2006 (11) TMI 333 - HC - Companies Law

Issues Involved:
1. Applicability of Section 5 of the Limitation Act to condone delay in filing an appeal under Section 111(2) of the Companies Act.
2. Whether the Company Law Board (CLB) acts as a Court under the Limitation Act.
3. The distinction between applications under Sections 111(2) and 111(4) of the Companies Act.

Detailed Analysis:

1. Applicability of Section 5 of the Limitation Act:
The primary question was whether Section 5 of the Limitation Act, which allows for condoning delays if sufficient cause is shown, applies to appeals filed under Section 111(2) of the Companies Act. The appellant argued that the CLB is not a Court, and therefore, Section 5 should not apply. They cited the Supreme Court's decision in *Prakash H. Jain v. Ms. Marie Fernandes*, which held that a competent authority under the Maharashtra Rent Control Act is not a Court and cannot condone delays under Section 5 of the Limitation Act.

However, the respondent contended that under Section 29(2) of the Limitation Act, the provisions of Sections 4 to 24, including Section 5, apply to any special or local law unless expressly excluded. The Full Bench of the Kerala High Court in *State of Kerala v. Ayilammal Syamala Thamburatti* supported this view, holding that Sections 4 to 24 of the Limitation Act apply to applications filed before various tribunals unless expressly excluded.

The Supreme Court in *Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker* also held that Section 5 of the Limitation Act applies to appeals filed before the appellate authority under the Kerala Buildings (Lease and Rent Control) Act, as it is a special law prescribing a different period of limitation.

2. Whether the CLB Acts as a Court:
The judgment examined whether the CLB has the trappings of a Court and thus can apply Section 5 of the Limitation Act. The CLB, while dealing with applications under Section 111 of the Companies Act, exercises judicial powers and has the authority to make definitive judgments. The CLB's powers include discovery and inspection of documents, enforcing attendance of witnesses, compelling production of documents, examining witnesses on oath, granting adjournments, and receiving evidence on affidavits. It was noted that the CLB's decisions are appealable, further indicating its judicial nature.

The Supreme Court in *Canara Bank v. Nuclear Power Corporation of India Ltd.* recognized that the CLB performs functions previously exercised by civil courts under Section 155 of the Companies Act, reinforcing the view that the CLB acts as a Court for the purposes of Section 5 of the Limitation Act.

3. Distinction Between Sections 111(2) and 111(4):
The CLB held that even if an appeal under Section 111(2) is barred by limitation, it can be entertained under Section 111(4), which has no prescribed limitation period. The CLB followed the decision in *Citi Bank NA v. Power Grid Corporation of India Ltd.*, which treated remedies under Sections 111(2) and 111(4) as alternate remedies.

The Supreme Court in *Canara Bank* observed that applications under Sections 111 and 155 (now assimilated into Section 111) can be made as alternate remedies. The CLB found sufficient grounds to condone the delay, treating the application as one under Section 111(4) if not maintainable under Section 111(2).

Conclusion:
The High Court of Kerala upheld the CLB's order, agreeing that the CLB acts as a Court for the purposes of the Limitation Act, and therefore, Section 5 applies. The delay in filing the appeal was condoned, and the application was deemed maintainable under Section 111(4) if not under Section 111(2). The appeals were dismissed, and the case was remanded to the CLB for further proceedings on the merits of the application.

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