2020 (9) TMI 81 - HC - Companies Law

Court dismisses review petition challenging Companies Act interpretation on secured creditors' preferential claims under Section 529A. No error found. Refusal to entertain without new evidence. Failure to join necessary parties leads to dismissal.

IFCI LIMITED & OTHERS Versus M/s HIM ISPAT LTD. & OTHERS

IFCI LIMITED & OTHERS Versus M/s HIM ISPAT LTD. & OTHERS - TMI Issues: Review of judgment interpreting provisions of law under Companies Act, 1956 - Preferential claims of secured creditors under Section 529A - Error apparent on the face of record - Entertaining a review petition - Joining necessary party in the petition1. Interpretation of provisions of law under Companies Act, 1956:The review petition was filed challenging a judgment dated 06.03.2020, asserting that the Court did not interpret the relevant provisions of law contained in Section 529A read with Section 529 of the Companies Act, 1956, in the context of the matter. The petitioners contended that observations made in the impugned judgment raised concerns regarding the rights of the petitioners under Section 529A of the Act. They argued that the discussion around the provisions of law in the judgment did not construe the legislative intent accurately. The petitioners, being secured creditors, claimed that their rightful preferential claim could not be ignored, especially concerning the sale proceeds from assets mortgaged by the Company. They believed that the application of Section 529A should give first charge to them, and allowing the full claim of workmen would lead to significant financial losses to the petitioners.2. Error apparent on the face of record:The grounds for reviewing the judgment did not disclose any new or crucial evidence or facts that were not known to the petitioners during the hearing. The Court noted that the petitioners were attempting to re-argue points that had already been decided, emphasizing that the review petition could not be used to re-agitate issues already settled. It was highlighted that even if two views were possible on an issue, it did not warrant a review if the judgment was rendered after considering relevant legal provisions and apex court pronouncements. The Court emphasized that a decision not accepting a party's plea, but made after considering all facts and applicable laws, could not be deemed to have an apparent error on the face of the record.3. Entertaining a review petition:The Court found no grounds for entertaining the review petition, stating that there was no error in interpreting the relevant provisions of law or appreciating apex court pronouncements. Even if the plea of the petitioners regarding an incorrect interpretation of the law was accepted, the Court held that such error could not be considered self-evident and required a detailed reasoning process to detect. The judgment highlighted that a mere possibility of an alternative view based on the material on record was not sufficient to review a decision.4. Joining necessary party in the petition:The petition raised doubts about calculations and findings concerning the share of workmen under Section 529A of the Act. However, the workmen were not included as parties in the review petition, and neither were they provided a copy of the petition. Due to the failure to join the necessary party in the petition, the Court held that the petition was liable to be dismissed for this reason as well.In conclusion, the Court dismissed the review petition for being devoid of merit, emphasizing that the petitioners failed to establish grounds for a review based on the issues raised and the legal principles applied.