2010 (8) TMI 458 - Board - Indian Laws

Court dismisses RBI's application, ruling it not maintainable under Company Law Board Regulations.

The court found that the application filed by the Reserve Bank of India (RBI) to recall an order was not maintainable as there was no provision for ... Repayment of fixed deposits - Small depositors - whatever extensions given by this Bench on the applications are given by putting all these to the notice of the applicant for all these times - it is evident that there is no provision for review of the order passed by this Bench, in fact the provision of review in force until 1992 was deleted - the opportunity was given to the applicant as and when the first respondent moved for extension, but never availed the same - if the applicant comes and says this order as abuse of the process of law cannot be considered because no fraud is played against this Bench, moreover this Bench is competent to pass extensions, of course veracity of the order is always open to the scrutiny of the appellate authority since the application itself being held as not maintainable, the question of discussion of the second point will be nothing but putting the impugned order to scrutiny, hence not discussed - Since the main application itself is disposed on merits, the demur application filed by the first respondent is closed Issues Involved:1. Maintainability of the application.2. Entitlement of the applicant to the reliefs sought.Issue-wise Detailed Analysis:1. Maintainability of the application:The primary issue is whether the application filed by the Reserve Bank of India (RBI) to recall the order dated October 13, 2009, is maintainable. The RBI, acting as the Regulatory Authority for Non-Banking Financial Companies (NBFCs), sought to recall the order and take appropriate legal action against CFL Capital Financial Services Ltd. for failing to repay fixed deposits as per the re-scheduled plan.The court noted that there is no provision for reviewing its own orders under the Company Law Board Regulations, 1991, as the review provision was deleted in 1992. Although inherent powers analogous to section 151 of the Code of Civil Procedure, 1908, exist, these can only be invoked to prevent abuse of process or to achieve the ends of justice. The court emphasized that inherent power cannot be used to nullify other provisions of the Act when specific provisions for appeal and setting aside orders exist.The court referenced the Supreme Court's ruling in Indian Bank v. Satyam Fibres (India) (P.) Ltd. [1998] 92 Comp. Cas. 149, which stated that inherent powers can be used to recall orders obtained by fraud on the court. However, in this case, the court found no evidence of fraud or abuse of process. The RBI had been given opportunities to object to extensions but did not raise objections or file an appeal under section 10F of the Companies Act, 1956.The court concluded that the application for recall is not maintainable because the proper recourse would have been to file an appeal or a set-aside petition, not to seek a recall under regulations 43, 44, and 48 of the Company Law Board Regulations, 1991.2. Entitlement of the applicant to the reliefs sought:Since the application was deemed not maintainable, the question of whether the RBI is entitled to the reliefs sought was not discussed in detail. The court noted that discussing this point would essentially scrutinize the impugned order, which is beyond the scope given the application's lack of maintainability.Conclusion:The court held that it has no authority to review its own order unless fraud upon the court is demonstrated. Consequently, the RBI's application was dismissed on grounds of non-maintainability. The demur application filed by the first respondent was also closed since the main application had been disposed of on merits.