Section 421 Companies Act | NCLAT Has Exclusive Jurisdiction Over Condonation of Delay; Writ Courts Barred : NCLAT Chennai

The National Company Law Appellate Tribunal (NCLAT) has reaffirmed the exclusivity of its appellate jurisdiction under Section 421 of the Companies Act, 2013, holding that High Courts cannot condone delays in filing appeals against National Company Law Tribunal (NCLT) orders. The judgment underscores that litigants must pursue statutory remedies in good faith and that recourse to writ jurisdiction under Article 226 of the Constitution of India should not be abused to circumvent prescribed limitation periods.

Background & Facts

The Dispute

The appeal arises from Company Petition (CP) No. 21/KOB/2020, filed before the NCLT, Kochi Bench. The dispute involved a civil contractor, Mr. PT Mathew, who claimed dues of Rs. 3.21 crores from M/s. Guruchandrika Builders & Property (P) Ltd. and its associated entities. The NCLT, by an order dated 22.10.2024, directed the settlement of these dues by 31.10.2024 and appointed an Independent Chartered Accountant (ICA) to verify and report the disbursement by 01.11.2024.

Key Facts

• 25.06.2024: NCLT passed an order in IA (C/ACT) 111/KOB/2024, which was challenged by the appellant in a writ petition.
• 24.07.2024: NCLT passed another order in IA No. 131/KOB/2024, also challenged in the same writ petition.
• 15.10.2024: The appellant filed Writ Petition (C) No. 36441/2024 before the Kerala High Court, challenging the NCLT orders dated 25.06.2024 and 24.07.2024. The writ petition was filed 111 days after the first order and 83 days after the second order, exceeding the 90-day limitation period prescribed under Section 421(3) of the Companies Act, 2013.
• 22.10.2024: The impugned NCLT order was passed during the pendency of the writ petition.
• 19.09.2025: Certified copy of the impugned order was made available.
• 06.11.2024: The appellant filed an amendment application (IA No. 2/2024) in the writ petition to challenge the 22.10.2024 order.
• 12.11.2024: The amendment application was allowed by the High Court.
• 24.03.2025: The writ petition was dismissed by the Single Judge of the Kerala High Court, observing that the appellant had an alternative remedy under Section 421 of the Companies Act, 2013.
• 15.11.2024: A contempt case (Contempt Case No. 2967/2024) was also dismissed, reiterating the availability of the statutory remedy.
• 18.05.2025: The appellant filed Writ Appeal No. 1224/2025 before the Division Bench of the Kerala High Court.
• 09.06.2025: The Division Bench dismissed the writ appeal but granted liberty to the appellant to approach the NCLAT within 15 days, directing the NCLAT not to dismiss the appeal on the ground of delay.
• 23.06.2025: The appellant filed Review Petition No. 769/2025, which was dismissed on 17.07.2025 with clarifications.
• 24.06.2025: The appellant filed the instant Company Appeal (AT) (CH) No. 162/2025 before the NCLAT, Chennai Bench, with a reported delay of 163 days. The Registry reported a defect of 89 days in refiling the appeal.

Procedural History

• 22.10.2024: NCLT order directing settlement of dues.
• 15.10.2024: Writ Petition filed before Kerala High Court.
• 24.03.2025: Writ Petition dismissed.
• 18.05.2025: Writ Appeal filed.
• 09.06.2025: Writ Appeal dismissed with liberty to approach NCLAT.
• 23.06.2025: Review Petition filed.
• 17.07.2025: Review Petition dismissed.
• 24.06.2025: Company Appeal filed before NCLAT with a delay of 163 days.

Relief Sought

The appellant sought condonation of the 163-day delay in filing the Company Appeal under Section 421 of the Companies Act, 2013, relying on Section 14 of the Limitation Act, 1963. The appellant contended that the time spent pursuing remedies before the Kerala High Court should be excluded from the limitation period.

