Calcutta High Court
The Property Company Ltd vs Rohinten Daddy Mazda on 16 December, 2016
Author: Soumen Sen
Bench: Soumen Sen
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
BEFORE:
THE HON'BLE JUSTICE SOUMEN SEN
ACO No.91 of 2016
APO No.222 of 2016
THE PROPERTY COMPANY LTD.
VS.
ROHINTEN DADDY MAZDA
For the Petitioner : Mr. Jishnu Saha, Sr. Adv.,
Mr. Sanjib Kumar Mal, Adv.,
Mr. Dibanath Dey, Adv.
For the Respondent : Mr. Ratnanko Banerjee, Sr. Adv.,
Mr. Rudraman Bhattacharya, Adv., Ms. Sreya Basu Mallick, Adv., Mr. Souma Sil, Adv., Heard On : 08.08.2016, 07.09.2016, 21.09.2016, 02.11.2016, 16.11.2016, 30.11.2016, 15.12.2016.
Judgment On : 16th December, 2016 Soumen Sen, J.:- The short point arises in this appeal is whether the Company Law Board lacked authority in receiving the petition under Section 58 of the Companies Act, 2013 beyond the period prescribed in sub-section 4 thereof.
The facts limited to the aforesaid issue are summarized below. Rohinten Daddy Mazda became the owner of 20 shares of the appellant Company by a grant of probate on 30th November, 1990. The petitioner on 1st March, 2013 applied to the company for transfer of 20 shares. On 30th April, 2013 the Company refused transmission of the said shares. The respondent issued a legal notice on 18th July, 2013 threatening legal action. Sections 111 and 111A of the Companies Act, 1956 stand replaced on 12th September, 2013 by insertion of new Sections 58 and 59 of the Companies Act, 2013. On 12th December, 2013, Mr. Mazda forwarded a copy of petition under Section 111A(2) of the Act to the appellant Company. Thereafter Sri Mazda presented the petition before the Company Law Board on 13th December, 2013. On 16th December, 2013, a letter was issued by the Bench Officer to rectify the defects and submitted further documents.
On an advice that the said application may not be maintainable under the provisions of the old Act, since new Act by the time had come into force on 3rd February, 2014, Sri Mazda filed a petition under Section 58 of the Companies Act, 2013 along with an application under Regulation 44 of the Company Law Board Regulations, 1991 for condonation of delay and for enlargement of time.
The Bench Officer of CLB by a letter dated 18th February, 2014 informed the Advocate of Sri Mazda that the petition filed on 13th December, 2013 being defective remained unnumbered. The subsequent petition for self-same relief was filed on 7th February, 2014 and registered as CP No.31 of 2014. The appellant filed an application for dismissal of CP No.31 of 2014 on the ground that the respondent already having filed an application seeking rectification, the subsequent application for the self-same relief is not maintainable.
On 29th August, 2013, the Parliament had received the assent of the President of the new Companies Act, 2013 and the same was published in the Gazette of India on 30th August, 2013 for general information. In exercise of powers conferred by sub-section 3 of Section 1 of the Companies Act, 2013, the Central Government appointed 12th September, 2013 as the date on which some of the provisions of the Companies Act came into operation including Section 58 of the Companies, 2013 which is corresponding to the earlier Section 111 and Section 111A of the Companies Act, 1956. The Department of Company Law Board brought it to the notice of the applicant and in view thereof the petitioner filed CP No.31 of 2014 seeking self-same relief.
Before the Company Law Board various points were raised for refusal to allow transmission of shares.
In the said proceeding, Sri Mazda filed an application for condonation of delay of 249 days in filing the petition for refusal to register the transfer/transmission of shares and for rectification of register under Section 58 of the Companies Act, 2013 and also for enlargement of time.
This prayer was opposed on behalf of the company appellant on the ground that Section 5 of the Limitation Act does not apply to quasi-judicial bodies of Tribunal which include the Company Law Board.
