2023 (4) TMI 72 - AT - Insolvency and Bankruptcy

Doctrine of Merger - suppression of fact or not - CIRP proceedings and approval of resolution plan - judgement has been obtained by playing fraud with the Court or not - 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 - locus standi in the case - HELD THAT - In the present case there is neither any FIR nor any order passed under Section 340 of the Code of Criminal Procedure, 1973 and as such in this situation it would be impermissible to accede to the prayer for recall of a judgement of this Tribunal, which has long back merged with judgement of Hon ble Supreme Court. In so far as doctrine of merger is concerned, a Three Judges Bench of Hon ble Supreme Court in 2019 (11) TMI 731 - SUPREME COURT has already given finality to the law in this regard. To justify the locus of the applicant No.2 and showing entitlement to file application on behalf of the applicant No.1 company Mr Deepak Khosla, learned counsel for the applicant has placed heavy reliance on a judgement of Federal Court reported in Dr Satya Charan Law and others Vs Rameshwar Prasad Bajoria and others 1949 (12) TMI 40 - FEDERAL COURT . The applicant may not get any benefit from this judgement in view of the fact that the Hon ble Federal Court also had considered that it is cardinal principle that in respect of any dispute, case is to be filed by the company itself to protect the right and interest of the company. However, exception has been noticed that the majority of the shareholders are also entitled to take steps to redress the wrong. 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 expected for applicant No.2 to request the Administrator to take appropriate steps. Moreover in the present case the applicant was not a party in the earlier proceeding before this Tribunal and as such besides having no locus and also no order passed under Section 340 of the Cr PC it would not be appropriate for us to accede to the prayer for recall of the judgement which was passed long back in 2019 and finally merged with the order of Hon ble Supreme Court on 15.11.2019. The present application can be dismissed primarily on the point of its maintainability.

Summary

Issues Involved:
1. Maintainability of the application for recall of the final judgment.
2. Doctrine of merger and its applicability.
3. Locus standi of the applicant to file the application.
4. Allegation of fraud in obtaining the judgment.

Summary:

1. Maintainability of the Application:
The application I.A. No.647/2023, filed by the applicant/intervenor, sought intervention/recall of a detailed judgment passed by the Tribunal on 4.7.2019, which was subsequently merged with a detailed judgment by the Hon'ble Supreme Court on 15.11.2019. The application was heard purely on the maintainability issue. The Tribunal noted that there is no provision under the NCLAT Act or Rules for reviewing or recalling a judgment except for removing clerical or typographical errors. The Tribunal cited the case of "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma" to support this point and concluded that entertaining the present application for recall is impermissible.

2. Doctrine of Merger:
The Tribunal emphasized that once a judgment of this Tribunal has merged with the judgment of the Hon'ble Supreme Court, the applicant is not entitled to maintain the present application. The Tribunal referred to the three-judge bench judgment in "Kunhayammed and Others Vs State of Kerala and another," which clarified that once the appellate jurisdiction of the Supreme Court is invoked, the order passed in appeal attracts the doctrine of merger. The Tribunal rejected the argument that fraud nullifies the doctrine of merger, citing that the judgment of this Tribunal had already merged with the Supreme Court's judgment.

3. Locus Standi of the Applicant:
The applicant No.2, claiming to be a shareholder of applicant No.1 (SREI Industrial Finance Ltd.), filed the application asserting derivative rights. The Tribunal questioned the bona fides of the applicant, noting that the management of applicant No.1 was under an Administrator appointed by NCLT Kolkata. The Tribunal found inconsistencies in the emails purportedly sent to the Administrator, casting doubt on the applicant's genuine intent. The Tribunal concluded that the applicant lacked the locus standi to file the application, especially in the absence of a majority shareholder's support or a clear indication of her share percentage.

4. Allegation of Fraud:
The applicant argued that the judgment dated 4.7.2019 was obtained by committing fraud. The Tribunal acknowledged that fraud vitiates everything but emphasized that a court must be satisfied that fraud was actually committed before treating a judgment as nullity. The Tribunal found no substantial evidence of fraud and noted that the applicant was not a party in the earlier proceedings. The Tribunal concluded that without an order under Section 340 of the CrPC, it would be inappropriate to recall the judgment.

Conclusion:
The Tribunal dismissed the application on the ground of maintainability, indicating that further material regarding any ulterior motive might lead to an in-depth enquiry by an appropriate Investigating Agency.