The Legal Issue

The NCLAT addressed three central questions:

1. Whether High Courts can regulate or condone delays in proceedings before the NCLAT, particularly when the NCLAT’s jurisdiction spans multiple states.
2. Whether the appellant is entitled to the benefit of Section 14 of the Limitation Act, 1963, given the proceedings before the High Court.
3. What is the intent of the law regarding limitation periods in appeals under Section 421 of the Companies Act, 2013, and whether general principles of limitation override the specific provisions of the statute.

Arguments Presented

For the Appellant

• The appellant argued that the time spent pursuing remedies before the Kerala High Court should be excluded under Section 14 of the Limitation Act, 1963, as the proceedings were prosecuted in good faith and with due diligence.
• Reliance was placed on the Division Bench’s order dated 09.06.2025, which granted liberty to approach the NCLAT and directed that the appeal should not be dismissed on the ground of delay.
• The appellant contended that the High Court’s observations in dismissing the writ petition and writ appeal did not preclude the NCLAT from condoning the delay.

For the Respondents

• The respondents argued that the appellant’s conduct was not bonafide, as the appellant persisted in pursuing non-maintainable proceedings before the High Court despite being repeatedly informed of the availability of the statutory remedy under Section 421 of the Companies Act, 2013.
• It was contended that Section 14 of the Limitation Act, 1963 could not be invoked as the appellant failed to satisfy the prerequisites of good faith, due diligence, and bonafide conduct.
• The respondents emphasized that the Companies Act, 2013 is a special statute and its provisions, including those on limitation, override the general law.

The Court's Analysis

The NCLAT conducted a detailed analysis of the legal principles governing its jurisdiction, the scope of Article 226 and Article 227 of the Constitution of India, and the applicability of Section 14 of the Limitation Act, 1963.

Jurisdiction of High Courts Under Article 226 and Article 227

The NCLAT examined the scope of Article 226 and Article 227 of the Constitution, which confer extraordinary and supervisory jurisdiction on High Courts. The Tribunal held:

"The jurisdiction of the Hon'ble High Court under Article 226 of the Constitution of India is restricted to its territorial jurisdiction and the nature of writs that can be issued. The NCLAT, which exercises appellate jurisdiction over NCLTs across multiple states, does not fall within the territorial jurisdiction of any single High Court. Thus, High Courts cannot exercise supervisory jurisdiction over the NCLAT or issue directions that affect its adjudicatory functions."

The Tribunal further observed that Article 227, which confers supervisory jurisdiction, is limited to courts and tribunals situated within the territory of the High Court. Since the NCLAT’s jurisdiction spans multiple states, it does not fall within the supervisory ambit of any High Court.

Exclusivity of Statutory Remedies Under the Companies Act

The NCLAT emphasized that the Companies Act, 2013 is a special statute that provides an exclusive remedy for aggrieved parties under Section 421. The Tribunal held that recourse to Article 226 should not be abused to circumvent the statutory remedy, particularly when the High Court has already determined that the proceedings before it are not maintainable.

"The constitutional remedies under Article 226 are extraordinary and should not be invoked when a statutory remedy is available. The appellant’s persistent pursuit of non-maintainable proceedings before the High Court demonstrates a lack of bonafide intent and an abuse of the judicial process."

Applicability of Section 14 of the Limitation Act, 1963

The NCLAT scrutinized Section 14 of the Limitation Act, 1963, which allows for the exclusion of time spent prosecuting a proceeding in good faith before a court without jurisdiction. The Tribunal identified three essential prerequisites for invoking Section 14:

1. Bonafide conduct: The proceedings must be pursued honestly and without malicious intent.
2. Due diligence: The party must act with reasonable care and prudence.
3. Good faith: The proceedings must be prosecuted with a genuine belief in their maintainability.

The Tribunal held that the appellant failed to satisfy any of these prerequisites:

• The appellant was judicially informed of the availability of the statutory remedy under Section 421 as early as 24.03.2025, yet persisted in filing a writ appeal and a review petition, both of which were dismissed on identical grounds.
• The appellant’s conduct was not bonafide, as it demonstrated an intent to delay proceedings rather than pursue the available remedy.
• The appellant did not act with due diligence, as a prudent litigant would have approached the NCLAT immediately upon being informed of the statutory remedy.

