2019 (11) TMI 965 - HC - Companies Law

CLB exceeded authority in review; Appeal successful due to unjustified delay and lack of evidence.

The court held that the Company Law Board (CLB) exceeded its authority by using inherent powers to review its orders, as the power of review was not ... Inherent powers of a tribunal - power to review or recall own orders - condonation of delay - finality of orders - forfeiture of right to file rejoinder - abuse of process - fraud or collusion vitiating proceedingsPower to review or recall own orders - inherent powers of a tribunal - finality of orders - Whether the Company Law Board could invoke its inherent power under Regulation 44 to review or recall its earlier orders after Regulation 27 (which conferred review) was omitted - HELD THAT: - The Court held that the Company Law Board Regulations, 1991 constitute a complete procedural code and that the specific power of review, previously contained in Regulation 27, was omitted by the 1992 amendment. A tribunal acting under statutory authority cannot exercise a power unless conferred by statute or regulation. The inherent jurisdiction under Regulation 44 is to be exercised only when no other remedy is available and cannot be used to import a statutory power of review which the legislature deliberately removed. Consequently, once an order has attained finality under the regulatory scheme, change or variation of that order is not permissible by invoking Regulation 44; the aggrieved party's proper recourse is to the appellate forum. [Paras 22, 23, 26, 27, 28]The Board could not lawfully exercise Regulation 44 to review its earlier orders in place of the omitted Regulation 27; the exercise of such power was impermissible and contrary to the regulatory scheme.Condonation of delay - forfeiture of right to file rejoinder - fraud or collusion vitiating proceedings - abuse of process - Whether the Board's invocation of inherent power was justified on the record facts (non-receipt of order, incomplete inspection, or use of forged/fabricated documents) so as to condone delay and permit filing of rejoinder - HELD THAT: - On the facts the Court found no contemporaneous objection by the respondent about lack of inspection or non-supply of certified copies during the extended period when inspection and copies could have been sought, and counsel for the respondent had appeared on the relevant dates. There was therefore no satisfactory pleading or material before the Board to justify reopening orders on the ground that they were founded on fabricated or forged documents. The Bench's observations that the earlier orders were based on misleading statements and fraud were against the record and unsustainable. The factual basis advanced to condone delay and recall the orders did not meet the high threshold (such as patent lack of jurisdiction, fraud, or similar grounds) required to reopen finalized proceedings. [Paras 15, 17, 18, 19, 20]The Board's exercise of inherent power to condone delay and recall its orders on the stated factual grounds was unjustified and unsustainable on the record.Final Conclusion: The appeal is allowed; the impugned order of the Company Law Board dated 16.08.2012 is set aside. The Company Law Board could not invoke Regulation 44 to effect a review/recall in substitution for the statutory review power omitted from the Regulations, and the Board's factual justifications for reopening its orders were held to be unsupported by the record. Issues Involved:1. Review Power of Company Law Board under Regulations 43 and 44.2. Condonation of Delay in Filing Rejoinder.3. Allegations of Misleading Statements and Fabricated Documents.Detailed Analysis:1. Review Power of Company Law Board under Regulations 43 and 44:The appellants challenged the Company Law Board's (CLB) authority to review its own orders, arguing that such power was not explicitly conferred by the regulations. The appellants contended that the omission of Regulation 27, which previously allowed for review, indicated a deliberate legislative intent to remove this power. The court noted that inherent powers under Regulation 44 could not substitute for the explicitly omitted review power. The inherent powers are meant to ensure justice and prevent abuse of process but cannot be used to reintroduce a power that was specifically removed. The court cited Supreme Court rulings, emphasizing that review power must be conferred by law and cannot be assumed.2. Condonation of Delay in Filing Rejoinder:The respondents filed an application for condonation of delay, claiming they were not provided with complete inspection and certified copies of documents, which caused the delay in filing the rejoinder. The CLB initially granted multiple extensions, emphasizing the importance of timely filings. Despite this, the respondents failed to file the rejoinder within the stipulated time, leading to the forfeiture of their right to file. The court found that the respondents had multiple opportunities and were aware of the deadlines, making their delay unjustifiable. The court highlighted that the respondents did not raise any objections about the inspection or document copies during the relevant hearings, undermining their claims.3. Allegations of Misleading Statements and Fabricated Documents:The respondents alleged that the CLB's earlier orders were based on misleading statements and fabricated documents by the appellants. The court examined the timeline and found no evidence supporting these allegations. The respondents did not raise these issues during earlier proceedings, and there was no application for condonation or extension of time based on such grounds. The court concluded that the CLB's decision to review its orders based on these allegations was against the record and unsustainable.Conclusion:The court determined that the CLB overstepped its authority by invoking inherent powers to review its orders, as the power of review was specifically omitted from the regulations. The respondents' delay in filing the rejoinder was not justified, and there was no substantial evidence of misleading statements or fabricated documents. Consequently, the appeal was allowed, and the CLB's order was set aside.