TaxTMI 
TaxTMI 
TaxTMI 
2012 (5) TMI 92
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...., particularly since the petition had been heard out before a previous chairman of the CLB who demitted office without delivering the judgment thereon. The appellants express their anguish at being debarred from urging their case on merits on the twin grounds that they did not meet the statutory qualification for maintaining the petition and that the proceedings were in abuse of process. They complain that upon the petition having previously progressed to final hearing - which was completed - it was no longer open to the CLB to slam the door on them for their not being able to demonstrate their collective share-holding strength in the first respondent company being in excess of the threshold mark of 10 per cent of its paid-up capital. The appellants insist that even if they were to fail on such score it had to be on a more protracted assessment of their entitlement in the share-holding of the company since they had asserted in the petition that they had the statutory requisite holding. The appellants contend that once a statement was made in the petition asserting the requisite percentage of share-holding in the company, the petition could no longer be rejected out of hand on a poi....
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.... proceedings under Sections 397 and 398 of the Act was that the Kala group had wrongfully wrested control of the shares in the company, caused the illegal transfer thereof from the names of the appellants and their associates to the respondents' names and engineered the ostensible alienation of the only valuable asset of the company, its paper mill. The paper mill is said to have been sold to the respondent No.25 in the CLB proceedings; such transferee was claimed to be under the exclusive control of the Kala group. 6. In March, 2004 the appellants or one of them or their associate or associates instituted a suit, CS No.37 of 2004, on the Original Side of this Court complaining of the Kala group having stolen some shares belonging to the Godha group and wrongfully causing the transfer thereof in the Kala group's favour for the purpose of usurping control of the company. On an interlocutory application at the initial stage of the suit, ad interim orders were refused to the plaintiffs. An appeal was filed from the relevant order but the same was ultimately not pursued and withdrawn. CS No.37 of 2004 has since been unconditionally withdrawn on March 5, 2008. But a lot transpired betw....
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....he claimant in the proceedings was not jeopardised by the sale of the respondent company's assets in the interregnum and since the basis for such injunction was rendered redundant upon the claim being satisfied, the tribunal was not called upon to go into the violation of its order at the behest of a guarantor in the transaction who had not contributed to the settlement of the claim. 10. In the proceedings arising out of the insurance claim, the NCDRC passed an order on July 27, 2010 which is also of some relevance in the context of the order impugned. The NCDRC found that the company was entitled to a sum of Rs. 5 crore in respect of the insurance claim following the fire at its factory. Since there were disputes between the Godha and the Kala groups as to the right to control the company and, consequently, the right to receive such substantial payment, both sets of parties sought to establish the authority to receive the payment on the company's behalf before the NCDRC. It was in such context that the order dated July 27, 2010 was rendered where the commission directed that the insurance amount payable to the company should be kept with the CLB "so that its utilization is insure....
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....nsidering the various arguments raised by the parties, we are of the view that the change of management from the Godha Group to Ashok Kala Group and subsequently M/s. Uniglobal Papers (P.) Ltd. without the permission of the BIFR cannot be recognised and is not binding on the BIFR. The question of transfer of shares is already pending before the CLB, subsequent transfer of property in favour of M/s. Uniglobal (P.) Limited after change of management is also not binding on the BIFR. Consequently, the BIFR can only recognise the management of Godha Group which existed at the time of filing of the reference and formulation of the DRS before the change of management of UPML to Ashok Kala Group and therefore, we are of the view that the management and possession of assets of the UPML should be restored to Godha Group. The amount of Rs. 50 lakhs deposited by the Godha Group in an NLA account with OA is to be utilised for the revival of the company and if not, the same shall be refunded to them. We have also observed that the dismissal of reference is not proper after the declaration of the company as a sick industrial company in terms of Section 3(1)(o) of SICA. The reference cannot be de-....
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....but also in the manner in which such order has been given a twist by the CLB in the judgment and order under appeal: "18. Since the proceedings before the Company Law Board are still pending it will be open to the parties to prove (before) the Company Law Board and upon conclusion of such proceedings to move the learned Single Judge for final hearing of the writ petition. "19. For the reasons aforesaid, we do not find any merit in this appeal. The appeal is, therefore, dismissed. "20. It is clarified we may not be treated to have expressed any opinion on the controversies which are the subject matter of proceedings before the Company Law Board. Neither this judgment nor pendency of the writ petition before the learned Single Judge shall preclude the Company Law Board from hearing and deciding C.P. No.201 of 2007." 15. It is, thus, evident that the NCDRC did not address the question of which of the two groups was entitled to be in the management of the company or entitled to receive the insurance claim since it noticed that the issue was pending before the CLB. In any event, the ordinary scope of the jurisdiction exercised by the NCDRC would not have permitted it to address the ....
