2012 (5) TMI 49 - HC - Companies Law

Court dismisses application due to applicant's conduct barring issue of alleged mistake in order.

Gloster Ltd., In re

The court dismissed CA No 145 of 2011, emphasizing that the applicant's conduct and the principle that a party may not approbate and reprobate precluded ... Sanction of a scheme of arrangement - whether the North Mill was transferred to the petitioner, the transferee company? - Held that:- The surrounding circumstances made it obvious that such property had passed to the applicant under the sanctioning order - The order on the request under Section 11 of the 1996 Act may then have been without prejudice to the applicant's contention that the order sanctioning the scheme was mistaken or left unaffected the applicant's right to urge such ground at a subsequent stage, only then would the present application and the plea urged by the applicant have been maintainable despite the rejection of the request under Section - once the applicant had asserted its right to the North Mill on the basis of the order sanctioning the scheme as drawn up, and failed; it was no longer open to it to claim that the order was erroneously drawn up in the North Mill not being included in the schedule thereto - a mistake of court in an order may be corrected at the instance of any person demonstrating to be prejudiced but the right of such person may not be recognized any longer if he has stood by and allowed a previous opportunity to pass when he ought to have asserted the mistake and attempted to have it rectified – against applicant. Issues Involved:1. Alleged mistake in the court's order sanctioning the scheme of arrangement.2. Transfer and vesting of the North Mill property.3. Applicability of Section 11 of the Arbitration and Conciliation Act, 1996.4. Doctrine of res judicata and issue estoppel.5. Conduct of the applicant and the principle of approbate and reprobate.Detailed Analysis:1. Alleged Mistake in the Court's Order Sanctioning the Scheme of Arrangement:The transferee company claimed that a mistake existed in the court's drawn-up order sanctioning the scheme of arrangement, which did not specifically include the North Mill property. The applicant discovered this alleged mistake following a recent order passed by the court under Section 11 of the Arbitration and Conciliation Act, 1996. The court noted that the applicant did not regard the order as mistaken during the previous proceedings and had asserted that the North Mill did pass to it based on the order sanctioning the scheme as drawn up.2. Transfer and Vesting of the North Mill Property:The scheme of arrangement sanctioned on May 31, 1993, provided for certain properties of Fort Gloster Industries Limited to be transferred to Gloster Limited. The applicant claimed that the North Mill was included in this transfer. However, the court found that the relevant schedule did not refer to the North Mill but included 'a part of the properties of the jute division.' The court concluded that only the properties mentioned in the schedule were transferred and vested in the applicant, and the North Mill was not one of them.3. Applicability of Section 11 of the Arbitration and Conciliation Act, 1996:The applicant lodged a request under Section 11 of the 1996 Act, claiming that disputes regarding the North Mill were covered by the arbitration clause in the agreement for sale dated March 24, 1988. The court's order dated December 16, 2010, declined this request, noting that the North Mill did not pass to the applicant under the scheme. The court emphasized that the applicant should have raised the issue of the alleged mistake in the order sanctioning the scheme during these proceedings.4. Doctrine of Res Judicata and Issue Estoppel:The applicant argued that the doctrine of res judicata and issue estoppel did not apply as the question of mistake had never been urged or considered. The court, however, noted that the principle of res judicata would not apply in terms to this matter based on the decision rendered in the applicant's failed request under Section 11 of the 1996 Act. The court also highlighted that the applicant's conduct in not raising the issue of the mistake earlier precluded it from doing so now.5. Conduct of the Applicant and the Principle of Approbate and Reprobate:The court held that the applicant could not approbate and reprobate by asserting in previous proceedings that it was a party to the agreement of March 24, 1988, and then later claiming that the order sanctioning the scheme was erroneously drawn up. The court emphasized that the applicant's failure to raise the issue of the alleged mistake during the Section 11 proceedings condemned its current application. The court concluded that the applicant's conduct in not asserting the mistake earlier precluded it from doing so now.Conclusion:The court dismissed CA No 145 of 2011, emphasizing that the applicant's conduct and the principle that a party may not approbate and reprobate precluded it from raising the issue of the alleged mistake in the order sanctioning the scheme. The court noted that the applicant had a previous opportunity to assert the mistake but failed to do so, and thus, the application was not maintainable. The court also highlighted that the principle of res judicata would not apply in terms to this case, but the applicant's conduct condemned its current application. There was no order as to costs.