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2013 (1) TMI 252 - HC - Companies LawPowers of CLB - Whether allowed to transfer matters between Regional Benches of the CLB under section 10E(4B) - Company Application to Southern Bench of the Hon ble Company Law Board for hearing - Held that - The power in law to form a Bench and to authorize such Bench to discharge the powers and functions of the CLB as may be specified is exclusively that of the CLB as a whole as provided in section 10E(4B)- Transfer of matters and hearing of them by particular Benches or Members are obviously matters relating to the procedure of the CLB. These matters could very well be regulated by the CLB acting as a whole. The CLB Regulations provide for delegation to the Chairman of the CLB of the powers of the CLB for formation of Benches, and specification of powers and discharge of functions by the respective Benches and their members and transfer of matters pending before any Bench. Regulation 3 of the CLB Regulations makes it clear beyond any doubt that the Chairman of the CLB is empowered by the Board to constitute the Benches of the Board as per the composition of Benches prescribed under section 10E(4B) - Regulation 3(3) of the CLB Regulations empowers the Chairman to specify the member of the Bench before whom every matter requiring decision by the Board shall be placed for orders and in the absence of such Member so specified every such matter shall be placed before any other member of the Bench who is present. Thus, regulation 3(3) of the CLB Regulations delegates the power of intra Bench allocation of matters to the Chairman, i.e., transfer of a matter from one Member of a Bench to another Member of a Bench but not inter Bench transfer, i.e., from one Member of the Bench to a Member of another Bench. Matters pending before Principal Bench shall continue to be disposed by it By proviso (2) to regulation 4(3), it was provided that notwithstanding anything contained in regulation 7, the Chairman could transfer any matter pending before the Regional Benches to the Principal Bench either at the joint request of all the parties or for other reasons to be recorded in writing. The power delegated to the Chairman is the power to transfer matters before the Regional Benches only to the Principal Bench since any other transfer inter se between Regional Benches would otherwise violate the mandate of regulation 7(1), and this is not the power that the Company Law Board has delegated to the Chairman. Thus, the subject of power to transfer has been expressly and exhaustively provided in and limited by the second proviso to regulation 4(3) of the CLB Regulations. The Chairman cannot have direct recourse to the powers of the CLB over and above what is delegated to him under the CLB Regulations.Thus, as per second proviso to regulation 4(3), there was no right or authority in the Chairman to transfer matters, not even an inherent power to transfer matters pending before the Regional Bench to the Principal Bench. The position cannot be any different with regard to the Chairman s power to transfer any matter pending before a Regional Bench to another Regional Bench. A Regional Bench has no power to pass any order in exercise of its inherent powers that go beyond the jurisdiction of that Regional Bench. Hence, one Regional Bench cannot direct another Regional Bench to do anything or to hear a matter. Similarly a Regional Bench cannot direct that a matter before it be transferred to another Regional Bench for hearing nor can it transfer a matter pending before another Regional Bench to itself for hearing. This is because inherent powers cannot transcend jurisdiction. Thus the Chairman s decision is certainly not based on subjective satisfaction or on reasons which are otherwise unsustainable. In any event, even assuming that some reasons given by the Chairman are not relevant whilst exercising his discretion in the matter, only one reason of the Chairman namely that he has made enquiries with the Benches and has been informed that there are many such pending part heard matters and that in such circumstances if orders as sought are passed, it would create a chaotic situation at Benches, is enough for the Court to come to the conclusion that the Chairman could have passed the same order, that is dismissal of the Company Application on that ground alone. The Company Appeal and the Company Application are, therefore, dismissed
Issues Involved:
1. Whether the impugned order is amenable to challenge under Section 10F of the Companies Act, 1956. 2. Whether the Chairman of the Company Law Board (CLB) has the power under the Act and the CLB Regulations to grant the reliefs prayed for in the Company Application by the Appellant. 3. Whether the impugned order amounts to an abdication or fettering of jurisdiction in a case where such power ought to have been exercised. 4. Whether the impugned order is perverse, arbitrary, unsustainable in law, and therefore deserves to be set aside. Analysis: Issue 1: Amenability to Challenge under Section 10F The court held that the impugned order is amenable to challenge under Section 10F of the Companies Act, 1956. The test to determine whether an order is judicial or quasi-judicial involves checking if there is a contest between two parties and if a statutory authority is required to adjudicate upon the rival contentions. The court cited the Supreme Court's decisions in *Indian National Congress (I) v. Institute of Social Welfare* and *Dr. Manju Varma v. State of U.P.*, concluding that the impugned order meets the criteria for being judicial/quasi-judicial and is therefore appealable under Section 10F. Issue 2: Power of the Chairman under the Act and CLB Regulations The court examined the provisions of the Companies Act, 1956, and the CLB Regulations, 1991, to determine the Chairman's powers. It was concluded that the Chairman does not have the power to transfer matters between Regional Benches under Section 10E(4B) of the Act or Regulation 44 of the CLB Regulations. The power to transfer matters is limited to transferring cases from Regional Benches to the Principal Bench as per the second proviso to Regulation 4(3). The court also noted that the inherent powers under Regulation 44 pertain to the Benches and not to the Chairman acting independently. Issue 3: Abdication or Fettering of Jurisdiction The court found that the Chairman of the CLB did not abdicate or fetter his jurisdiction. The Chairman's decision was based on rational, relevant, and germane considerations, including the potential disruption of the work of the Benches if part-heard matters were transferred. The court observed that the Chairman is concerned with the proper functioning of the Tribunal in the interest of the larger litigating public and that private interests must yield to broader considerations. Issue 4: Perversity and Arbitrary Nature of the Impugned Order The court held that the impugned order was neither perverse nor arbitrary. The Chairman had exercised his discretion reasonably and in a judicial manner. The court emphasized that an appellate court should not interfere with the exercise of discretion by the lower court unless it is shown to have been exercised arbitrarily, capriciously, or perversely. The court also rejected the Appellant's argument that the order should not be sustained if based on some irrelevant considerations, citing the principle that even if some reasons are irrelevant, the order can be sustained if it is based on other relevant and existing grounds. Conclusion: The appeal was dismissed, and the Company Law Board, Mumbai Bench, was directed to commence the hearing of Company Petition No. 62 of 2009 and pass a final order on or before 31st March 2013.
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