Retrospective Application of S.433 of Companies Act Rejected: SC Holds CLB Cannot Borrow NCLT’s Powers [Read Order]

The SupremeCourt has rejected the retrospective application of section 433 of the Companies Act and held that the Company Law Board (CLB) cannot borrow such powers from the National Company Law Tribunal (NCLT) under the 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.

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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 theLimitation 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 issue in hadn was Whether Section 433 of the Companies Act, 2013 could be retrospectively applied to CLB proceedings

The counsel for the appellant argued that the CLB lacked authority to condone delay. Also Section 433 (which applies the Limitation Act to NCLT/NCLAT) came into force only on 1 June 2016, four days after CLB’s order, it cannot retrospectively validate CLB’s condonation. At the relevant time, CLB had no such power.

Senior Counsel Ms Meenakshi Arora defended the High Court’s view. It was argued that the delay was due to residence abroad and procedural confusion. No negligence or mala fides existed. Further, an appeal under Section 10F to High Court is a continuation of proceedings. Hence, a change in law (Section 433) during pendency must be considered.

The division bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed that CLB and NCLT are distinct bodies created at different times with different powers.

Section 433 was consciously timed with NCLT’s constitution, showing legislative intent not to empower CLB. Retrospective application of procedural law is general, but exceptions exist: (a) new law cannot revive a dead remedy; (b) it cannot extinguish vested rights.

Here, the respondent’s remedy under Section 111(3) of the old Act expired on 30 June 2013. By the time Section 58(3) came into force (Sept 2013), the claim was already time‑barred.

Thus, Section 433 in 2016 could not revive it. Reliance on Thirumalai Chemicals v. Union of India was distinguished as, in that case, the remedy was alive when the new law came. Here, the remedy was dead. Hence, retrospective application would impair the vested rights of the appellant to plead limitation. Therefore, Section 433 cannot be borrowed backwards to CLB.

It was held that it would not be permissible for one to say that the power to condone delay which has been given to the NCLT beginning from 01.06.2016 must enure to the benefit of an appeal which had become time-barred much before the commencement of the Act, 2013. If such an argument is accepted then it would have the consequence of affecting vested rights.

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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