TaxTMI 
TaxTMI 
2019 (9) TMI 535
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....a Company incorporated under Section 25 of the Companies Act, 1956. The Company was primarily incorporated to aid, and further the work of the Church of South India in those parts of India where the Church of South India may function and for that purpose to do and carry out or assist in doing or carrying out all such matters and things as are likely to promote the objects of such Church and in particular assist pecuniarily or otherwise all or any of the societies, hostels, Tribunaling houses, hospitals, dispensaries, industries, homes refugees and other charities now existing are to be started in future in connection with the Church. (ii) Respondents herein approached the National Company Law Tribunal, by filing a petition, under Section 241 of the Companies Act, 2013, alleging several acts of operation and mis-management, on the part of the revision petitioner herein. In short, the allegations in brief are:- (i). The Managing Committee is acting clandestinely, and is acting against the interest of the stakeholders. (ii). Large number of financial frauds are happening in the Company. (iii). Assets worth crores of rupees meant only for the poor be....
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.... the Office bearers and appointed Hon'ble Mr.Justice C.T.Selvam, as the Chairman of the Company. 3. Material on record discloses that since the Hon'ble Mr.Justice C.T.Selvam, has not yet retired, some other retired Judge of the High Court has been nominated to look after the affairs of the Company. It is this order, which is challenged in the revision petition. 4. This Court, by an order, dated 28/11/2016, granted interim stay of the operation of the impugned order, subject to the condition that revision petitioner, and others in Management of the Company, shall not assign, alienate or encumber any of the properties of the Company, in any manner until further orders. 5. Mr.A.L.Somayaji, learned Senior Counsel appearing for the first respondent has raised a preliminary objection stating that the present petition under Article 227 of the Constitution of India is not maintainable in view of the appellate remedy provided under Section 421 of the Companies Act 2013. It is submitted that an appeal is provided under Section 421 of the Companies Act against any order of the National Company Law Tribunal to the National Company Law Appellate Tribunal. 6. Section 421 of t....
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....thority assumes jurisdiction, when there is a complete absence of it, and passes such orders which are incapable of being reversed, then the High Court as a Court of superintendence must step in to remedy the error. 9. Learned Senior Counsel would place heavy reliance, on SURYA DEV RAI Vs. RAM CHANDER RAI AND OTHERS {2003 (6) SCC 675}, wherein at paragraph Nos.38 and 39, it has been observed as under:- "38. Such like matters frequently arise before the High Courts. We sum up our conclusions in a nutshell, even at the risk of repetition and state the same as hereunder:- (1) Amendment by Act No.46 of 1999 with effect from 01.07.2002 in Section 115 of Code of Civil Procedure cannot and does not affect in any manner the jurisdiction of the High Court under Articles 226 and 227 of the Constitution. (2) Interlocutory orders, passed by the courts subordinate to the High Court, against which remedy of revision has been excluded by the CPC Amendment Act No. 46 of 1999 are nevertheless open to challenge in, and continue to be subject to, certiorari and supervisory jurisdiction of the High Court. (3) Certiorari, under Article 226 of the Constitution, is ....
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.... an appeal or revision preferred there against and entertaining a petition invoking certiorari or supervisory jurisdiction of High Court would obstruct the smooth flow and/or early disposal of the suit or proceedings. The High Court may feel inclined to intervene where the error is such, as, if not corrected at that very moment, may become incapable of correction at a later stage and refusal to intervene would result in travesty of justice or where such refusal itself would result in prolonging of the lis. (emphasis supplied). (8) The High Court in exercise of certiorari or supervisory jurisdiction will not covert itself into a Court of Appeal and indulge in re-appreciation or evaluation of evidence or correct errors in drawing inferences or correct errors of mere formal or technical character. (9) In practice, the parameters for exercising jurisdiction to issue a writ of certiorari and those calling for exercise of supervisory jurisdiction are almost similar and the width of jurisdiction exercised by the High Courts in India unlike English courts has almost obliterated the distinction between the two jurisdictions. While exercising jurisdiction to issue ....
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....a Company having a share capital, not less than one hundred members of the Company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than onetenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b). in the case of a company not having a share capital, not less than one-fifth of the total number of its members: Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under Section 241." 11. According to the learned Senior Counsel, none of the applicants are not members of the revision petitions and are therefore, cannot maintain a petition. He would rely on Article 4 and 5 of the Articles of Association, which defines the members. 4. The first members of Association shall be: 1. The Venerable Archdeacon J. White The Venerable Archdeacon J. White 2. Mr.L.D.Miller Mr.L.D.Miller 3 Mr.C.J.Lucas ....
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....o maintain the application. In the absence of even one member the Company petition is not maintainable. 14. He would further submit that the Tribunal has exercised its jurisdiction which is not vested in it at all, in as much it has entertained an application which is not maintainable and further, it has gone ahead and while considering an application for maintainability of the petition has passed interim orders by removing all the Directors of the Company and further, appointing a retired Judge to take over the Company. He would further submit that the High Court has jurisdiction to entertain in such matters where the authority has over stepped or crossed the lines of jurisdiction and has acted in flagrant disregard of law or the rules of procedure and the exercise of jurisdiction has resulted in failure of justice and grave injustice has been caused to the Company. 15. The National Company Law Tribunal and the National Company Law Appellate Tribunal were created under the Companies Act, 2013. They are specialised bodies which have been created to adjudicate upon the disputes arising under the Companies Act and the Insolvency and Bankruptcy Code. When an identical issue aros....
