1999 (2) TMI 696 - Board - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Company Law Board to condone the delay in filing appeals.
2. Whether the delay in filing appeals by the appellants could be condoned under Section 5 of the Limitation Act, 1963.
3. Merits of the appeals regarding the registration of share transfers.

Analysis of the Judgment:

Jurisdiction of the Company Law Board to Condon the Delay:
The High Court of Delhi remanded the case to the Company Law Board (CLB) to decide if the delay in filing the appeals by the appellants could be condoned. The High Court held that the CLB had the jurisdiction to condone the delay under the Limitation Act. Despite the respondents' argument that the Limitation Act does not apply to the CLB and that there is no provision in the Companies Act to condone such delays, the CLB is bound by the High Court's decision. The High Court's ruling established that the CLB had the power to condone delays, thus making the respondents' objections on this point academic.

Condonation of Delay under Section 5 of the Limitation Act:
The appellants argued that they were pursuing an amicable resolution within the company's board meetings and believed that no final decision had been taken regarding the refusal of share transfer registration. This belief was based on the fact that the matter was deferred in multiple subsequent board meetings. The appellants approached the CLB only after receiving a formal written communication of refusal from the company. The respondents contended that the appeals should have been filed within the prescribed period as the appellant was aware of the board's refusal decision in June 1990. However, the CLB noted that the appellant's continuous efforts to resolve the issue internally and the subsequent deferrals by the board meetings justified the delay. The CLB cited Supreme Court judgments emphasizing a liberal interpretation of "sufficient cause" to advance substantial justice and concluded that the delay was not due to gross negligence or deliberate inaction. Hence, the delay was condoned.

Merits of the Appeals Regarding Registration of Share Transfers:
The CLB had previously directed the company to register the impugned shares in the names of the appellants within 30 days from the receipt of the order dated June 30, 1995. Since the delay in filing the appeals has now been condoned, the company is required to implement the directions given in the order within 30 days from the date of receipt of this new order.

Conclusion:
The CLB, following the High Court's directive, condoned the delay in filing the appeals based on the appellants' continuous efforts to resolve the matter internally and the absence of gross negligence or deliberate inaction. The company is now mandated to register the impugned shares as directed in the previous order.