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....ication in the nature of demurrer seeking dismissal of the petition without the merits thereof being looked into. In the words of the CLB in the opening paragraph of the impugned judgment, such application was founded "on the principles of O.VII Rule 11 of the CPC, res judicata, constructive res judicata, estoppel, acquiescence, O.II Rule 2 of the CPC, suppression of material facts etc." The CLB recognised that such matters as had been referred to by it in its description of the demurrer application, including matters as to estoppel, acquiescence and suppression of material facts, could be taken up and dealt with without any assessment of facts or any investigation into the allegations levelled in the petition before it. The appellants say that in the very approach adopted by the CLB, it is evident that it failed to appreciate the scope of the application or the tools that were necessary for the assessment thereof. The appellants insist that the judgment impugned is perverse in its every sentence and betrays an abject inability on the part of the relevant member of the CLB in adjudicating a matter of the particular type. 18. One further matter needs to be referred to before return....
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....nt rendered by the same member that had been set aside by the Delhi High Court in appeal have been verbatim pasted on a matter of law and included as part of the impugned judgment. 21. In the first 16 paragraphs of the impugned judgment, the CLB has noticed the genesis of the disputes between the parties and the tussle over the control of the company and the spilling over of such fight in the different jurisdictions that has already been referred to hereinabove. Paragraphs 17 to 27 of the impugned order deal with the submissions of the parties and appear to bear a close resemblance to the written submissions filed by the two sets of parties that have been disclosed in the present appeal. The judicial or quasi-judicial exercise in the judgment begins in right earnest only from paragraph 28 thereof. But before referring to paragraphs 28 to 31 of the impugned judgment, it must be mentioned that most of paragraphs 32 to 34 of the impugned judgment appear to have been physically lifted - the copy and paste disease - from a previous decision of the same member of the CLB in a judgment rendered on November 24, 2010 in Chiranjit Khanna v. Khanna Paper Mills Limited, CP No.61 of 2007. Such....
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....no quarrel as to what the ingredients of res judicata and issue estoppel as explained in detail in the case of Mc Lkenney (supra) are, and as to what constitutes constructive res judicata and what needs to be seen for applicability of Order VII Rule 11, and Order II Rule 2 of the CPC. On the Touchstone of these principles, when the facts of the instant C.P. as argued, are tested, it is found that the Applicant's contention that the three issues raised in the C.P. as per the pleadings and the reliefs sought pertain to transfer of shareholding, change of management and sale of assets, which issues have been raised, pleadings considered and reliefs dealt with in the Judgment and Order dated 14.01.2010 by Hon'ble AAIFR in Appeal No. 190 of 2008 read with orders passed by Hon'ble Calcutta High Court, affirmed till the Hon'ble Supreme Court of India and Hon'ble Delhi High Court remains uncontroverted. DRT's Judgment and Order dated 30.11.2006 dismissing an application on behalf of P-1, seeking restraint orders on sale of assets has attained finality as no appeal was preferred against that order. NCDRC's Judgment and Orders have been upheld till Hon'ble Supreme Court. What the Respondents....
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....in W.P. 3085/10, an appeal from that order had been dismissed by Double Bench on 2.3.2010. Principles of res judicata, constructive res judicata and issue estoppel apply. "29. It has been rightly contended by the Applicant Company that the petitioners are pursuing parallel proceedings, the respondents/petitioners are guilty of forum shopping by filing multiple petitions before different for a based on the same cause of action. These proceedings are being actively pursued by the Respondents/Petitioners. The present Petition is, therefore, hit by Res-judicata and also by the "Doctrine of Comity of Judgments" that is likely to result in conflicting decision by the independent judicial authorities. Civil Suit No. 113 of 2007 wherein sale of assets has been challenged is hit by the principles of O.II Rule 2 of the CPC. Suit was got restored on 23.7.2010, pursuing the matter before the Hon'ble High Court abandoning the cause of action before the CLB. In this matter the doctrine of Election applies as the petitioners have already made their election of fora. The "doctrine of election" is a branch of "rule of estoppel", in terms whereof a person may be precluded by his actions or conduct ....
