The Supreme Court has held that the limitation period for filing an appeal under provisions of the Companies Act, 2013, cannot be extended beyond what is provided for in the statute.
This is yet another blow to companies seeking to buy time for completing resolution of bad assets under the new bankruptcy law. Section 421(3) of the Companies Act provides that appeals may be filed to the National Company Law Appellate Tribunal (NCLT) within a period of 45 days from the date of the NCLT order.
The proviso to this sub-section, however, allows an extended period of 45 days for sufficient cause.
The apex court’s order came on an appeal filed by Bengal Chemists & Druggists Association against a July 31 order of NCLT that disallowed extension of appeal period to the petitioners.
The appellate tribunal said that the provisions of the Limitation Act were not applicable for initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC).
This petitioner’s appeal was filed nine days after the period of limitation of 45 days had expired and a further period of another 45 days too had expired.
Dismissing the petition, the Supreme Court said that a cursory reading of Section 421(3) makes it clear that the proviso provides a period of limitation different to that provided under the Limitation Act.
This means, the court said, that Section 433 of the Companies Act cannot come to the aid of appellant because provisions of Limitation Act only apply “as far as may be.”
The appellants relied on Section 433, which enables the application of Limitation Act, 1963 to all appeals. Section 5 of the Limitation Act essentially allows the court to condone any delay if sufficient cause is shown.
The appellants further relied on Section 34(3) proviso of the Arbitration Act, 1996, which is a para materia provision. This sub-section also provides for a three-month timeline for setting aside an arbitral award with a proviso that allows an extended period of 30 days.
However, it contains the words “but not thereafter”, after providing the extended timeline for filing an application.
The appellants, therefore, argued that in the absence of similar wordings in Section 421(3), Section 5 of the Limitation Act would be applicable to condone the delay.
Justice Rohinton Nariman of the Supreme Court, however, read period of limitation provided for under Section 421(3) of the Companies Act as different from that provided in the Limitation Act.
He also held that, “Section 433 obviously cannot come to the aid of the appellant because the provisions of the Limitation Act only apply “as far as may be” In a case like the present, where there is a special provision contained in Section 421(3) proviso, Section 5 of the Limitation Act obviously cannot apply.”