Remanded

The Union of India, Ministry of Corporate Affairs, v. M/s Satyam Computer Services Limited

Telangana HC2 Mar 2012CAPPEAL/5/2012

Case brief

AI extract

What is this about?

The court allowed an appeal against the Company Law Board's rejection of a recall application. The CLB had rejected a petition for recall under Regulation 44, mistakenly treating it as a review. The court set aside the CLB's order and remanded it to examine the merits of the recall application. The CLB was directed to decide within four weeks.

What did the court decide?

The order of the Company Law Board dated 8.12.2011 is set aside. The matter is remanded to the CLB for fresh examination and decision within four weeks.

The Union of India, Ministry of Corporate Affairs… — Company and Corporate | Telangana HC (2012)

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THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN COMPANY APPEAL NO.5 OF 2012

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ORDER:

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Heard the Learned Additional Solicitor General appearing on behalf of the appellant, and Sri S.Ravi, Learned Senior Counsel, appearing on behalf of the respondent. At their request the appeal is being disposed of at the stage of admission.

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The order, under challenge in this appeal filed under Section 10-F of the Companies Act, is that of the Company Law Board, Principal Bench, New Delhi in C.A.No.618 of 2011 in C.P.No.1 of 2009 dated 8.12.2011 whereby the application filed by the appellant herein, under Section 403 of the Companies Act, 1956 read with Rule 44 of the Company Law Board Regulations, 1991, was dismissed by the Company Law Board. (hereinafter called the CLB).

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In its order in C.A.No.618 of 2011 dated 8.12.2011 the CLB records that, by way of the said application, the appellant herein had sought review of the order in C.A.NO.486 of 2011 dated 18.10.2011. The CLB dismissed the application in C.A.No.618 of 2011 on two grounds; firstly that the erstwhile Regulation 27 of the Company Law Board Regulations, 1991, which hitherto conferred the power of review on the CLB, was deleted by the amendment to the Regulations on 14.5.1992; and, secondly, that the order in C.A.No.486 of 2011 dated 18.10.2011 showed that vacation, of the earlier order of the CLB dated 21.1.2009, was confined to the assets mentioned in the affidavit of Sri G.Jayaraman dated 29.11.2011(respondent herein), and a perusal of the compliance

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report/affidavit dated 28.10.2011 filed by him showed that, pursuant to the order dated 18.10.2011, he had already sold all the securities held by him in the companies mentioned in the said affidavit.

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The Learned Additional Solicitor General, appearing on behalf of the appellant, would draw attention of this Court to the earlier order of the CLB in M.V. Paulose v. City Hospital (Private) Limited^[1] wherein the CLB, while noting that the power of review had been deleted by the Company Law Board Amendment Regulations, 1992, held that it was still open for it to exercise its inherent powers to make such orders as may be necessary to meet the ends of justice, or to prevent abuse of the process of the Bench. Learned Additional Solicitor General would submit that, in the present case, CLB had grossly erred in rejecting the application filed by the appellant herein, on the ground that the power of review available to the CLB had since been deleted, as the application filed by the appellant was not to review the earlier order of the CLB but to exercise its inherent power, under Regulation 44 of the Company Law Board Regulations, 1991, to recall the said order.

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The power to recall an order inheres in a court/tribunal to correct its own mistakes. Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the court/tribunal should not be prejudicial to anyone. If the court finds that the order was passed under a mistake, and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist, and

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its perpetration would result in miscarriage of justice, then it cannot, on any principle, be precluded from rectifying the error. Mistake is accepted as a valid reason to recall an order. Difference lies in the nature of the mistake, and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the court. Technicalities apart, if the court is satisfied of the injustice then it is its legal obligation to set it right by recalling its order. It is the duty of the court to rectify, revise and re-call its orders as and when it is brought to its notice that certain of its orders were passed on a wrong or mistaken assumption of facts, and that implementation of those orders would have serious

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consequences. (S. Nagaraj v. State of Karnataka^[2] ). If the court commits a mistake which prejudices a party, the court has the inherent power to recall its order. (Benoy Krishna Mukerjee v. Mohanlal Goenka^[3] ; Gajanand Sha v. Dayanand Thakur^[4] ; Krishnakumar v. Jawand Singh^[5] ; Devendra Nath Sarkar v. Ram Rachpal Singh^[6] ; Saiyed Mohd. Raza v. Ram Saroop^[7] ; Bankey Behari Lal v. Abdul Rahman^[8] ; Lekshmi Amma Chacki Amma v. Mammen Mammen^[9] ; Indian Bank v. Satyam Fibres (India) (P) Ltd.,^[10] ).

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Unlike an inherent power to recall the order, the power of the CLB to recall its orders is statutorily conferred under Regulation 44 of the Company Law Board Regulations, 1991 which

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saves the inherent power of the Bench of the Company Law Board, and thereunder, nothing in the Rules shall be deemed to limit or otherwise affect the inherent power of the Bench to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench.

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While the Learned Additional Solicitor General had also put forth his submissions on merits, Sri S.Ravi, Learned Senior Counsel appearing on behalf of the respondent, is justified in his submission that, since the CLB has not examined the question whether or not it should exercise its powers under Regulation 44 to recall the earlier order dated 18.10.2011, it would be wholly inappropriate for this Court to examine the matter on merits more so when an appeal lies to this Court, under Section 10-F of the Companies Act, only on a question of law.

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What the appellant has invoked, by way of the application in C.A.No.618 of 2011, is not the power of the Company Law Board to review its orders, but its powers under Regulation 44 to recall its earlier order in C.A.No.486 of 2011 dated 18.10.2011. The Company Law Board has failed to examine whether or not the application in C.A.No.618 of 2011 necessitates exercise of its power under Regulation 44 to recall the order dated 18.10.2011. As the CLB has erroneously presumed that the application in C.A.No.618 of 2011 is to review the earlier order of the CLB dated 18.10.2011, it is but appropriate that the order of the Company Law Board in C.A.No.618 of 2011 dated 8.12.2011 be, and is accordingly, set aside.

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The matter is remanded back to the CLB for its examination

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afresh on the question whether or not it should exercise its powers under Regulation 44 to recall its earlier order dated 18.10.2011. On a query from this Court as to whether the respondent had sold all his assets Sri S.Ravi, Learned Senior Counsel, would submit that the flat which the respondent owns has not as yet been sold. As any delay in adjudication of C.A.No.618 of 2011 may cause prejudice, both to the appellant and the respondent herein, it is but appropriate that CLB decides, and passes orders in C.A.No.618 of 2011, within four weeks from the date of receipt of a copy of this order.

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The appeal is disposed of accordingly.

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___________ 2-3-2012 Note: Copy of this order to be sent to the Company Law Board, Principal Bench, New Delhi forthwith.

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B/o asp

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[1] Order in C.A.Nos.75 and 76 of 1997 dated 23.10.1997

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[2] 1993 Supp (4) SCC 595

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