NCLAT Dismisses Share Transfer Appeal as Time-Barred, Rules Section 14 Benefit Not Applicable after Failed Civil Suit [Read Order]
The Tribunal held that time spent in a voluntarily filed, time-barred civil suit cannot be excluded under Section 14 of the Limitation Act, and the dismissal on limitation operated as res judicata.
![NCLAT Dismisses Share Transfer Appeal as Time-Barred, Rules Section 14 Benefit Not Applicable after Failed Civil Suit [Read Order]](https://images.taxscan.in/h-upload/2026/01/07/2117548-nclat-dismisses-share-transfer-appeal-time-barred-rules.webp "NCLAT Dismisses Share Transfer Appeal as Time-Barred, Rules Section 14 Benefit Not Applicable after Failed Civil Suit [Read Order]")
The Chennai Bench of National Company Law Appellate Tribunal (NCLAT) dismissed the shareholder’s appeal on wrongful transfer of 500 shares as barred by limitation and held that time spent in a voluntarily filed civil suit which was dismissed as time-barred and cannot be excluded under Section 14 of the Limitation Act, 1963.The Section 14 of the Limitation Act, 1963, explained that: Exclusion...
The Chennai Bench of National Company Law Appellate Tribunal (NCLAT) dismissed the shareholder’s appeal on wrongful transfer of 500 shares as barred by limitation and held that time spent in a voluntarily filed civil suit which was dismissed as time-barred and cannot be excluded under Section 14 of the Limitation Act, 1963.
The Section 14 of the Limitation Act, 1963, explained that: Exclusion of time of proceeding bona fide in court without jurisdiction.
“(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.
(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.”
The Appellant, Hasmukh Kanubhai Shah, held 500 shares in Respondent No. 1 Company based on a Delivery Memo dated 31.03.2025, as actual share certificates were never handed over to him against the NCLT Hyderabad's order dated 25.04.2023 rejecting the application for condonation of 308 days' delay in filing a Company Appeal under Section 59 of the Companies Act, 2013.
The Appellant claimed rightful ownership of 500 shares (Folio No. APL004523) in Respondent No. 1 Company, though no share certificate was issued to him. On 10.08.2015, he was first intimated through email that the shares had been wrongfully transferred to a third party. After issuing a notice on 07.04.2016, the Respondent replied on 11.05.2016 confirming the shares were transferred in 1998.
The Appellant, upon legal advice, filed Commercial Civil Suit No. 90/2019 before the Commercial Court, Vadodara on 14.06.2019, seeking Rs. 3 Crores. The suit was dismissed on 05.10.2021 as time-barred, with limitation computed from 11.05.2016. The Appellant did not challenge this order.
Subsequently, the Appellant filed a Company Appeal under Section 59 of the Companies Act, 2013 before NCLT Hyderabad with a delay of 308 days. The NCLT dismissed the appeal on 25.04.2023, holding it was not maintainable due to the delay and limitation bar.
The Counsel for the Appellant, Natasha Dhruman Shah, stated that he was entitled to the benefit of Section 14 of the Limitation Act, as the Commercial Civil Suit No. 90/2019 was filed under wrong legal advice and bonafide belief.
Further, the Counsel argued that the time spent pursuing proceedings before the Commercial Court should be excluded while computing limitations under Section 14 read with Section 433 of the Companies Act, 2013. On the other hand, the Respondent No. 1 was represented by the Counsel, Y. Suryanarayana.
The Tribunal consisted of Judicial Member, Justice Sharad Kumar Sharma and Technical Member, Jatindranath Swain, heard and reviewed the matter.
The Tribunal, after considering the submissions made, held that the Appellant cannot claim benefit under Section 14 of the Limitation Act to exclude the period spent pursuing the Commercial Civil Suit (14.06.2019 to 05.10.2021), as those proceedings were voluntarily instituted by the Appellant himself and resulted in a decision on merits.
The Tribunal observed that the Appellant voluntarily approached the Commercial Court, filed the suit beyond the limitation period under Article 137, contested the proceedings, and invited the judgment dismissing it as time-barred on 05.10.2021. Since this unchallenged judgment operates as a decree and constructive res judicata against the Appellant, he cannot re-agitate the limitation issue through subsequent appeals. Computing limitation from 11.05.2016 when the Appellant gained knowledge of the wrongful transfer, the Company Appeal under Section 59 was clearly time-barred.
Accordingly, the Tribunal on finding no error in NCLT’s order, dismissed the appeal.
