CLB Has No Authority to Extend Limitation u/s 58(3) of Companies Act: Supreme Court [Read Order]

The Supreme Court has ruled that the Company Law Board (CLB) has no authority to extend the period of limitation that is prescribed under section 58(3) of the Companies Act.

The issue arose from a long-pending transmission of shares in a private company named The Property Company (P) Ltd, which is the appellant in the present case. The appellant had 631 fully paid-up equity shares. Among them, 20 shares were held by Ms Mehroo Mazda, mother of the respondent, Mr Rohinten Daddy Mazda.

Mehroo Mazda passed away in July 1989, but before her death, she had executed a will in June 1987. This had bequeathed her shares to her son. Probate of this will was granted in November 1990. But the respondent, even after receiving this, did not seek the transmission of the shares. For nearly two decades, the respondent never took any action to have his name entered in the company’s register.

Suddenly, in March 2013, the respondent’s advocate issued a notice to the appellant company requesting the registration of the transmission. The company refused the same in April 2013.

The respondent issued another request, but no reply was given. Meanwhile, the Companies Act, 2013 was enacted and implemented in phases. Section 58, replacing Section 111, came into force on 12 September 2013. Thus, by the time the respondent returned to India in December 2013, the new regime applied.

On 13 December 2013, the respondent filed a petition under Section 111A of the old Act, but defects were pointed out since that provision had ceased to operate. Instead of rectifying, he filed a fresh petition under Section 58 of the 2013 Act on 7 February 2014 (C.P. No. 31 of 2014).

Along with which he sought condonation of the delay of 249 days under Regulation 44 of the CLB Regulations. The appellant objected, arguing the petition was barred by abandonment of the earlier filing. The CLB rejected this objection in January 2015, holding that the earlier petition was unregistered and unnumbered, hence not abandoned.

On merits, the CLB condoned the 249‑day delay in May 2016, reasoning that the respondent had taken steps since 2013, that probate was long granted, and that technical delay should not defeat transmission. By then, Section 433 of the 2013 Act had come into force (June 2016), applying the Limitation Act, 1963 to NCLT/NCLAT.

The High Court, in December 2016, upheld the CLB’s order, relying on precedents that Limitation Act principles could apply to CLB proceedings, and noting that change in law during pendency must be considered.

Aggrieved, the appellant approached the Supreme Court. The central question was whether CLB had the power to condone delay under Section 58(3), and whether Section 433 could retrospectively apply to CLB proceedings.

The counsel for the appellant argued that the CLB lacked authority to condone delay. The Limitation Act, 1963, applies only to courts, not tribunals or quasi‑judicial bodies, unless expressly empowered. It was further argued that Section 58(3) prescribes a strict period of 30 or 60 days for appeal, and no provision had authorised CLB to extend this.

Senior Counsel Ms Meenakshi Arora defended the High Court’s view. She argued that Section 58(3) does not contain prohibitory language like “but not thereafter” (seen in Arbitration Act). Hence, delay could be condoned. It was also argued that Section 29(2) of the Limitation Act provides that where special law prescribes limitation, Sections 4–24 apply unless expressly excluded. Since Companies Act, 2013 does not expressly exclude Section 5, CLB could apply.

The division bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed that the appeal under Section 58(3) of the Act, 2013 preferred by the respondent herein was filed during the period between 12.09.2013 and 01.06.2016. Therefore, although the appeal was made under the new provision of the Act, 2013, yet the body/forum before which it was made i.e., the CLB, was one constituted under the provisions of the Erstwhile Act.

According to Section 10E(4C) of the Erstwhile Act, the CLB was a court only in the restricted sense. There existed no express provision which empowered the CLB to apply the provisions of the Act, 1963, to the proceedings and appeals before itself.

It was further observed that 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.

It was held that the simpliciter limitation period prescribed under Section 58(3) of the Act, 2013 must not be read to be merely directory. The presence of any 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.

Finally, it was held that the High Court had 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.

162. As a result, the appeal was allowed.

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