TaxTMI 
TaxTMI 
2023 (4) TMI 72
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....t and before learned counsel, Mr. Deepak Khosla, for the applicant/intervenor started his submission, Mr Mukul Rohatgi, learned senior counsel and Mr Tushar Mehta, Ld, SG tried to persuade the Court that the application was not maintainable. However, without taking note of submission of either side this Court called for a report from the Registry as to under what circumstances the present IA which was filed for recall of a final judgement was listed under the caption for 'Orders'. The Registry was directed to examine and submit the report and application was directed to be listed on 1.3.2023 under the same caption. On 01.03.2023 we perused the report submitted by the Registry and observed not to further examine the issue of listing. On 01.03.2023 we heard Mr. Deepak Khosla, learned counsel for the applicant in present IA No.647/2023 on the point of maintainability of the application. After he concluded his submission it was replied by Mr. Tushar Mehta, learned SG appearing for the Committee of Creditors, Dr. AM Singhvi, learned senior counsel appearing for Corporate Debtor and also Mr. Mukul Rohatgi, learned senior counsel who appeared on behalf of Successful Resolution Applican....
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....nafter referred to as I&B Code) under Section 62 remedy of appeal was available to the party. The appeals preferred against the judgement dated 4.7.2019 by this Appellate Tribunal were heard by Hon'ble Supreme Court and after hearing the parties a detailed judgement was passed by Hon'ble Supreme Court on 15.11.2019 which has been reported in (2020) 8 SCC 531. (Committee of Creditors of Essar Steel India Ltd Vs Satish Kumar Gupta). By virtue of detailed judgement passed by Hon'ble Supreme Court against judgement of this Tribunal the judgement of this Tribunal had already merged with the judgement of Hon'ble Supreme Court on the basis of doctrine of merger. Though the judgement of this Appellate Tribunal which was passed on 4.7.2019 and merged with judgement of Hon'ble Supreme Court on 15.11.2019, to the reasons best known to the applicant particularly applicant No.2, who was not party in either of the earlier proceedings, has preferred the present application taking the plea of derivative right in respect of applicant No.1 i.e. SREI Infrastructure Finance Ltd. M/s SREI Infrastructure Finance Ltd and applicant No.2 have been arrayed as applicants in the present IA. M/s SREI Infrastru....
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....For that matter, the wordings of Section 340 CrPC are significant. The Court will have to act in the interest of justice on a complaint or otherwise. Assuming that the complaint may have to be made at the instance of a party having an interest in the matter, still the court can take action in the matter otherwise than on a complaint, that is, when it has received information as to a crime having been committed covered by the said provision. Therefore, it is wholly unnecessary to examine this aspect of the matter. We proceed on the basis that the respondent has locus standi to present the complaint before the Designated Judge." By way of referring to para 153 and 154 of the present application which is at page 239 and 240 he tried to persuade us that in the case of fraud there is no question of finality of litigation. We propose to reproduce statement made in para 153 and 154 of the present application as follows: "153.At the cost of reiteration, the binding words of the Hon'ble Supreme Court expressed in the case of S.P. Chengal Varaya Naidu (Dead) By Lrs, Vs. Jagannath (Dead) By Lrs. & Ors. [(1994) 1 SCC 11 are again reproduced below, which make it clear that wheth....
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....ment in which the Hon'ble Supreme Court of India specifically found fault in the approach of the Hon'ble High Court of Calcutta, which latter Court, only because an earlier order passed by it had travelled all the way up to the Hon'ble Supreme Court, refused to entertain a challenge subsequent to passing of the order by the Hon'ble Supreme Court raised before the High Court on grounds of fraud, only on the ground that its order had 'merged' in the order of the Hon'ble Supreme Court, which is a position that is identical to the present case, and which approach of the Hon'ble Court of Calcutta had been disapproved by the Hon'ble Supreme Court, being patently contrary to law." On the question of doctrine of merger it was vehemently argued by Mr. Khosla, learned counsel that once it is established that fraud was committed in a proceeding before the Appellate Tribunal and by way of suppression of fact judgement from this Tribunal was obtained, in such situation the doctrine of merger may not apply even though judgement of this Appellate Tribunal was dealt with by Hon'ble Supreme Court and decided by a detailed judgement. He has further placed reliance on a case re....
