Supreme Court Upholds NCLAT’s Rejection of Delayed Appeal in Company Restoration Case: Condonation Beyond Statutory Limit Not Permissible

The Supreme Court upheld the NCLAT’s rejection of a delayed appeal in a company restoration case, ruling that condonation of delay beyond the statutory limit under Section 421 of the Companies Act is not permissible.

The Supreme Court Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan, while reviewing an appeal and connected interlocutory applications, observed that although Section 14 of the Limitation Act applies to proceedings under the Companies Act—allowing exclusion of time spent pursuing a non-maintainable review petition—repeated and unexplained delays at multiple stages preclude condonation under Section 421 of the Companies Act, which permits a maximum delay of only 45 days to be condoned. Consequently, in the absence of sufficient cause, the dismissal of the appeal was upheld.

The Supreme Court heard the appeal challenging the order of the National Company Law Appellate Tribunal (NCLAT), which had dismissed an appeal filed under Section 252(3) of the Companies Act, 2013, for restoration of a company’s name in the Register of Companies, on the ground of delay. The appellant’s name had been struck off on 18 August 2018, and the application for restoration was filed on 11 December 2018. This application was dismissed by the National Company Law Tribunal (NCLT) on 31 January 2019. Subsequently, the appellant filed a review petition on 30 June 2019, which was also dismissed on 30 March 2021.

An appeal was preferred before the NCLAT only on 21 April 2022—over a year after the review petition was dismissed. Since the appeal was filed beyond the limitation period, the appellant sought condonation of delay. The appellant argued that the time spent in pursuing the review petition before the NCLT should be excluded under Section 14 of the Limitation Act, 1963, which is made applicable to proceedings under the Companies Act by virtue of Section 433.

The Supreme Court acknowledged that the NCLAT had erred in holding that Section 14 of the Limitation Act would not apply to exclude the time consumed in pursuing the review petition, especially since the NCLT itself had held that it lacked jurisdiction to entertain the review. However, the Court also noted that there was a consistent delay at every stage of the proceedings. The restoration application itself was filed after four months, the review after five months, and the appeal to the NCLAT after more than a year—with no adequate justification for these delays.

In view of the discretionary nature of the proceedings and the statutory time limit under Section 421 of the Companies Act, which permits condonation of delay only up to forty-five days, the Court held that the NCLAT was justified in refusing to condone the delay. Accordingly, the appeal was dismissed as being devoid of merit.

Ms. Jahnavi Taneja, Advocate, Mr. Vishnu Unnikrishnan, Advocate, Mr. Danish Saifi, Advocate and Mr. Sabarish Subramanian, AOR, represented the Appellant.

For the Respondent/ Defendant: Ms. Archana Pathak Dave, A.S.G., Mr. Raman Yadav, Advocate, Ms. Mani Munjal, Advocate, Mr. Aadya Jha, Advocate, Mr. Vaishnav Kirti Singh, Advocate and Mr. Sudarshan Lamba, AOR, appeared for the Respondent.

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