2019 (11) TMI 965 - HC - Companies Law

Jurisdiction - power of review of the CLB - inspection of the original documents referred to and relied upon by the appellants in their affidavit in reply - Whether power of review not specifically conferred upon the Company Law Board by the Rules/Regulations statutorily framed, could still be exercised by the Board by restoring to the inherent powers conferred upon it under Regulations 44 of the Company Law Board Regulations, 1991? HELD THAT - One cannot lose sight of the fact that during the period from 10.08.2010, when the inspection of the document was allowed to 18.10.2011, when the last opportunity of two weeks was granted to file rejoinder, forfeiting the right if order is not complied with, and for that matter even on 08.02.2012, no allegation that inspection of all the documents was not provided or certified copy of the documents not supplied was made by the respondent nor there were any allegations that appellants had made false or misleading statements or used forged and fabricated documents. The reasoning and the observations made by the Bench, which led the Board to exercise its inherent powers to recall/review its earlier orders are against the record and not sustainable. In Patel Narshi Thakershi and others Vs. Shri Pradyumansinghji Arjunsinghji 1970 (3) TMI 163 - SUPREME COURT , the Supreme Court has held that it is well settled that power to review is not an inherent power. It must be conferred by law either specifically or by necessary implications. Thus, the power of review was in fact contained in the Company Law Board Regulations, 1975 as Rule 45 and was incorporated in the Company Law Board Regulations, 1991, as Regulation 27. However, in 1992, this regulation was specifically omitted. No provision has been brought to my notice from which it could be gathered that the Board had power to review its own order. If the power of review has been specifically omitted. It is not possible to import the provision of review by taking shelter under Regulation 44 - The inherent powers are inherent by virtue of the Court/Tribunal with the duty to render justice. The inherent jurisdiction can be restored to only when there is no other remedy available to the party. The question of law is decided in favour of the appellants - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Review Power of Company Law Board under Regulations 43 and 44.
2. Condonation of Delay in Filing Rejoinder.
3. Allegations of Misleading Statements and Fabricated Documents.

Detailed Analysis:

1. Review Power of Company Law Board under Regulations 43 and 44:
The appellants challenged the Company Law Board's (CLB) authority to review its own orders, arguing that such power was not explicitly conferred by the regulations. The appellants contended that the omission of Regulation 27, which previously allowed for review, indicated a deliberate legislative intent to remove this power. The court noted that inherent powers under Regulation 44 could not substitute for the explicitly omitted review power. The inherent powers are meant to ensure justice and prevent abuse of process but cannot be used to reintroduce a power that was specifically removed. The court cited Supreme Court rulings, emphasizing that review power must be conferred by law and cannot be assumed.

2. Condonation of Delay in Filing Rejoinder:
The respondents filed an application for condonation of delay, claiming they were not provided with complete inspection and certified copies of documents, which caused the delay in filing the rejoinder. The CLB initially granted multiple extensions, emphasizing the importance of timely filings. Despite this, the respondents failed to file the rejoinder within the stipulated time, leading to the forfeiture of their right to file. The court found that the respondents had multiple opportunities and were aware of the deadlines, making their delay unjustifiable. The court highlighted that the respondents did not raise any objections about the inspection or document copies during the relevant hearings, undermining their claims.

3. Allegations of Misleading Statements and Fabricated Documents:
The respondents alleged that the CLB's earlier orders were based on misleading statements and fabricated documents by the appellants. The court examined the timeline and found no evidence supporting these allegations. The respondents did not raise these issues during earlier proceedings, and there was no application for condonation or extension of time based on such grounds. The court concluded that the CLB's decision to review its orders based on these allegations was against the record and unsustainable.

Conclusion:
The court determined that the CLB overstepped its authority by invoking inherent powers to review its orders, as the power of review was specifically omitted from the regulations. The respondents' delay in filing the rejoinder was not justified, and there was no substantial evidence of misleading statements or fabricated documents. Consequently, the appeal was allowed, and the CLB's order was set aside.