The Tribunal relied on precedents such as Shiv Sarup Gupta v. Dr. Mahesh Chand Gupta and Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department, which emphasize that bonafide conduct and due diligence are essential for invoking Section 14.

Special Law Overrides General Law

The NCLAT reiterated the principle that special laws override general laws. The Companies Act, 2013 prescribes a limitation period of 45 days (extendable by another 45 days) for filing appeals under Section 421. The Tribunal held that this specific provision overrides the general principles of limitation under the Limitation Act, 1963.

"The Companies Act, 2013, is a self-contained statute with its own provisions on limitation. The general law of limitation cannot be invoked to override the specific provisions of the special statute."

High Courts Lack Power to Condone Delay

The Tribunal held that High Courts lack the power to condone delays in appeals under Section 421 of the Companies Act, 2013. Once a High Court determines that a proceeding is not maintainable, it ceases to have jurisdiction to pass any orders on merits, including condonation of delay.

The Tribunal relied on judgments such as Asma Lateef v. Shabbir Ahmad and Shri Nivruti G. Ahire v. State Bank of Maharashtra, which hold that condonation of delay is a merit-based consideration that can only be decided by the forum where the proceedings are maintainable.

"The High Court, having held that the writ petition was not maintainable, became functus officio and could not condone the delay or direct the NCLAT to decide the appeal on merits. Such directions would encroach upon the exclusive jurisdiction of the NCLAT."

The Verdict

The NCLAT dismissed the Company Appeal (AT) (CH) No. 162/2025 as barred by limitation. The Tribunal held:

1. The appellant’s conduct in pursuing non-maintainable proceedings before the High Court was not bonafide, not in good faith, and lacked due diligence.
2. Section 14 of the Limitation Act, 1963 was not applicable, as the appellant failed to satisfy its prerequisites.
3. The Companies Act, 2013 being a special statute, its provisions on limitation override the general law.
4. The High Court lacked jurisdiction to condone the delay or direct the NCLAT to decide the appeal on merits.
5. The appeal was filed beyond the prescribed limitation period of 90 days (including the condonable period of 45 days) under Section 421(3) of the Companies Act, 2013.

All pending interlocutory applications were closed as a consequence of the dismissal of the appeal.

What This Means For Similar Cases

High Courts Cannot Regulate NCLAT Proceedings

• The NCLAT’s jurisdiction spans multiple states, and its orders are not amenable to the supervisory jurisdiction of any single High Court under Article 227.
• Article 226 cannot be invoked to challenge NCLT/NCLAT orders unless there is a breach of fundamental rights or a violation of principles of natural justice.
• Litigants must avoid abusing writ jurisdiction to circumvent statutory remedies, as such conduct will not be condoned.

Strict Compliance with Limitation Periods Under Special Statutes

• Section 421 of the Companies Act, 2013 prescribes a strict limitation period of 45 days (extendable by another 45 days) for filing appeals. This period cannot be extended by invoking general principles of limitation.
• Section 14 of the Limitation Act, 1963 is not automatically applicable to proceedings under special statutes. Its benefit can only be extended if the party satisfies the prerequisites of bonafide conduct, due diligence, and good faith.
• Delay condonation is a merit-based consideration that can only be decided by the statutorily designated forum (e.g., NCLAT), not by High Courts.

Bonafide Conduct and Due Diligence Are Non-Negotiable

• Litigants must act prudently and pursue remedies in good faith. Persisting in non-maintainable proceedings after being informed of the correct forum will disentitle them to the benefit of Section 14.
• Review petitions and consecutive proceedings before the same court will not extend the limitation period if the initial proceedings were non-maintainable.
• Judicial directions condoning delay or granting liberty to approach another forum do not bind the NCLAT if they encroach upon its exclusive jurisdiction.