MANU/CL/0030/2004

BEFORE THE COMPANY LAW BOARD

SOUTHERN REGION BENCH, CHENNAI
C.A. Nos. 126 and 128 of 2003 in C.P. No. 15/111/SRB/2003
Decided On: 15.03.2004
Appellants: Shri Johnny Mathew
Vs.
Respondent: Duroflex Limited, Shri Chandy Mathew and Shri George Mathew
AND
Appellants: Duroflex Limited
Vs.
Respondent: Shri Johnny Mathew
Hon'ble Judges/Coram:
K.K. Balu, Member
ORDER
K.K. Balu, Member
1 . In the Company Petition filed under Section 111(2) of the Companies Act, 1956
("the Act") the petitioner while seeking directions against M/s Duroflex Limited ('the
Company"), its Chairman and Managing Director to register the transmission of
67,300 shares inherited by him from his deceased mother, Smt. Kunjamma Mathew,
simultaneously prays for condonation of a delay of 285 days, in filing the Company
Petition by resorting to the Company Application No. 126/2003, which is resisted by
the Company on the ground that the Company Petition is barred by limitation, as set
out in the Company Application No. 128/2003 and in the course of the arguments of
Shri. B.C. Thiruvengadam, the learned Counsel appearing for the Company, as under
:
• The petitioner claims to have forwarded an application on 01.08.2002 to
the Company for registration of the transmission of 67,300 shares
bequeathed by Smt. Kunjamma Mathew in his favour by virtue of a will dated
21.12.1987, in which case the petitioner must have filed the Company
Petition within two months of the receipt of notice of refusal, if any, or where
no notice has been sent by the Company, within four months from the date
on which the intimation of transmission was delivered to the Company as
envisaged in Sub-sections (2) and (3) of Section 111. Accordingly, the
petitioner in the present case ought to have tiled the Company Petition on or
before 01.12.2002 (i.e) within four months from the date on which the
petitioner said to have delivered the application to the Company but chose to
file only on 15.09.2003, after a delay of 285 days, thereby the same is
barred by limitation.
• The petitioner has not offered any proper explanation for the delay of 285
days. The causes shown are insufficient to condone the inordinate delay on
the part of the petitioner, as held in Jonas Hemant Bhutta v. Surgi plast
Ltd - 1993 (78) C.C. 296.

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 • There is no provision enabling the Company Law Board under the Act to
condone the delay in filing a petition under Section 111(2), warranting the
dismissal of the application made in CA No. 126/2003, in limini, in support
of which reference is made to the following decisions:
• Prakash H Jain v. Marie Fernandes - MANU/SC/0750/2003 : AIR
2003 SC 4591 to show that the Competent Authority constituted under
Maharashtra Rent Control Act is neither a Court nor empowered to exercise
any power under the Limitation Act, 1963 condoning the delay is filing any
application and further to show that there is no such as any inherent power
of Court to condone delay in filing a proceeding before Court / Authority
concerned, unless the law warrants and permits, since it has a tendency to
alter the rights accused to one or the other party under the statue concerned;
and
• Carbon Corporation Ltd v. Abhudaya Properties Pvt. Ltd -Vol. 73
(1992) C.C. 572 - to show that the provisions of the Limitation Act are not
applicable to proceedings under sections 22A of the Securities Contracts
(Regulations) Act, which is a special statute and that the CLB has no power
to condone the delay and extend the time limit provided for a company to file
a reference.
• Any counter-reply is required to be accompanied by an affidavit in terms of
the Company Law Board Regulations, 1991. The statement of objections filed
by the petitioner contesting the Company Application No. 128/2003 without
any supporting affidavit must be rejected, as held by the High Court of
Karnataka in Jindal Vijayanagar Steel Limited v. Prakash Industries
Limited - CA No. 1176 of 2000 (unreported judgment).
Shri. Thiruvengadam, the learned Counsel, therefore, sought for dismissal of the
application seeking condonation of the delay as well as the Company Petition as
barred by limitation.
2 . According to Shri. P.M. Vasudev, the learned Counsel, the petitioner by pursuing
the Company Petition No. 40/2003 filed under sections 397 and 398 on account of
various acts of oppression and mismanagement in the affairs of the Company and
further urging therein relief in relation to the inherited shares, bonafide believed in
terms of Section 109 that this claim for shares could be settled through the said
Company Petition. Moreover, the petitioner living in Guatemala was hampered on
account of his physical absence from India, which resulted in the present delay. The
learned Counsel urged that the CLB has the power to condone the delay in filing the
Company Petition, as held in V.K. Gupta v. Auto Lamps Ltd -1999 (96) C.C 555
and further placed reliance on the decision in Citi Bank NA v. Power Grid
Corporation of India Ltd-1995 (83) CC 454 - to show that the remedies under
Section 111(2) and Section 111(4) are alternate remedies. Refusal to register transfer
and delay in registering transfers are treated at par, in which case the present
petition can be maintained under Section 111(4) which does not prescribe any time
limit within which the CLB must be approached unlike Sub-section (3) of Section
111. While the petitioner would be put to irrepairable hardship, in the event of
dismissal of the Company Petition on the ground of limitation, the respondents would
not in any way be prejudiced if the delay is condoned by the CLB. The learned
Counsel pointed out that he was under bonafide belief till the recent clarification
made by the CLB in the connected proceeding that there is no requirement of any