It is submitted that it would be clear from Section 5 of the Limitation Act, 1963 that the said provision would apply to the "Court", not "Quasi-Judicial authorities" or "Tribunals" unless such Tribunals and the authorities are vested with the power of enlargement of time.
Mr. Jishnu Saha, the learned Senior Counsel appearing on behalf of the petitioner although does not dispute that by operation of law, the petitioner would become the beneficial owner of the shares by reason of the grant of probate but raised serious objections with regard to the enforcement of such right by the petitioner on the basis of the probate after a delay of 249 days. It is submitted that the statutory period to apply for transmission of shares and for rectification of register is to be filed within a period of 30 days from the date of receipt of the notice or in case no notice has been sent by the company within a period of 60 days from the date on which the instrument of transfer or the intimation of the transmission as the case may be was delivered to the company. It is submitted that admittedly there is a delay of 249 days and since Section 58 sub-section 4 of the Companies Act does not permit any enlargement of time beyond the aforesaid periods, the Company Law Board has clearly erred in allowing condonation of delay. It is submitted that the Company Law Board has completely misdirected its mind and has assumed a jurisdiction which it does not possess. The learned Senior Counsel has referred to the following decisions of the Hon'ble Supreme Court in support of his submission that the Limitation Act does not apply to Tribunal or Quasi-Judicial bodies which includes Company Law Board:-
1) Town Municial Corporation, Athani Vs. Presiding Officer reported at (1969) 1 SCC 873;
2) Nityanand M. Joshi Vs. LIC Three Judge Bench reported at AIR 1970 SC 209, (1969) 2 SCC 199;
3) Sushila Devi Vs. Ramanandan Prasad reported at AIR 1976 SC 177, (1976) 2 SCR 845;
4) Sakura Vs. Tanaji reported at AIR 1985 SC 1278, (1985) 3 SCC 590;
5) Officer on Special Duty Vs. Shah Manilal Chandulal; (1996) 9 SCC 414
6) Nasiruddin And Ors. Vs.Sita Ram Agarwal reportedat (2003) 2 SCC 577;
7) Popat Bahiru Govardhane Vs. Special Land Acquisition Officer & Anr. reported at (2013) 10 SCC 765.
The learned Senior Counsel has also referred to the following decisions of the Company Law Board in support of his submissions that the Company Law Board has also held in such decisions that Limitation Act does not apply to Tribunal or Quasi-Judicial bodies:-
1) Carbon Corporation Ltd. Vs. Abhudaya Properties Ltd. Reported at (1992) 73 Comp Cases 572;
2) Union of India Vs. Kopran Ltd. Reported at (2006) 134 Comp Cases 665;
3) Neelam D. Divekar Vs. Metallurgical Laboratories (P) Ltd. & Ors.
reported at (2014) 182 Comp Cases 182.
Per contra, Mr. Ratnanko Banerjee, the learned Senior Counsel appearing on behalf of the respondent-applicant submits that the issue as to whether Section 5 of the Limitation Act would apply in such a situation is no more res integra in view the recent decision of a Coordinate Bench in M/s. Mackintosh Burn Ltd. Vs. M/s. Sarkar & Chowdhury Enterprises Pvt. Ltd. being ACO No.199 of 2015, APO No.448 of 2015 dated 15th October, 2015.
It is submitted that similar issue was raised and answered by the learned Single Judge against the appellant and in favour of the respondent to the said appeal by holding that the principles contained in the Limitation Act, 1963 would be applicable to matters before the Company Law Board.
The learned Senior Counsel has also referred to a fairly recent decision of the Hon'ble Supreme Court in M.P. Steel Corporation Vs. Commissioner of Central Excise reported at (2015) 7 SCC 58 for the proposition that the principles of Limitation Act would be applicable to a proceeding before the CLB.
It is further submitted that in view of Section 433 of the Companies Act, 2013, the said argument has now become merely academic as the provisions of the Limitation Act is now specifically applicable to a proceeding before the tribunal and the appellate tribunal. Mr. Banerjee has referred to a gazette notification dated 1st June, 2016 which shows that the said provision has come into operation on and from 1st June, 2016.