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....ious proceedings, the nature of the parties involved in the previous proceedings and like matters. Apart from the fact that nothing has been decided in the two suits instituted by the appellants before this Court or in the NCDRC order requiring the money to be transmitted to the CLB or in the AAIFR order as it stands modified today by the March 2, 2010 judgment of a Division Bench of this Court or the DRT proceedings, on the face of the relevant orders, it is equally uncomplicated to appreciate that the issues that arose upon the allegations made in the company petition before the CLB and the denial thereof could not have been adjudicated upon by any of the other fora in the previously instituted - and some not concluded - proceedings where the two groups of parties were, among others, either parties or had been heard. The impugned judgment does not reveal that any effort was expended by the CLB in assessing the applicability of the principles or the maxims. There is only an omnibus subjective satisfcation recorded that it was the opinion or the perception of the member of the CLB that one or more of the doctrines or principles referred to in the judgment would be applicable and th....
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.... of proceedings are required to be looked into and, thereafter, a conclusion drawn as to whether a decision on the one would render meaningless the continuation of the other. There is no attempt at such assessment by the CLB in the impugned order. In the middle of some other matter and some other context a line surfaces in the impugned judgment with all the profundity that the CLB could muster that the several proceedings were parallel proceedings. There is nothing before and little else later to justify the conclusion that the two suits instituted in this Court and the petition before the CLB were parallel proceedings. Assuming that the two suits filed by the appellants in this Court and the CLB petition were parallel proceedings, it mattered little in the context. No decision - far less any final pronouncement - had been rendered on the merits or otherwise in the two suits. The principle embodied in Order II Rule 2 of the Code would not apply since the scope of the several proceedings were dissimilar; yet the CLB found the proceedings to be parallel and non-suited the appellants. 27. There is a further line at the end of paragraph 28 of the impugned judgment that reflects the CL....
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....urpation of control of the company by the Kala group. But the scope of a suit and of similar allegations carried by way of a petition under Sections 397 and 398 are so utterly different that it is insulting for a High Court to enlist them in an appeal from an order passed by the CLB under Section 10F of the Act. The extent of the authority of the CLB qua the company which is the subject-matter of the proceedings under Sections 397 and 398 of the Act is more expansive than the jurisdiction of a civil court in a suit. In proceedings under Sections 397 and 398 of the Act, the interest of the company is paramount; illegal steps taken in the interest of the company may be condoned and the exercise of legal rights is subject to equitable considerations. There are judgments legion on such aspect and only two - those reported at AIR 1965 Guj 96 and AIR 1982 Cal 94 - need be mentioned in such context. 29. The several proceedings that the CLB noticed as being parallel to the one that was launched before its were, in fact, of different and varying imports and certainly not of similar or identical scope as that of the matter pending before the CLB. The orders passed in the proceedings before ....
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.... CLB had noticed the submission on behalf of the appellants that the question of the maintainability of the proceedings under Section 399 had, per force, to be considered only on the basis of the averments in the petition. The opening paragraph of the impugned judgment records that only the demurrer application had been taken up and not the main petition. In such circumstances, the only relevant material that ought to have weighed with the CLB in course of the demurrer application was whether the petitioners had asserted in the petition that they had the requisite qualification under Section 399 of the Act. Of course, if such assertion was demonstrably false on any legal premise, the CLB was well within its authority to treat it as a point of demurrer. If, however, there was the slightest assessment necessary on facts, the matter ought to have been postponed for adjudication on merits and was incapable of being considered as part of a plea of demurrer. It does not appear from paragraph 31 of the impugned judgment that such considerations crossed the mind of the relevant member. It must also be remembered, in the context, that paragraphs 32 to 34 which appear to deal with the legal ....
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....the petitioners before the CLB had the requisite numerical qualification under Section 399 of the Act, the CLB felt that a composite claim for rectification of the share register and oppression and mismanagement should not have been made and permitted the appellants to carry their grievance as to their shares being stolen by the other group by way of a fresh petition for such purpose. If, according to the CLB, the issues that arose or were likely to arise in the company petition had already been conclusively decided in previous proceedings for the principles of res judicata or constructive res judicata or issue estoppel to apply, it flies in the face of reason and logic that the CLB would still grant permission or leave to the petitioners before it to resurrect a matter that had already been previously concluded against them. 37. The impugned judgment betrays a total non-application of mind and worse. The CLB was not aware of the tools that were available to it or the tools that were necessary for the assessment. Both the method and methodology appear to be awry. It is here that the larger question indicated in the opening paragraph of this judgment arises. Many eminent lawyers ha....