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....er of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by parliamentary legislation-L. Chandra Kumar v. Union of India [(1997) 3 SCC 261 : 1997 SCC (L&S) 577] . However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order passed by or action taken by the State and/or its agency/instrumentality or any public authority or order passed by a quasi-judicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 12. In Thansingh Nathmal v. Supdt. of Taxes [AIR 1964 SC 14....
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....and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine." 14. In Mafatlal Industries Ltd. v. Union of India [(1997) 5 SCC 536] B.P. Jeevan Reddy, J. (speaking for the majority of the larger Bench) observed: (SCC p. 607, para 77) "77. ... So far as the jurisdiction of the High Court under Article 226-or for that matter, the jurisdiction of this Court under Article 32-is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment." 15. In the judgments relied upon by Shri Vaidyanathan, which, by and large, reiterate the proposition laid down in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad [AIR 1969 SC 556] , it has been held that an alternative remedy is not a bar to the entertaining of writ petition filed for the enforcement of any of the fundamental rights ....
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.... Suri, that the words 'in derogation of the provisions of any other law for the time being in force' would be given proper meaning and effect and if the complaint is not stayed and the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act. Prima facie, the contention appears to be plausible but on construction and conspectus of the provisions of the Act we think that the contention is not well founded. Parliament is aware of the provisions of the Arbitration Act and the Contract Act, 1872 and the consequential remedy available under Section 9 of the Code of Civil Procedure i.e. to avail of right of civil action in a competent court of civil jurisdiction. Nonetheless, the Act provides the additional remedy." 17. Similarly, the Hon'ble Supreme Court in Commissioner of Income Tax and Others Vs. Chhabil Dass Agarwal {(2014) 1 Supreme Court Cases 603}, has observed as under:- "11. Before discussing the fact proposition, we would notice the principle of law as laid down by this Court. It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an ef....
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....harashtra, (2001) 8 SCC 509; Pratap Singh vs. State of Haryana, (2002) 7 SCC 484 and GKN Driveshafts (India) Ltd. vs. ITO, (2003) 1 SCC 72). 13. In Nivedita Sharma vs. Cellular Operators Assn. of India, (2011) 14 SCC 337, this Court has held that where hierarchy of appeals is provided by the statute, party must exhaust the statutory remedies before resorting to writ jurisdiction for relief and observed as follows: "12. In Thansingh Nathmal v. Supdt. of Taxes, AIR 1964 SC 1419 this Court adverted to the rule of self-imposed restraint that the writ petition will not be entertained if an effective remedy is available to the aggrieved person and observed: (AIR p. 1423, para 7). "7. ... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by enterta....
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.... with the provisions of the enactment." (See: G. Veerappa Pillai v. Raman & Raman Ltd., AIR 1952 SC 192; CCE v. Dunlop India Ltd., (1985) 1 SCC 260; Ramendra Kishore Biswas v. State of Tripura, (1999) 1 SCC 472; Shivgonda Anna Patil v. State of Maharashtra, (1999) 3 SCC 5; C.A. Abraham v. ITO, (1961) 2 SCR 765; Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433; H.B. Gandhi v. Gopi Nath and Sons, 1992 Supp (2) SCC 312; Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1; Tin Plate Co. of India Ltd. v. State of Bihar, (1998) 8 SCC 272; Sheela Devi v. Jaspal Singh, (1999) 1 SCC 209 and Punjab National Bank v. O.C. Krishnan, (2001) 6 SCC 569) 14. In Union of India vs. Guwahati Carbon Ltd., (2012) 11 SCC 651, this Court has reiterated the aforesaid principle and observed: "8. Before we discuss the correctness of the impugned order, we intend to remind ourselves the observations made by this Court in Munshi Ram v. Municipal Committee, Chheharta, (1979) 3 SCC 83. In the said decision, this Court was pleased to observe that: (SCC p. 88, para 23). "23. ... when a revenue statute provides for a person aggrieved by an assessment thereunder,....
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....ame, we are of the considered opinion that the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the re-assessment orders passed and the consequential demand notices issued thereon." 18. In Miss MANECK GUSTEDJI BURJARJI VS. SARFAZALI NAWABALI MIRZA {(1997) 1 SUPREME COURT CASES 227}, the Hon'ble Supreme Court observed as under:- "6. It is very difficult to appreciate the reasoning behind the order made by the High Court. It is to say the least an extraordinary order which flies in the face of law and judicial procedure. The respondent had clearly a legal remedy available to him by way of an appeal against the decree of the City Civil Court and this remedy was not only adequate but more comprehensive than the one under Article 227of the Constitution. Even so, for some inexplicable reasons, the respondent chose to prefer a Special Civil Application under Article 227 of the Constitution and Vaidya, J., entertained the Special Civil Application and granted relief to the respondent casting to the winds the well-settled principle ....