It is submitted that since this Court is exercising an appellate jurisdiction and the appeal is a continuation of the original proceeding, the appellate court can always take notice of the change in law and apply the said provisions in order to do complete justice between the parties as failure to do so might result in multiplicity of proceedings. It is argued that even if the order of the Company Law Board is reversed nothing would prevent the petitioner to apply afresh for rectification with a prayer for condonation and the tribunal would be competent to decide the application on merits. That demonstrable injustice would be caused in the event such rectification is not allowed is also emphasized to pursue this Court to affirm the order passed by the Company Law Board. That the Court can take into account the change of law and the present position and mould its relief the following decisions were relied upon:-
i) Mohanlal Chunilal Kothari Vs. Tribhovan Haribhai Tamboli & Ors. reported at AIR 1963 SC 358;
ii) H.V. Rajan Vs. C.N. Gopal & Ors. reported at (1975) 4 SCC 302;
iii) In re: Chattaranjan Bhadra & Ors. reported at 1986 (I) CHN
479.
It was further argued that Section 111(4) of the Companies Act, 1956, however, has not been repealed and the order would be otherwise sustainable even by taking recourse to the said provision.
In order to appreciate the arguments of the parties, it is necessary to refer to Section 58(4) and Section 433 of the Companies Act, 2013 and Section 111 and Section 111A of the Companies Act, 1956 as well as Section 5 of the Limitation Act, 1963. The said provisions are:-
Companies Act, 1956 Companies Act, 2013 S.111. Power to refuse S.58(4). If a public company without
registration and appeal against sufficient cause refuses to register the refusal. - (1) If a company refuses, transfer of securities within a period whether in pursuance of any power of of thirty days from the date on which the company under its articles or the instrument of transfer or the otherwise, to register the transfer of, intimation of transmission, as the or the transmission by operation of case may be, is delivered to the law of the right to, any shares or company, the transferee may, within interest of a member in, or debentures a period of sixty days of such refusal of, the company, it shall, within two or where no intimation has been months from the date on which the received from the company, within instrument of transfer, or the ninety days of the delivery of the intimation of such transmission, as instrument of transfer or intimation of the case may be, was delivered to the transmission, appeal to the Tribunal. company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal.
(2) The transferor or transferee, or the persons who gave intimation of the transmission by operation of law, as the case may be, may appeal to the [Tribunal] against any refusal of the company to register the transfer or transmission, or against any failure on its part within the period referred to in sub-section (1), either to register the transfer or transmission or to send notice of its refusal to register the same.
(3) An appeal under sub-section (2) shall be made within two months of the receipt of the notice of such refusal or, where no notice has been sent by the company, within four months from the date on which the instrument of transfer, or the intimation of transmission, as the case may be, was delivered to the company.
111A. Rectification of register on S.433. Limitation. - The provisions transfer. - (1) In this section unless of the Limitation Act, 1963 (36 of the context otherwise requires, 1963) shall, as far as may be, apply "company" means a company other to the proceedings or appeals before than a company referred to in sub- the Tribunal or the Appellate Tribunal, section (14) of Section 111 of this Act. as the case may be. (2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be freely transferable:
[Provided that if a company without sufficient cause refuses to register transfer of shares within two months from the date on which the instrument of transfer or the intimation of transfer, as the case may be, is delivered to the company, the transferee may appeal to the [Tribunal] and it shall direct such company to register the transfer of shares.] (3) The [Tribunal] may, on an application made by a depository, company, participant or investor or the Securities and Exchange Board of India, if the transfer of shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) or any other law for the time being in force, within two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or intimation of the transmission was delivered to the company, as the case may be, after such inquiry as it thinks fit, direct any depository or company to rectify its register or records.] Section 5 of the Limitation Act, 1963 "S.5. Extension of prescribed period in certain cases. - Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be admitted after the prescribed period, if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period."
