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Judgment
O R D E R
[Per. Justice Rakesh Kumar Jain]
09.09.2022: This Appeal is directed against the order dated 17.02.2020 passed by Adjudicating Authority (National Company Law Tribunal, New Delhi, Court –III), by which an application filed by the Appellant under Section 244 of the Companies Act, 2013 (for short ‘The Act’) allegedly seeking waiver of the requirement for filing the Company Petition under Sections 241 and 242 of the Act has been rejected only on the ground of being barred by limitation.
Shorn of unnecessary details, Counsel for the Appellant has submitted that the Appellant had filed the Company Petition- 213/241/242/ND/18 under Section 241 and 242 and also erroneously mentioned Section 244 of the Act seeking direction not to mismanage the affairs of Respondent No.1/(A-1 Equipment’s (P) Ltd.) in the manner prejudicial and oppressive to them. The said application was alleged to have been filed on 16.05.2018 and since the Company Petition was filed, not only invoking Sections 241 and 242, but also 244 and the Application under Section 244 was not filed, the Company Petition was ordered to be returned and the Appellants were asked to file it again along with an application under Section 244. The Company Petition was then filed by the Appellant not only under Section 241 and 242 but also along with an application under Section 244 dated 04.06.2018.
Counsel for the Appellant has submitted that since the Appellant qualifies the conditions prescribed in Section 244, therefore, it had only made a prayer that
“(a)To pass an order treating the Petitioners to have requisite qualification under Section 244 of the Companies Act, 2013, to prefer the accompanying petition for oppression and mismanagement of affairs of the Respondent No.1 by the Respondent.”
However, the application filed under Section 244 was dismissed by the Adjudicating Authority on the ground that the cause of action had arisen to the Appellants somewhere in the year 2013-2014 and the application was filed in the year 2018, therefore, it was clearly barred by limitation, prescribed under Article 137 of the Limitation Act, 1963 (for short ‘the act of 1963’).
Counsel for the Appellant has vehemently argued that not only the act of 1963 do not apply to an application filed under Section 244 of the Act but also the Appellants had never made a prayer for waiver in the said application filed on 04.06.2018. It is thus submitted that the Adjudicating Authority has both on law and facts, failed to appreciate the prayer made by the Appellant in the Application filed under Section 244 and also in applying the provision of Limitation to the Application which is otherwise conspicuous by its absence in the act itself.
In support of his submission he has relied upon a decision of this Tribunal rendered in the case of “Cyrus Investments Pvt. Ltd. & Anr. vs. Tata Sons Ltd. & Ors.” in Company Appeals (AT) No. 133 and 139 of 2017. In reply Mr. Gupta, appearing on behalf of the Respondents has though argued that there is no error in the order passed by the Ld. Tribunal but he has been fair and candid before this tribunal in accepting that the application filed under Section 244 would not attract the Provisions of the act, 1963 for the purpose of holding it time barred after the expiry of three years from the date of alleged cause of action.
We have heard Counsel for the parties and perused the record with their able assistance.
The issue involved in this case is as to whether Provision of Section 433 is applicable to Section 244 of the Act? In order to answer this question, it would be relevant to refer to Section 433 first which provides limitation and reads as under:
“Limitation – The Provisions of the Limitation Act, 1963(36 of 1963) shall, as far as may be, apply to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case may be”.
Section 244 reads as under:
“Right to apply under Section 241. –(1) The following members of a company shall have the right to apply under Section 241, namely:-
(a)in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares;
(b)in the case of a company not having a share capital, not less than one-fifth of the total number of its members:
Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under Section 241.
Explanation- For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member.
(2)Where any members of a company are entitled to make an application under sub-section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them”.
According to the Appellants, there are four shareholders of the Company out of which two shareholders proposes to file the application under Section 241 and 242 and in that manner the number of the shareholders is about fifty percent and in any case more than one tenth. It is thus submitted that in this background, initially the Company Petition under Section 241 and 242 was filed and the application under Section 244 was not appended because according to the Appellants there was no requirement on their part to ask for a waiver from the Tribunal. But when it was noticed by the Ld. Tribunal that company petition has been filed under Section 241/242 read with 244 of the Act then the Company Petition was returned and it had to be filed with an application under Section 244 of the Act also but still in that application no prayer for waiver was made because the Appellant was sanguine that it has a right to apply under Section 241/244 de hors the request for a waiver which is required in case the Appellant is not having the right to apply. It is also found from the perusal of Section 244 read with Section 433 that no application is required to be filed for seeking condonation of delay as there is no limitation prescribed much less under Article 137 of the Act of 1963 for the purpose of applying within the period of three years.
Thus, in view of the aforesaid facts and circumstances we are totally satisfied that the impugned order is not sustainable. The Appeal is allowed. The impugned order is hereby set aside in so far as the application under Section 244 is concerned. Application under Section 241, 242 is still alive which shall be decided by the Ld. Tribunal again, by giving opportunity to both the parties, in accordance with law and by passing a speaking order.
It is needless to mention that while passing this order we have not touched the merits of the application filed under Section 241 and 242.