2000 (7) TMI 897 - HC - Companies Law

Summary

Issues Involved:
1. Non-joinder of necessary parties.
2. Alleged suppression of material facts.
3. Impact of the court's order on the petitioner's financial interests.
4. Jurisdiction of the High Court to review its own orders.
5. Delay and laches in approaching the court.

Detailed Analysis:

Non-joinder of Necessary Parties:
The petitioner, Federal Bank Ltd., argued that they should have been impleaded in the original writ petition (W.P. No. 4965 of 1994) filed by the Shamrao Vithal Co-operative Bank Ltd. The non-joinder of Federal Bank as a necessary party was claimed to be fatal to the proceedings. The court acknowledged that the Federal Bank's interests were substantially affected by the order, and thus, they should have been made a party to the proceedings, especially after the understanding reached between the petitioner-co-operative bank and respondent Nos. 3 to 7.

Alleged Suppression of Material Facts:
The petitioner contended that respondent Nos. 3 to 7 had suppressed material facts, particularly the existence of a bridge loan of Rs. 1 crore from the Federal Bank, while securing an order from the court. The court found that the suppression of this information by the third respondent-company deprived the Federal Bank of realizing its legitimate dues, constituting a manifest injustice.

Impact of the Court's Order on the Petitioner's Financial Interests:
The court's order dated 23-2-1994, which allowed the third respondent-company to earmark Rs. 65 lakhs for the petitioner-co-operative bank, directly affected the Federal Bank's ability to recover its bridge loan. The court recognized that the order financially impacted the Federal Bank and thus warranted a review to correct this error.

Jurisdiction of the High Court to Review its Own Orders:
The court referred to several Supreme Court judgments, including Shivdeo Singh v. State of Punjab and United India Insurance Co. Ltd. v. Rajendra Singh, to assert that it has the inherent power to review its own orders under Article 226 of the Constitution to prevent miscarriage of justice. The court emphasized that it could rectify mistakes or grave errors that had crept into its previous orders.

Delay and Laches in Approaching the Court:
The respondents argued that the Federal Bank delayed approaching the court, which should bar their claim. However, the court found the explanation provided by the Federal Bank satisfactory. The petitioner had been corresponding with the petitioner-co-operative bank and filed applications to implead themselves in the original writ petition within a reasonable time. Thus, the court rejected the contention of delay and laches.

Conclusion:
The court concluded that a mistake had been committed in the orders made on 23-2-1994, and the Federal Bank's interests were adversely affected due to the suppression of material facts by the third respondent-company. Therefore, the court set aside the orders made in W.P. No. 4965 of 1994 and directed the office to post the writ petition for further hearing.