The submission of Mr. Banerjee in this regard is that while Section 111 prescribes a period of two months of the receipt of notice of refusal or where no notice has been sent by the company within four months from the date of which the instrument of transfer or the intimation of the transmission, as the case may be, was delivered to the company, there is no period of limitation prescribed for the purpose of exercising power by the Tribunal under Section 111A(2) of the Companies Act, 1956. The said Section 111A having been specifically deleted the power of the CLB now Tribunal to accept the petition after two months is not curtailed.
Mr. Banerjee submits that since the appeal is a continuation of the original proceeding, the appellate court may take into consideration Section 433 of the Companies Act, 2013 and condone the delay in filing the proceeding. It is submitted that the challenge to the order of the Company Law Board has now become academic in view of Section 433 of the Companies Act, 2013.
In reply, Mr. Jishnu Saha, the learned Senior Counsel has submitted that the original proceeding prescribed a period of limitation and at the relevant time the CLB did not have the power to extend the time as the provisions of the Limitation Act, 1963 was not made applicable to CLB. Section 433 of the Companies Act, 2013 was notified on 1st June, 2016 after the commencement of the original proceeding before the Tribunal. The said Section can only apply prospectively and cannot affect a pending proceeding. The learned Counsel seeks to draw sustenance in support of the submission from the following decisions:-
i) Lakshminarayan Guin & Ors. Vs. Niranjan Modak reported at AIR 1985 SC 111;
ii) Gajraj Singh & Ors. Vs. State Transport Appellate Tribunal & Ors. reported at (1997) 1 SCC 650;
iii) Moti Ram Vs. Suraj Bhan & Ors. reported at AIR 1960 SC 655;
iv) Akshat Commercial Pvt. Ltd. & Anr. Vs. Kalpana Chakraborty & Ors. reported at AIR 2010 Calcutta 138.
Under the provisions of Companies Act, 1956, the Company Law Board (CLB) is a Court in a restricted sense. Under Section 10E (4C) of the Companies Act, 1956, the CLB would have powers under the Code of Civil Procedure, 1908 (5 of 1908) only in respect of the matters specified in Section 10E (4C) (a) to (f) of the Companies Act. The Company Law Board is a quasi-judicial authority to be guided by the principles of natural justice in exercise of its power and discharge its functions under the Companies Act, 1956 and it shall act in its discretion.
There cannot be any doubt that the provisions of Section 5 of the Limitation Act would only be applicable to the Courts and not to any Tribunal, Quasi-Judicial bodies including CLB unless such authorities are vested with the power of enlargement.
In M.P. Steel Corporation (supra) the Hon'ble Supreme Court after taking into consideration a large number of decisions held that a series of decisions of the Supreme Court have also clearly held that the Limitation Act applies only to Courts and does not apply to quasi-judicial bodies and the decision in Madan Lal Das & Sons reported at (1976) 4 SCC, 464, a three-Judge Bench of the Supreme Court is per incuriam as it was decided without adverting to either Parson Tools, (1975) 4 SCC 22 or other earlier judgments. Madan Lal case, therefore, is not an authority for the proposition that the Limitation Act would apply to tribunals as opposed to courts.
The distinction between the Courts and Civil Proceeding vis-à-vis Limitation Act was discussed in M.P. Steel (supra), it was held that suits, appeals or applications referred to by the Limitation Act as such are to be filed in courts. However, this has nothing to do with "civil proceedings" referred to in Section 14 of the Limitation Act, 1963 which may be filed before other courts or authorities which ultimately do not answer the case before them on merits but throw the case out on some technical ground. Obviously, the word "court" in Section 14 of the Limitation Act, 1963 takes its colour from the proceeding words "civil proceedings". Civil proceedings are of many kinds and hues and need not be confined to suits, appeals or applications which are made only in courts strict sensu. This is made even more clear by the explicit language of Section 14 of the Limitation Act, 1963 by which a civil proceeding can even be a revision which may be to a quasi-judicial tribunal under a particular statute.