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.... 23. Again in A.V. Papayya Sastry and Ors. Vs. Government of A.P. and Ors., AIR 2007 SC 1546, this Court reviewed the law on this position and reiterated the principle. In paras 38 and 39 it was held as follows: 38. The matter can be looked at from a different angle as well. Suppose, a case is decided by a competent Court of Law after hearing the parties and an order is passed in favour of the applicant/plaintiff which is upheld by all the courts including the final Court. Let us also think of a case where this Court does not dismiss Special Leave Petition but after granting leave decides the appeal finally by recording reasons. Such order can truly be said to be a judgment to which Article 141 of the Constitution applies. Likewise, the doctrine of merger also gets attracted. All orders passed by the courts/authorities below, therefore, merge in the judgment of this Court and after such judgment, it is not open to any party to the judgment to approach any court or authority to review, recall or reconsider the order. 39. The above principle, however, is subject to exception of fraud. Once it is established that the order was obtained by a successful party by practi....
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.... 1994, had already committed breach of its obligations arising of the contracts from out of which the entire litigation arose. A fact which is greatly relevant in deciding the entitlement of the private company to seek various reliefs such as the ones sought by it before the Calcutta High Court. It is further specific allegation in the FIR such a non-disclosure/suppression of the crucial fact was wilful and deliberate pursuant to a conspiracy between all the accused to secure an illegal and wrongful monetary gain to the private company. Therefore, in our opinion the Judgment under appeal cannot be sustained. 26. Coming to the question of the scope of the jurisdiction to quash an FIR, either in the exercise of statutory jurisdiction under Section 482 of Cr.P.C. or under Article 226 of the Constitution of India, the law is well settled and this Court in a catena of decisions laid down clear principles and indicated parameters which justify the quashing of an FIR. We do not propose to catalogue all the cases where the issue was examined but notice only two of them and indicate the consistent principles laid down by this Court in this regard. 168. Therefore, the fact that the ....
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....r Rule for review or recall of a judgement save and except removing clerical or typographical error. By way of placing reliance on a judgement of this Tribunal reported in (2022) SCC Online NCLAT 402 "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma" he has specifically drawn our attention to para 6, 7 and 8 of the said judgement which are quoted hereinbelow:- "6. Rule 11 of the NCLAT Rules, 2016 reads as hereunder:- "11. Inherent Powers. - Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal." 7. It is noted that in the scheme of IBC, there is no provision for review of a final order passed by NCLAT. Section 61 in Chapter VI of IBC provides for "Appeals and Appellate Authority" wherein the grounds of filing an appeal of the order of NCLT/Adjudicating Authority are provided. Section 62 of the IBC provides for filing of appeal to Hon'ble Supreme Court on the question of law arising out of an order of NCLAT. 8. It is noted that in the matter of Agarw....
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.... one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court. 42."To merge" means to sink or disappear in something else; to become absorbed or extinguished; to be combined or be swallowed up. Merger in law is defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, but the greater is not increased; an absorption or swallowing up so as to involve a loss of identity and individuality. (See Corpus Juris Secundum, Vol. LVII, pp. 1067-1068)" He submits that once the judgement of this Tribunal has already been merged with judgement of Hon'ble Supreme Court the applicant ....
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.... so desires/advised. Looking at from that perspective, the I.A. No.265/2019 in Comp App (AT)(Ins) No.412/2019 is devoid of merits and it fails." Mr. Rohatgi, learned senior counsel has emphatically argued that even allegation of fraud committed in a proceeding in which a judgement is passed and if the said judgement has merged with the order of Hon'ble Supreme Court, applying the doctrine of merger no one is entitled to approach the Court/Tribunal whose judgement/order has been merged with the judgement of the Hon'ble Supreme Court. On this score alone it has been argued that the present application is not maintainable and is fit to be rejected. In rejoinder Mr. Khosla, learned counsel for the applicant reiterated that a judgement which is nullity cannot be merged with any judgement or order. He submits that doctrine of merger may not be applicable in an order/judgement which has been obtained by playing fraud with the Court. Even in the rejoinder he has drawn our attention to statement made in para 166 of the present application which is reproduced hereinbelow: "166. It is most respectfully submitted that when it comes to fraud played upon a Court (leading to its ju....
