2004 (3) TMI 744 - Board - Companies Law

Summary

Issues Involved:
1. Whether the Company Law Board (CLB) has the power to condone the delay in filing a Company Petition under Section 111(2) of the Companies Act, 1956.
2. Whether the petitioner's Company Petition is barred by limitation.
3. Whether the petitioner has shown "sufficient cause" to condone the delay in filing the Company Petition.

Issue-wise Detailed Analysis:

1. Power of CLB to Condon the Delay:
The petitioner sought directions against the Company to register the transmission of 67,300 shares inherited from his deceased mother and also sought condonation of a 45-day delay in filing the Company Petition. The Company resisted, arguing that the petition is barred by limitation. The petitioner argued that the CLB has the power to condone the delay, citing V.K. Gupta v. Auto Lamps Ltd and Citi Bank NA v. Power Grid Corporation of India Ltd. The CLB noted that the issue of whether the Limitation Act applies to proceedings under Section 111 has been considered multiple times. Initially, it was held that the Limitation Act does not apply, but the Calcutta High Court in Smt. Nupur Mitra v. Basubani Pvt. Ltd, later upheld by the Supreme Court, held that the Limitation Act does apply. Therefore, the CLB is bound by this decision and has the power to condone the delay.

2. Petition Barred by Limitation:
The Company argued that the petition should have been filed within four months from the date of intimation of transmission (i.e., by 24.11.2002) but was filed on 18.09.2003, thus delayed by 290 days. The petitioner contended that the delay was only 45 days. The CLB examined the communication dated 31.05.2003 from the Company, which indicated the refusal to register the transmission of the remaining shares. The CLB concluded that the petitioner should have filed the petition within two months from this refusal (i.e., by 01.08.2003), making the actual delay less than 290 days.

3. Sufficient Cause for Delay:
The petitioner claimed that his efforts to resolve the issue in CP No. 68/2000 and his preoccupation with setting up a new unit caused the delay. The CLB found these reasons justifiable, noting that the petitioner handed over the R&D Division on 15.04.2003 and the Company acknowledged the transmission of 1791 shares. The CLB emphasized that "sufficient cause" must receive liberal consideration to advance substantial justice. The petitioner was not found to be grossly negligent or acting in bad faith. Thus, the CLB condoned the delay.

Conclusion:
The CLB concluded that it has the power to condone the delay under the Limitation Act, found the delay justifiable, and directed the respondents to file a counter in the Company Petition. The applications in CA No. 125 & 127 of 2003 were disposed of without any order as to costs.