The three decisions of the Company Law Board relied upon by Mr. Saha does not appear to have taken into consideration the decision of the Hon'ble Supreme Court in Canara Bank Vs. Nuclear Power Corporation of India Ltd. & Ors. reported at 1995 (84) Comp Cas 70; 1995(Sup3) SCC 81 and a Division Bench Judgement of the Hon'ble High Court in Smt. Nupur Mitra & Anr. Vs. Basubani Pvt. Ltd. & Ors. reported at 1999 (2) CLT 264 where it has been clearly held that in the absence of a specific provision covering application under Section 111, the residuary Article, namely, Article 137 would apply.
In Smt. Nupur Mitra (supra), the Hon'ble Division Bench relying upon a decision of the Hon'ble Supreme Court in Canara Bank (supra) held that in proceedings under Section 111 of the Act the provisions of the Limitation Act would apply. The judgment was taken in appeal wherein the Supreme Court after observing, "various contentions are raised on behalf of both the parties before us and, in particular on behalf of the appellants as regards the limitation and delay. The respondents in their petition have made out a prima facie case for condonation of delay and if necessary, the respondents may file such documents as permissible in law to get the delay condoned", directed the Company Law Board to hear the matter afresh. Thus, in view of the Supreme Court upholding the decision of the Calcutta High Court that the provisions of the Limitation Act are applicable to the proceedings under Section 111 of the Companies Act, the said decision was binding on the Company Law Board. If so, then the application for condonation of delay can be considered under Section 5 of the Limitation Act. In regard to the application of the Section, the settled law as propounded by the Supreme Court in a number of cases is that the term "sufficient cause" in Section 5 must receive liberal construction so as to advance substantial justice and generally delays in bringing the appeal are required to be condoned in the interest of justice where no gross negligence or deliberate inaction or lack of bona fides is imputable to the parties seeking condonation of delay. It may not be out of place to mention that in the case of Smt. Nupur Mitra (Supra) the petition under Section 111 of the Act was filed nearly 50 years after the allotment of shares and the Company Law Board dismissed the petition as time-barred. The order was set aside by the Division Bench of the Calcutta High Court, which decision was confirmed by the Supreme Court and the matter was remanded back to the Company Law Board for consideration afresh.
In Smt. Nupur Mitra (supra) in Paragraph 65 of the said report, the Hon'ble Division Bench considered the applicability of the Limitation Act and held:-
"65. Assuming that the Limitation Act, 1963 does apply, in the absence of a specific provision covering applications under Section 111, the residuary article namely Article 137 would apply. If the cause of action arose in 1996 as claimed by the appellants, the application under Section 111 having been filed in 1998 would be within time."
In Canara Bank (supra) in Paragraph 81, the Hon'ble Supreme Court, inter alia, held that the Company Law Board has the power in question relating to the title of any person who is a party before it to have his name entered upon the Companies name register and in view of record it as exclusive civil jurisdiction, the observations of the Hon'ble Supreme Court in Paragraph 81 reads:-
"81. Now, under Section 111 of Companies Act as amended with effect from 31.5.1991, the CLB performs the functions that were therefore performed by courts of civil judicature under section 155. It is empowered to make orders directing rectification of company's register, as to damages, costs and incidental and consequential orders. It may decide any question relating to the title of any person who is a party before it to have his name entered upon the company's register; and any question which it is necessary or expedient to decide, it may make interim orders. Failure to comply with any order visits the company with a fine. In regard to all those matters it has exclusive civil jurisdiction (except under the provisions of Special Courts Act, which is the issue before us).
Certain observations of Supreme Court in Ammonia Supplies Corpn. Vs. Modern Plastic contained: (1998) 4 Com. LJ 211 (SC) would also appear to suggest that in certain matters the jurisdiction under section 111 is exclusive."
A Co-ordinate Bench in M/s. Mackintosh Burn (supra) answered the said question in the manner following:-
"Section 58(4) of the Act permits an application though the exact word used is "appeal" to be filed by a person within the time stipulated in such provision. The provision is for the benefit of the transferees of shares in a public company and the time-limits are 60 days from the date f the refusal to register the transfer or 90 days of the delivery of the instrument for transfer to the company without any intimation as to its fate.