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....Bank as well as State Bank of India. Two cases namely CP(IB) No.39/7/NCLT/AHM/2017 and CP(IB) No.40/7/NCLT/AHM/2017 were admitted by a common order dated 2.8.2017 wherein the Adjudicating Authority recorded a finding that the application filed by the Standard Chartered Bank as well as State Bank of India were complete in all respects, for triggering the CIRP against Corporate Debtor company. It was held that Corporate Debtor had committed default in making payment of its financial debt to the financial creditors including Standard Chartered Bank and SBI. The amount of debt was quantified by the Adjudicating Authority stating inter alia that Standard Chartered Bank (SCB) had provided loan of USD 4,13,00,000 to M/s Essar Steel Offshore Limited which was disbursed on 03.01.2014. The said loan was secured as guarantee was given by the Corporate Debtor company namely M/s Essar Steel Holding India Ltd. During CIRP on 7.9.2018 the Adjudicating Authority on challenge to ineligibility of the resolution applicant as well as Numetal Limited, the judgement was passed by the Adjudicating Authority and thereafter Resolution Applicant filed a SLP before the Hon'ble Supreme Court on 10.09.2018 ass....
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.... 222. It is made clear that this decision relates to 'Corporate Insolvency Resolution Process' initiated against 'Essar Steel India Limited'. It does not relate to 'Odisha Slurry Pipeline Infrastructure Limited'. Mr. Harish Salve, learned Senior Counsel for the 'Resolution Applicant' made it clear that the 'Resolution Plan' do not relate to any outstanding debt in 'Odisha Slurry Pipeline Infrastructure Limited'. 223. Company Appeal (AT) (Insolvency) Nos. 242, 243, 266, 279, 290, 291, 292, 293, 300, 302-303, 304-305, 332-333, 337, 338, 345, 349, 361, 374, 376, 449, 454, 580 & 551 of 2019 are allowed with observations and directions as made above; Company Appeal (AT) (Insolvency) Nos. 517 & 518 of 2019 stand disposed of with liberty as given to them and Company Appeal (AT) (Insolvency) Nos. 257, 265, 375, 428, 429 & 181 of 2019 are dismissed. No costs." Again judgement of this Appellate Tribunal was assailed before the Hon'ble Supreme Court by filing number of appeals. The Hon'ble Supreme Court by a detailed judgement dated 15.11.2019 finally adjudicated the matter. The judgement of Hon'ble Supreme Court against judgement of this Appellate Tribunal is reported in....
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....Applicant No. 2: Applicant No. 2 is Ms. Limalemla Longkumer, who is a shareholder of Applicant No. 1 Co (SIFL). She is aggrieved by the fact that Applicant No. 1 Co is presently under the care of an Administrator appointed by Hon'ble National Company Law Tribunal (herein, NCLT), Kolkata at the instance of the Reserve Bank of India, and whose activities are overseen by some of the banks who are arrayed as Respondents herein, and who are also Defendants in Money Suit No. 27 of 2022. Therefore, in the opinion of the COC Members of SIFL (who control the actions of the Administrator of SIFL), it is in the interests of these banks that comprise the Committee of Creditors of SIFL that their misdeeds in the affairs of ESSAR Steels India Ltd (herein, "ESIL") and OSPIL not be exposed, neither in the present recall proceedings, nor in the contempt proceedings pending before the Hon'ble High Court of Calcutta and for Hon'ble NCLT (Ahmedabad), nor in the aforementioned Money Suit No. 27 of 2022." On admission of the applicant it is clear that the management of Applicant No.1 on the date of filing of the present application was under the control of Administrator appointed by NCLT ....