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....se Court and such decision having been brought up before him in appeal or revision, enter upon a consideration of this question and pronounce upon it. The order passed by the learned Judge was clearly erroneous and it must be quashed and set aside and the Special Civil Application must be dismissed. We may make it clear that whenever the Small Cause Court hears the suit it will not take into account any observations made by the learned Judge in the impugned judgment in regard to the question whether the decision of the City Civil Court is binding or not and it will proceed to decide the suit before it in the light of what it considers to be the correct legal position." 19. In PUNJAB NATIONAL BANK Vs. O.C.KRISHNAN & OTHERS {(2001) 6 SUPREME COURT CASES 569}, while dealing with a petition under 227 of the Constitution of India against the order of the Debts Recovery Tribunal, the Hon'ble Supreme Court, observed as under:- "4. The respondent who was a guarantor and whose property was stated to have been mortgaged filed a petition under Article 227 before the High Court at Calcutta. The High Court allowed the petition by observing that as the mortgaged property was situ....
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....igh Court has powers under Article 227 of the Constitution of India to entertain petitions where Courts and Tribunals under the jurisdiction of the High Court have acted in a manner which has resulted in abuse of process of law or where the facts are so gross that if the High Court does not entertain the petition, then it will result in such an injury which cannot be rectified. The learned counsel for the petitioner relied on a Division Bench of this Court in AGD Private Limited, rep. By its Director, Mr.N.Vijaykumar, Coimbatore Vs. Registrar of Companies, Ministry of Corporate Affairs, Coimbatore 641 005 (C.R.P (NPD) No.1476 of 2018, dated 1/10/2018), which arose from proceedings from the National Company Law Tribunal. This Court has observed as under:- "24. The prayer is to set aside the order made in C.P.No.178 of 2017, dated 09.01.2018. True that there is an alternative remedy under the NCLT Act, 2013, to prefer an appeal to the Tribunal. But when the error is apparent on the face of record, we are of the view that exercise of power under 227 of the Constitution of India is not ousted. Order dated 09.01.2018 has been made on the submission of the petitioner th....
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....s if no consequence. In the event when the order is void, non-est, relegating a person to avail alternative remedy would result in palpable injustice. In that sense, in the decision reported in the case of Municipal Council v. Kamal Kumar (AIR 1965 SC 1321), the Apex Court has held that the High Court could retain the discretion to interfere in proper cases, even in the case when the impugned order is ultra vires." 27. In Shalini Shyam Shetty and another vs. Rajendra Shankar Patil, reported in (2010) 8 SCC 329, the Hon'ble Supreme Court explained the difference between the scope and exercise of power under Article 226 or 227 of the Constitution of India. 28. Apparently, when there is no order under Sub Section (6) of Section 248 of the Companies Act, 2013, the question is whether the steps taken by the petitioner under Section 252(3), for the reliefs prayed for, have any legs to stand? In such circumstances, whether this Court can strike off the proceedings initiated by the petitioner? or on the facts and circumstances, exercise of its supervisory jurisdiction, mould the relief prayed for and pass appropriate orders. Let us consider few decisions on the power ....
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..... The court must have regard for all the relief and look at the substance of the matter and not its forms. It is equally settled law that grant of declaring relief is always one of discretion and the court is not bound to grant the relief merely because it is lawful to do so. Based on the facts and circumstances the court may on sound and reasonable judicial principles grant such declaration as the facts and circumstances may so warrant. Exercise of discretion is not arbitrary. If the relief asked for is as of right. something is included in his cause of action and if he establishes his cause of action, the court perhaps has been left with no discretion to refuse the same, But when it is not as of right, then it is one of the exercise of discretion by the court. In that event the court may in given circumstances grant which includes 'may refuse' the relief. It is one of exercising judicious discretion by the court. Same consideration would apply to the causes under the Act and the Tribunal has such discretion. The Tribunal, while keeping justice, equity and good conscience at the back of its mind, may when compelling equities of the case oblige them, shape the relief consis....
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....to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to the matter that he has to consider. If he does not obey those rules, he may truly be said to be acting unreasonably." 29. In the case on hand, on the premise that there is an order, striking off the company from the register of companies, the petitioner has filed an application under Section 252(3) of the Companies Act, 2013, and orders have been passed in C.P.No.178 of 2017, dated 09.01.2018, which is impugned in this revision petition. But this Court on perusal of files, has found that there is no order under Section 246(6) of the Act, at all. By inadvertence the petitioner company, was of the view that, there was an order under Section 248(6), of the Companies Act, 2013, and proceeded further whether this Court is denuded of the power under Article 227 of the Constitution of India, to ignore the fundamental error committed by the Registrar of Companies, and direct the petitioner to avail the alternate remedy under Section 252(3) of the Companies Act, 2013, which admittedly, not availed by the petitioner, on the premise that there was an order under Sectio....