2019 (8) TMI 270 - AT - Companies Law

Direction to allot or transfer such number of shares so as to entitle the Petitioner to maintain her percentage shareholding - HELD THAT - Although it appears that if the relief was being granted to the Appellant as was directed in the primary Order directing Respondents to allot all the three rights issue shares, the consequential relief should also have been considered and granted by the NCLT. However, Appellant preferred no Appeal and now the position happens to be that after the primary Order was passed by NCLT, the Respondents preferred Appeal and even that has been decided. The Tribunal can rectify any mistake apparent from the record, if the mistake comes or is brought to its Notice by the parties within two years. The Sub-Section (2) has a proviso which puts an embargo on this power of NCLT by directing that no such amendment shall be made in respect of any Order against which Appeal has been preferred under this Act. Undisputedly, the appeal was filed. Even in the Appeal although the Appellant appeared as Respondent, the Appellant does not appear to have raised this grievance that the further or consequential relief was not granted. The Appellant did not file the Appeal on its own also, if she had grievances regarding part of relief not being granted. Admittedly, relief on the count of consequential relief had been sought in the Company Petition and when the NCLT did not say anything about it in the final operative Order which was passed, keeping the above general principle of law in view, it amounted to refusing to grant the relief - If at that time, the Appellant did not file Appeal and even when the other side filed the Appeal, did not raise grounds to seek relief, we do not think that the NCLT has now committed any error in the present Impugned Order whereby the application of the Appellant has been dismissed. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of primary order regarding the allotment of shares and payment of dividends.
2. Rectification application under Section 154 of the National Company Law Tribunal Rules, 2016.
3. Jurisdiction of NCLT to rectify errors in orders.
4. Application of res judicata principle in the context of relief sought but not granted.

Analysis:

1. The primary issue in this case revolves around the interpretation of the primary order issued by the NCLT regarding the allotment of shares and payment of dividends. The primary order directed the respondents to allot shares to the appellant but did not explicitly mention the payment of dividends. The appellant filed a rectification application seeking to rectify this omission, claiming that the NCLT inadvertently failed to provide directions for the payment of dividends.

2. The appellant filed a rectification application under Section 154 of the National Company Law Tribunal Rules, 2016, invoking the provision to rectify the error of omission in the primary order. The application was based on the argument that the NCLT had not given directions regarding the consequential relief of dividends and interest on dividends related to the three rights issues, resulting in an error that needed rectification.

3. The jurisdiction of the NCLT to rectify errors in its orders was a critical aspect of the case. The NCLT, in its impugned order, concluded that there was no clerical or arithmetical error in the primary order and that the appeal had been preferred to the NCLAT, merging the orders. The appellant contended that the NCLT erred in rejecting the rectification application due to the omission in providing directions for the payment of dividends.

4. The application of the res judicata principle was raised in the context of the relief sought but not expressly granted in the primary order. The respondents argued that since the relief regarding dividends was sought in the company petition and not granted in the final operative order, it should be deemed as refused. The NCLT, considering the general principle of law, held that the failure to raise the issue during the appeal process indicated a refusal of the relief sought, leading to the dismissal of the rectification application.

In conclusion, the NCLT rejected the appeal, emphasizing that the appellant did not raise the issue of consequential relief during the appeal process, and the failure to do so indicated a refusal of the relief sought. The application of the res judicata principle and the jurisdiction of the NCLT to rectify errors in its orders played crucial roles in the judgment.