Though the provision sets the time-limits as above, nothing therein prevents the Company Law Board from receiving a petition or application thereunder beyond the stipulated period.
Since it is now judicially recognized that the principles contained in the Limitation Act, 1963 would be applicable to matters before the Company Law Board, irrespective of the use of the word "appeal" in the relevant provision, it would appear that the Company Law Board would have authority to receive a petition after the expiry of the specified period, by applying the principles of the Limitation Act as may be applicable.
The question of law sought to be raised is of no consequence since the provision does not prohibit the receipt of a petition or application thereunder after the expiry of the time-limits indicated therein."
Moreover, the High Court in exercising an appellate jurisdiction is required to take into consideration the change of law. In fact, the decisions cited by Mr. Saha in order to emphasize that the said change of law did not affect the pending proceeding supports the respondent more than the appellant. In Lakshminarayan Guin (supra), the Hon'ble Supreme Court had taken note of the change of law to extend protection to a tenant against eviction which was not available to the tenant when the original proceeding was instituted. The intention of the legislature to extend the benefit of such amendment to a tenant in the pending proceeding was manifest. The manifest intention with which Mr. Saha seeks to support the observation of the Hon'ble Supreme Court in Lakshminarayan Guin (supra) equally applies in the instant case as failure to apply such principle may cause manifest injustice and miscarriage of justice since by operation of law the petitioner is entitled to have his name recorded in the share register and the refusal to register the share in the name of the petitioner is patently illegal.
A Division Bench judgment of this Court in M/s. Ceean International Private Limited Vs. Ashok Surana & Anr. reported at (2003) 2 CLT 322 (HC) after considering the case laws on this point has concluded:-
"9.2. An appeal is a continuation of a proceeding. It is a settled proposition of law (Vijay Nath v. Damodar Das, AIR 1971 All 109). It is a continuation of the proceeding of the original Court and is in the nature of rehearing (Damodar Mukherjee and Ors. v. Bonwarilal Agarwalla and Ors., AIR 1960 Cal 469; Dayawati v. Inderjit, AIR 1966 SC 1423). Therefore, at the time of hearing of the appeal, all rights available to a party in the suit would be equally available in the appeal. The fact that on account of a particular proposition of law then governing the field, a right, which might not have been available during the course of the suit, can become available, if the law changes before the appeal is decided. A proceeding is to be decided on the basis of law that governs the field on the date when the decision is arrived at. Therefore, even if such right was not available to a party when the suit was decreed, such party cannot be precluded from available of such right, which is now available by reason of changed law, in the appeal. Such a question arose in Chowdhury Rohini Kumar Mullick v. State of West Bengal and Anr. (F.M.A. No. 334 of 1990) disposed of on 12th of July 2002. In the said decision we had occasion to deal with this question relying on the decision in Lakshmi Narayan Guin v. Niranjan Modak, AIR 1985 SC 111 (para 9) . The said decision had followed the decision on this principle in Ram Sarup v. Munshi, AIR 1963 SC 553, followed in Mula v. Godhu, AIR 1971 SC 89 and Dayawati (supra), while quoting from page 1426 of AIR 1966 SC 1423. In Lakshmi Narayan (supra), the Apex Court had relied upon Amarjit Kaur v. Pritam Singh, AIR 1974 SC 2068; Kristnama Charier v. Mangammal, (1902) ILR 26 Mad 91 (FB) as well as Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri, AIR 1941 FC 5."
The very fact that an appeal is a continuation of proceedings and the order of CLB is subject to appeal and has not reached finality, therefore, no right appears to have been vested in the appellant in order to attract the mischief of affecting vested right, if there be any.
Under such circumstances, this Court finds no reason to interfere with the order passed by the Company Law Board. Since legal issue sought to be raised is devoid on merit. ACO No.91 of 2016 and APO No.222 of 2016 are dismissed.
However, there shall be no order as to costs.
Urgent Xerox certified copy of this judgment, if applied for, be given to the parties on usual undertaking.
(Soumen Sen, J.)