2021 (5) TMI 568 - Tri - Companies Law

Tribunal denies request to recall order, warns of costs for delays in 21-year-old case

The Tribunal rejected the Applicant's prayers to recall the ex-parte order and keep the main proceeding in abeyance. It emphasized that the matter had ... Recall of ex parte order - abeyance of main proceedings - substitution of legal representative - locus standi of legal representative - condonation of delay - qualification to file petition under sections 397/398 read with section 399 - harmonious construction of statute and rulesRecall of ex parte order - abeyance of main proceedings - substitution of legal representative - locus standi of legal representative - condonation of delay - IA No. 28 of 2020 seeking recall of the CLB order dated 08.02.2016 and interim abeyance of the main proceedings was examined and disposed of. - HELD THAT: - The Tribunal reviewed the CLB order dated 08.02.2016 which had considered and allowed the application for substitution of the legal representative (Mr. Abhay Kumar Singh) despite objections regarding delay and non-transmission of shares. The CLB had found that the applicant filed the substitution application shortly after receiving the death certificate, that the delay was minimal and adequately explained, and that there is no statutory requirement that a legal representative be a member of the company before being placed on record. Having perused the records, written submissions and the CLB's reasons, the Tribunal found no merit in the present application to recall the CLB order or to put the main petition in abeyance. The Tribunal noted that the NCLAT had directed that the parties be heard on the basis of copies of certain annexures, and that the matter has been pending for long with repeated interlocutory applications. The Tribunal therefore dismissed IA No. 28/2020 and declined to recall the CLB order or keep the main proceedings in abeyance, while warning against further frivolous delays and reserving power to take suo motu steps to protect corporate governance and justice to stakeholders. [Paras 14, 15, 18, 19]IA No. 28/2020 is rejected and disposed of; the prayer to recall the CLB order dated 08.02.2016 and to keep the main proceedings in abeyance is refused.Final Conclusion: The application for recall of the CLB's ex parte substitution order and for interim abeyance of the main Company Petition was dismissed; the Tribunal upheld the CLB's approach to substitution of legal representatives, declined to disturb that order, disposed IA No. 28/2020 with no costs and warned against further frivolous delay in the long-pending petition. Issues Involved:1. Recall of ex-parte order dated 08.02.2016 by the Company Law Board (CLB).2. Substitution of legal representative in place of deceased respondent.3. Eligibility of Shri Abhay Kumar Singh to maintain proceedings under Sections 397 and 398 of the Companies Act, 1956.Issue-wise Detailed Analysis:Issue 1: Recall of Ex-parte Order Dated 08.02.2016The Applicant sought to recall the ex-parte order dated 08.02.2016 passed by the CLB in CA No. 112/2014, which allowed the substitution of Shri Abhay Kumar Singh in place of his deceased father, Respondent No. 3. The Applicant argued that the order was passed without his presence and thus filed an application on 09.03.2016 for its recall. The Tribunal noted that the Hon'ble NCLAT had directed the NCLT, Guwahati to hear the matter based on available copies of documents, but despite several listings, the matter remained pending.Issue 2: Substitution of Legal RepresentativeThe substitution of Shri Abhay Kumar Singh was challenged on the grounds of delay and his non-membership in the company. The CLB order dated 08.02.2016 had condoned the delay in filing the substitution application, citing valid reasons such as the time taken to receive the death certificate and perform last rites. The CLB found no merit in objections regarding the delay and allowed the substitution, emphasizing that legal representatives should come on record immediately to protect their interests.Issue 3: Eligibility of Shri Abhay Kumar SinghThe Applicant contended that Shri Abhay Kumar Singh was not a member of the company as defined under Section 2(55) of the Companies Act, 2013, and thus ineligible to maintain proceedings under Sections 397 and 398. The Tribunal examined the legal provisions and precedents, including the requirement that only members can file petitions under these sections. The Tribunal found that the objections regarding Shri Abhay Kumar Singh's membership status were not sufficient to recall the CLB's order, as the primary concern was to protect the interests of legal heirs.Conclusion:The Tribunal rejected the Applicant's prayers to recall the ex-parte order and keep the main proceeding in abeyance. It emphasized that the matter had been pending for 21 years and any further delays would be met with heavy costs and penalties. The Tribunal also indicated its readiness to take suo motu cognizance of the company's affairs to ensure compliance with corporate governance guidelines and justice to stakeholders.