NCLT Kolkata Rules 12-Year Limitation For Enforcing Companies Act Schemes

NCLT Kolkata Rules 12-Year Limitation For Enforcing Companies Act Schemes

The National Company Law Tribunal ('NCLT') Kolkata, comprising Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), ruled that the limitation period for enforcing a scheme under the Companies Act, 2013, is 12 years, as specified in Article 136 of the Limitation Act, 1963.

In 2021, MTPL filed a petition under Section 231 of the Companies Act, 2013, seeking the execution of an order dated August 10, 2011 issued by the Calcutta High Court approving a scheme of arrangement.

The respondent opposed the application, arguing for its dismissal on the grounds of the expiration of the limitation period. It asserted that the petitioner's attempt to enforce an order dated August 10, 2011 falls outside the three-year timeframe specified under Article 137 of the Limitation Act, 1963.

The petitioner countered, asserting that it seeks the execution of a decree, for which the limitation period is 12 years according to Article 136 of the Limitation Act, thereby falling within the permissible timeframe. Furthermore, citing Section 424 of the Companies Act, 2013, it was argued that the order qualifies as a decree under this section, extending the limitation period for enforcement to 12 years. Additionally, under Section 231 of the Companies Act, there is no specified time limit for implementing the decree; instead, the Tribunal holds the authority to oversee its implementation.

Additionally, it argued that even if the three-year limitation applies, the petitioner only became aware of the order in 2020 when the company's auditors informed the management. Therefore, the limitation period should commence from the date of knowledge. It also relied on the judgment of Techno Metal India (P.) Ltd. v. Prem Nath Anand by the Division Bench of the Calcutta High Court.

The NCLT Kolkata granted the application and noted that while the respondent's argument regarding the three-year execution period under the Arbitration Act may be valid, under the Companies Act, the execution period extends to 12 years as per Article 136 of the Limitation Act, 1963.

It referred to the decision of the Calcutta High Court in Techno Metal India (P.) Ltd. v. Prem Nath Anand, where it was observed that the insertion of the word "other" in Article 137 indicates the legislature's intent to clarify that this article should be interpreted with reference to preceding articles. The other articles in the third division of the Schedule primarily relate to applications under the Code of Civil Procedure, except for certain applications under the Arbitration Act and, in two instances, the Code of Criminal Procedure. The Court concluded that even with the amendments introducing references to applications under the Code of Criminal Procedure in the new Limitation Act, there was no significant alteration in the scope of the residuary Article 137. Therefore, it cannot be inferred that the legislature intended to expand this article to cover all applications, irrespective of their connection to the Code of Civil Procedure.

In conclusion, the NCLT found the application to be within the prescribed period of limitation