Limitation Act Applies Only To Courts Not Tribunals Unless Statute Expressly Permits It: Supreme Court

The Supreme Court has recently clarified that the Limitation Act applies only to cases filed before courts and cannot be used in proceedings before tribunals or other quasi-judicial bodies unless the statute expressly gives them that power.

The ruling was delivered by a bench of Justices J B Pardiwala and R  Mahadevan while allowing an appeal filed by The Property Company (P) Ltd., which challenged orders of the Company Law Board and the Calcutta High Court condoning a substantial delay in a share transmission dispute.

Reiterating the law, the top court observed, “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 dispute centered on 20 equity shares of The Property Company that Rohinten Daddy Mazda claimed under a will executed by his mother. Although probate of the will was granted in 1990, Mazda approached the company for transmission of the shares only in 2013. The company refused. By the time he moved the Company Law Board under Section 58 of the Companies Act, the statutory time limit had already been exceeded by 249 days.

Mazda sought condonation of the delay, citing his residence abroad and the transition from the old Companies Act to the 2013 law.

In May 2016, the Company Law Board accepted this explanation and condoned the delay. The Calcutta High Court later upheld that decision.

Before the Supreme Court, the company argued that the Company Law Board had no authority to do so. It pointed out that while Section 58 of the Companies Act came into force in September 2013, the provision that expressly applies the Limitation Act to company law tribunals was notified only on June 1, 2016.

Until then, proceedings under Section 58 were still being heard by the Company Law Board, which was never given statutory power to apply the Limitation Act or condone delays under it.

The Supreme Court accepted this argument. It reiterated that the Limitation Act is tied to the forum and applies only when proceedings are before courts. At the relevant time, the Company Law Board was acting as a quasi-judicial body and had no statutory authority to invoke the Limitation Act. The bench added that provisions such as Section 5, which allow courts to condone delay, cannot be extended to tribunals unless the law expressly permits it.

The court also rejected the view that later changes in the law could cure the defect. It held that Section 433 of the Companies Act, which applies the Limitation Act to proceedings before the National Company Law Tribunal and the appellate tribunal, could not be given retrospective effect to validate an order passed by the Company Law Board before that provision came into force.

Setting aside the orders of the Company Law Board and the Calcutta High Court, the Supreme Court concluded that the Company Law Board lacked jurisdiction to condone the 249-day delay.