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....e Hon'ble Calcutta High Court, or to file his own proceedings, but to which no reply was received, leading to other shareholders seeking impleadment in the contempt proceedings pending before the Hon'ble Calcutta High Court by acting for and on behalf of, and in the name of SIFL, and also filing a stand-alone petition before the Hon'ble Calcutta High Court in the name of SIFL. For the ease of referral, the contents of this email are extracted and reproduced verbatim below, it is very last para being the legal justification for a shareholder to come forward by claiming derivative rights to act for, on behalf of, and in the name of the company. From: dk dandklaw.in-dka dandklaw in Sent: 09 February 2023 11:34 To: [email protected] Subject: Protecting of SIFL's interests Mr. Rajneesh Sharma Ld Administrator SREI Group of Companies arciadministratoriare.com 09-02-2023 Dear Sir, I serve upon you this representation cum request on behalf of my client, Ms. Limalemia Longkumer, who is a shareholder of SREI Infrastructure Finance Ltd (herein, "SIFL) It has come to her knowledge th....
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....ear to her that the positions taken by SMAIT are essentially executions/furtherance (or "the next steps", so to speak) of many actions that have been initiated by SIFL itself. Therefore, all these actions by SMAIT are in the interests of SIFL, and SIFL ought to join in these efforts. FMAT 1310 of 2016 is an appeal that has been filed by SIFL itself, and it is on the basis of the order dated 22-12-2016 that the NCLT. Ahmedabad Bench decided in their order dated 07-02-2018 during the insolvency resolution process of Essar Steel India Lad therein "ESIL") that the pipeline could not be treated as an asset of ESIL and was an asset of OSPIL until decided otherwise by the Sealdah Civil Court However, it is clear that such directions were not followed, thereby constituting contempt of the order of the Calcutta High Court order dated 22-12-2016. In fact, and as you are aware that SIFL had taken the pointed stand before Hon'ble NCLT. Ahmedabad Bench that various payments (namely "right-to-use charges") were payable by ESIL to OSPIL (this naturally could not be if ESIL and various other parties involved in the ESIL insolvency resolution process were not....
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....SPIL, and stands mortgaged by OSPIL to them. Similarly, the 2nd fact withheld from Hon'ble NCLAT was that Ashish Chhawchharia (Grant Thornton), the RP of OSPIL. had stated in COC meetings of OSPIL well prior to 04-07-2019 that he was of the view that the pipeline was an asset of OSPIL, so much so that he filed an affidavit on 16-07-2019 before the Ld. Sealdah Court to such effect. The relevance of the view of Ashish Chhawchharia is that he was also the Plan Evaluation Advisor (PEA) of ESIL, as also the Bid Evaluation Advisor (BEA), and it cannot possibly be that while wearing the cap of ESIL's PEA/BEA, he was of the view that the pipeline was an asset of ESIL, and while wearing the cap of RP of OSPIL, he was of the view that the pipeline belonged to OSPIL These 2 vital and material facts were consciously and deliberately withheld from Hon'ble NCLAT, because if they it had been disclosed, this meant also disclosing that these OSPIL lenders had not ensured, while acting as Members of ESIL's COC, that ESIL's RP paid RTU charges to OSPIL during the CIRP in compliance with the NCLT order dated 07-02-2018 and that these RTU charges were not ....
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..... Administrator SREI Group of Companies [email protected] 10-02-2023 Dear Sir Please see my earlier email dated 09-02-2023 in trail below), to which I have not received any reply I note that despite the email, SIFI, has taken no steps before the Han'ble NCLAT or the Hon'ble High Court of Calcutta to protect and promote its interests in terms of preferring for joining) proceedings for seeking recall of the judgement dated 04.07. 2019 and or proceedings for contempt of Court for violation of the order dated 22-12- 2016. Therefore, my client intends to take appropriate steps as are permitted in law. Cordially, Deepak Khosla D&K Law Offices D-367 Defence Colony NEW DELHI 110 024 Land +91 11 4109 9467 Fax: +91 11 4109 9467 Cell: +91 98 110 54200 Email: ddan.dklaw.in On examination of aforesaid two emails a very disturbing fact has come to fore. In email dated 09.02.2023 where time is mentioned as 11.34 A.M an event which took place on subsequent date i.e. 10.02.2023 has been incorporated at Page 59 in 5th para which is again highlighted below, where the event of 10.02.2....
