2014 (2) TMI 1102 - HC - Companies Law

Recall of order - Regulation of Caveat filings - writ petition for directions to be sought, inter alia, to the Company Law Board to frame regulations in respect of lodging caveats before that CLB as well as to this Court, to regulate filing of caveats, under Section 148-A of the Code of Civil Procedure - Held that - Court without giving a notice to the caveator cannot be treated as a nullity. If a statute intends to demolish the ordinary powers of a Civil Court, it is well settled proposition of law that it can only be done by a direct piece of legislation enacted for that purpose and not by the effect of an indirect legislation as if it were by a side wind. The powers of a Civil Court are too sacrosanct to be allowed to be diluted or to be curtailed by a mere remote implication. I, therefore, hold that as there is no specific provision declaring any action taken by the Court contrary to its mandatory duty under Sub-section (3) to give a notice would be void, the order passed by the Court below on 30-10-1980 is not a nullity. In other words, il appears to me that the mere lodgement of a caveat would not deprive the Court of its power to pass an order even if the caveator was not informed of the dale of hearing of the matter. As the lodgement of a caveat is merely a right to be informed of the hearing date and it has no effect by way of curtailing the powers of a Civil Court to pass an appropriate order on the merits of the case - no reason to review or recall judgment dated 01.10.2013 - Decided against Petitioner.

Issues Involved:
1. Validity of CLB orders made without serving notice to caveators.
2. Whether the writ petition is maintainable given the presence of an alternative remedy under Section 10F of the Companies Act, 1956.
3. Impleading of judicial members in the writ petition.
4. Requirement for framing regulations for lodging caveats.

Issue-wise Detailed Analysis:

1. Validity of CLB Orders Made Without Serving Notice to Caveators:
The petitioners argued that the orders of the Company Law Board (CLB) were a nullity because they were made without serving notice to the caveators. The court referred to the Andhra Pradesh High Court's decision in *Reserve Bank of India Employees Association v. The Reserve Bank of India, AIR 1981 AP 246*, which held that an order passed without giving notice to the caveator cannot be treated as a nullity. The court agreed with this view, stating that the failure to provide notice under Section 148A, CPC, does not ipso facto render the order a nullity. The court emphasized that no special prejudice was caused to the caveators apart from the mere fact of not being served, which is insufficient to vitiate the entire proceedings. The court concluded that the orders made by the CLB were not nullities and were operative until set aside in appropriate proceedings.

2. Whether the Writ Petition is Maintainable Given the Presence of an Alternative Remedy Under Section 10F of the Companies Act, 1956:
The court noted that the petitioners had an alternative remedy available under Section 10F of the Companies Act, 1956, for any grievances arising from the orders of the CLB. The court held that bypassing the relevant statutory framework and engaging the court's writ jurisdiction would be incorrect. The court cited the Supreme Court's decision in *Commissioner of Income Tax and Ors. v. Chhabil Dass Agarwal, 2013 (10) SCALE 326*, which emphasized that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. The court concluded that the writ petition was not maintainable, given the presence of an effective alternative remedy under Section 10F.

3. Impleading of Judicial Members in the Writ Petition:
The petitioners had arrayed a judicial member of the CLB as a respondent in his personal capacity. The court referred to the Supreme Court's decision in *Savitri Devi v. District Judge, Gorakhpur and Ors., 1999 (2) SCC 577*, which held that there was no necessity for impleading judicial officers who disposed of matters in civil proceedings as parties to writ petitions or special leave petitions. The court emphasized that the judicial member was acting in his judicial capacity, and there was no occasion to array him as a party. The court strongly deprecated the practice of impleading judicial officers in such cases and concluded that the judicial member should not have been made a party to the writ petition.

4. Requirement for Framing Regulations for Lodging Caveats:
The petitioners sought directions for the Company Law Board to frame regulations regarding the lodging of caveats. The court noted that the Company Law Board Regulations, 1991, framed under Section 10-E of the Companies Act, provided for various situations concerning the filing and presentation of petitions and matters before the CLB. Regulation 44 of the 1991 Regulations empowered the Bench of the CLB to make such orders as necessary to secure the ends of justice. The court found that the existing regulations were adequate and granted the CLB discretion to deal with matters such as those complained of in the writ petition. Therefore, the court did not issue any order to frame additional regulations for lodging caveats.

Conclusion:
The court found no reason to review or recall its judgment dated 01.10.2013. The review petition and all pending applications were dismissed. The court upheld the validity of the CLB orders, emphasized the availability of an alternative remedy under Section 10F, deprecated the practice of impleading judicial members, and found the existing regulations adequate for dealing with caveats.

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