2021 (5) TMI 542 - Tri - Companies Law

Recall of order - doctrine of merger - Appeal against the order passed by the NCLT was dismissed by the higher appellate forum - Non-filing of accounts - oppression and mismanagement - HELD THAT - It is to be mentioned that, the doctrine of merger is a common law doctrine that is adopted with an aim for the maintenance of the decorum of hierarchy of the courts and tribunals, the simple reason behind this is that there cannot be, at the same time, more than one operative order governing the same subject matter. The application so filed by the Applicant, is bad in the eye of law and is not maintainable. Further, the order of this Adjudicating Authority is assailed before the Hon'ble NCLAT and the same was again assailed before the Hon'ble Supreme Court, whereby, Hon'ble Supreme Court decline to interfere with the impugned order so passed by the Hon'ble NCLAT. Thus, the order of the original court ceases to exist and is merged in the order of the Appellate Court - this Adjudicating Authority is not vested with the power to review/recall of its own order either under section 60(5) of the IB Code or Rule 11 of the NCLT Rules 2016. The application so filed by the Applicant for recalling of the order dated 23.11.2017, along with other prayers, are not only beyond the jurisdiction of this Tribunal but also bad in the eye of law and is not maintainable - Application dismissed.

Summary

Issues Involved:
1. Recall of the order dated 23.11.2017.
2. Validity of the board meeting on 02.05.2013 and withdrawal of authority.
3. Allegations of oppression and mismanagement.
4. Non-finalization of accounts.
5. Denial of inspection and holding of EGM without convening a Board Meeting.
6. Jurisdiction and power of the Tribunal to review/recall its own order.

Issue-wise Detailed Analysis:

1. Recall of the order dated 23.11.2017:
The Applicant sought to recall the order dated 23.11.2017 passed by the Tribunal in CP 68 of 2017. The Tribunal noted that the Applicant had previously appealed against this order before the Hon’ble NCLAT, which upheld the Tribunal's order. The Applicant further appealed to the Hon’ble Supreme Court, which also dismissed the appeal. Consequently, the Tribunal emphasized the doctrine of merger, stating that the original order ceases to exist and merges into the appellate court's order. Therefore, the application for recall was deemed not maintainable.

2. Validity of the board meeting on 02.05.2013 and withdrawal of authority:
The Tribunal examined the Applicant’s claim that the board meeting on 02.05.2013 was invalid and that his authority was withdrawn without proper notice. The Tribunal referred to the NCLAT's observations, which confirmed that proper notice was given for the board meeting, and the Applicant chose to remain absent. The NCLAT concluded that the resolution to withdraw the Applicant’s authority was valid, and his subsequent actions of executing sale deeds without authority were improper.

3. Allegations of oppression and mismanagement:
The Applicant alleged various acts of oppression and mismanagement, including manipulation of board meeting minutes and improper removal from directorship. The Tribunal noted that these allegations were previously addressed in the NCLAT's detailed judgment, which found no merit in the claims. The NCLAT observed that the Applicant's removal was justified due to his conduct and the valid withdrawal of his authority.

4. Non-finalization of accounts:
The Applicant contended that the company's accounts for several financial years were not finalized, indicating mismanagement. The Tribunal referred to the NCLAT's findings, which acknowledged the delay in finalizing accounts but attributed it to disputes among directors and lack of cooperation. The NCLAT held that the Applicant, as a director, was equally responsible for the non-finalization of accounts and that this issue did not constitute grounds for mismanagement.

5. Denial of inspection and holding of EGM without convening a Board Meeting:
The Applicant claimed he was denied inspection of company records and that an EGM was held without a preceding board meeting. The Tribunal cited the NCLAT's observations, which confirmed that the Applicant had access to online records and was aware of the board meeting and EGM. The NCLAT concluded that the Applicant had knowledge of the meetings and failed to utilize the opportunity to address his concerns.

6. Jurisdiction and power of the Tribunal to review/recall its own order:
The Tribunal emphasized that it lacked the jurisdiction to review or recall its own order. It referred to the NCLAT's ruling in Deepak Kumar vs. M/s. Phoenix ARC Pvt. Ltd., which clarified that the power to review is not inherent and must be explicitly provided by law. The Tribunal highlighted that neither Section 60(5) of the IB Code nor Rule 11 of the NCLT Rules, 2016, conferred such power.

Conclusion:
The Tribunal rejected the application for recall of the order dated 23.11.2017, stating that it was beyond its jurisdiction and not maintainable. The Tribunal reiterated that the original order had merged with the appellate court's order, and no grounds existed for interference. The application was thus disposed of.