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....solution plan was partially approved by the Adjudicating Authority on 08.03.2019 that too after conclusion of the 1st litigation which went up to Hon'ble Supreme Court. The said approval of resolution plan by order dated 8.03.2019 of Adjudicating Authority was considered by this Appellate Tribunal and by judgement dated 4.7.2019 this Appellate Tribunal adjudicated and thereafter same was further adjudicated by the Hon'ble Supreme Court by a detailed judgement dated 15.11.2019. However, the applicant has preferred the present application which was verified on 10.02.2023 without any explanation as to what was the reason for coming after such delay that too without any bonafide right to maintain the present application either on her behalf or claiming derivative rights on behalf of applicant No.1. The applicant No.2 has not bothered to indicate as to what was the percentage of its share in Applicant No.1. Considering the volume of admitted debt which has been referred in resolution plan admitted debt i.e. Rs.545498856433/- (Rupees Fifty four thousand five hundred forty nine crores eighty eight lakhs fifty six thousand four hundred thirty three only) which is reflected in the applicati....
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....nherent jurisdiction. However, we may indicate some categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings. There may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice. If the criminal proceeding in question is in respect of an offence alleged to have been committed by an accused person and it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding the High Court would be justified in quashing the proceeding on that ground. Absence of the requisite sanction may, for instance, furnish cases under this category. Cases may also arise where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Informatio....
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....ce, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1). Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima-facie constitute any offence or make out a case against the accused. (2). Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers Under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3). Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4). Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted....
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....far as doctrine of merger is concerned, a Three Judges Bench of Hon'ble Supreme Court in a case reported in (2000) 6 SCC 359 ( Kunhayammed and others Vs State of Kerala and another) has already given finality to the law in this regar. Mr. Tushar Mehta, learned SG has already placed heavy reliance on the said judgement. We may not do better than to reproduce declaration by Hon'ble Supreme Court in the said case in paragraph 44 as under:- "44.To sum up our conclusions are :- (i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. (ii) The jurisdiction conferred by Article 136 of the Constitution is divisible into two stages. First stage is upto the disposal of prayer for special leave to file an appeal. The second stage commences if and when the leave to appeal is granted and special leave petition is conver....
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.... an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of Rule (1) of Order 47 of the C.P.C." In view of declaration of law on the doctrine of merger by the Three Judges Bench judgement the applicant may not get any advantage from the Ramesh Gandhi's Case. Moreover in Ramesh Gandhi's case order passed by Hon'ble Calcutta High Court setting aside the FIR lodged by the CBI was quashed by Hon'ble Supreme Court. In so far as Natarajan's case (Supra) is concerned on which heavy reliance was placed by Mr. Deepak Khosla, learned counsel for applicant, on examining para 8 of the judgement reported in (2003) 2 SCC 76 we are of the opinion that it is true that in criminal law a complaint can be lodged by anyone who has become aware of the crime having been committed and set the law into motion. However, same principle is not applicable in a case where Section 195 of the Cr PC is attracted. Meaning thereby that if in a Court proceeding any offence is committed without, an order passed by the concerned Court....
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....In MacDougall V. Gardiner and Pender V Lushington, specific reference was made to the fact that the directors, being the custodians of the seal of the company, were the persons who should normally sue in the name of the company, but nevertheless it was held that the majority of the shareholders were entitled to sue in the name of the company when relief was sought against the directors themselves." However, in the present case a feeble stand has been taken that applicant No.2 is a shareholder and in the capacity of shareholder she can also represent company/applicant No.1. The applicant No.2 has not even bothered to disclose as to what was percentage of her shares in the company. In any event it is not a case that majority of shareholder had come forward to protect the so called interest of the company. The applicant No.2 had taken a plea of exercising the derivative right in the interest of the company i.e. applicant No.1. The applicant in the present application has admitted that the Management of the company is under Administrator. Once Administrator was there, in normal course having been satisfied that by committing fraud judgement was obtained, then in that event it was ex....