitation and liable to be dismissed.
The petitioners were represented by Advocates Nina Nariman, Ramesh Keswani, Pranav Singal, Ravi Raghunath Vachher, Arjun Vachher and Samarth Suri.
The respondents were represented by Senior Advocate Meenakshi Arora with advocates Indranil Ghosh, Sreya Basu Mallick, Plazer Moktan, Shuvashish Sengupta and Ankit Dey.
[Read Judgment]