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statement of objections accompanied by an affidavit verifying the same and
therefore, sought indulgence of this Bench to waive the said requirement. For these
reasons, the learned Counsel, sought to condone the delay in filing the Company
Petition and further emphasised that the same is maintainable in law.
3. I have considered the arguments of the learned counsel. The short issue before me
is whether the CLB is vested with powers to condone the delay of 285 days in filing
the Company Petition under the provisions of the Limitation Act, 1963, in the facts
and circumstances of the case. If the answer is in affirmative, then the Company
Petition would be maintainable and if not, the same be dismissed in limini. The issue
as to whether the provisions of the Limitation Act, 1963 are applicable to proceedings
under Section 111 when came to be considered before the CLB time and again, it was
consistently held in several of the decisions viz., Shiv Dayal Agarwal v.
Siddhartha Polyster (P.) Ltd. - [1996] 21 CLA 44 (CLB)/[1997J 88 Comp
Cas 705; T.G. Veela Prasad V. Rayalseema Alkalias - [1996] 21 CLA 352
(CLB)/[1997] 89 Comp Cas 13 and G.N. Byra Reddy V. Arathi Cine
Enterprises (P.) Ltd - [1997] 26 CLA 27 (CLB)/[1997]89 Comp Cas 745that
the limitation Act does not apply to applications under Section 111. However, by
virtue of the decision of a Division Bench of the Calcutta High Court in the case of
Smt Nupur Mitra v. Basubani (P.) Ltd, - (1999) 35 CLA 97, which was later
confirmed in appeal by the Apex Court, after an analysis of various contentions as
regards the limitation and delay, it was categorically held that in proceedings under
Section 111, the provisions of the Limitation Act would apply. It may not be out of
place to mention that in the case of Basubani (P.) Ltd. (Supra), the petition under
Section 111 was filed nearly 50 years after the allotment of shares and the CLB
dismissed the petition as time barred, which order was set aside by the Calcutta High
Court, which decision was confirmed by the Supreme Court. Thus, in view of the
Supreme Court upholding the decisions, of the Calcutta High Court that the
provisions of Limitation Act are applicable to the proceedings under Section 111, the
said decision is binding on the CLB and accordingly followed in all the subsequent
decision. Therefore, the proposition laid down in Carbon Corporation Ltd. v.
Abhudaya Properties Pvt Ltd (Supra) is no more good in law. The decision in
Prakash H Jain v. Marie Fernandes, forcibly relied on by the learned Counsel for the
Company, not having, been rendered with reference to the CLB, in my considered
view, has no application in the facts and circumstances of the present case. I shall
now proceed to consider as to whether the petitioner has shown "sufficient cause" to
condone the delay of 285 days in filing the Company Petition. Towards this end, I am
guided by the settled law as propounded by the Supreme Court in a number of cases
to the effect that the term "sufficient cause" in Section 5 must receive liberal
consideration so as to advance substantial justice and, generally, delays in bringing
the appeals are required to be condoned in the interest of justice, whose no gross
negligence or deliberate inaction or lack of bonafides is imputable to the parties
socking condonation of delay. In the present case, admittedly the petitioner through
his attorney had in September 2002 filed a Company Petition under sections 397 and
398 alleging acts of oppression and mismanagement in the affairs of the Company,
which was subsequently withdrawn. Thereafter, when the petitioner himself come
forward with the Company Petition No. 18/2003 on the same cause of action, the said
petition cause to be rejected for not meeting the requirements of the Company Law
Board Regulations, 1991, compelling the petitioner to seek appropriate reliefs in the
Company Petition No. 40 of 2003 on account of his grievances in conduct of the
affairs of the Company. It is observed from these Company Petitions that the
petitioner has claimed alternative relief seeking directions against the respondents to
purchase the shares of the Company held by the petitioner, including the shares

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inherited by him from his deceased mother, vindicating the petitioner's stand. The
proceedings of the Company Petition No. 40 of 2003 are in progress. Against this
background, the petitioner can not be mulcted with gross negligence or deliberate
inaction, in delayed filing of the present Company Petition. The physical absence of
the petitioner from India, on account of being resident of Guatemala, which is
contended to be one, of the causes of the delay can not be brushed aside in the
interest of justice. There is, therefore, justification to condone the delay of 285 days
and, accordingly I do so. In these circumstances, the respondents are directed to file
counter in the Company Petition by 21.04.2004 and rejoinder to be filed by
05.05.2004. The Company Petition will be heard on 17.05.2004 at 10.30 a.m. With
these directions the applications in CA No. 126 & 128 of 2003 stand disposed of,
however, without any order as to costs. While disposing these applications, I have
not placed any reliance on the statement of objections on record, not being
supported by an affidavit verifying the same in terms of the Company Law Board
Regulations, 1991, but took cognizance of the affidavit filed in support of the
Company Application No. 126/2003.

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