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TMI Blog2013 (8) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ng included in the schedule thereto - A mistake of court in an order that operates in rem may be corrected at the instance of any person demonstrating to be prejudiced thereby - but the right of such person may not be recognised any longer if he has stood by and allowed a previous opportunity to pass when he ought to have asserted the mistake and attempted to have it rectified particularly if such conduct has resulted in a right having accrued to any other - The consequence may be harsh and may confer an undeserving windfall on another - But the ethos of the applicable principles in matters of public policy demands that the applicant be left to its fate for a course of conduct that it consciously charted for itself at an earlier point of time. - CA NO. 145 OF 2011 CP NO. 28 OF 1993 - - - Dated:- 20-4-2012 - SANJIB BANERJEE, J. S.K. Kapur, Joy Saha, P.K. Jhunjhunwala, D. Basak, Prantik Gorai, P.C. Sen, Dhruba Ghosh, Sanjoy Bose, Dipnath Roy Chowdhury, Souvik Majumdar and Ms. Abha Alley for the Appearing Parties. ORDER 1. Nearly two decades after the sanction of a scheme of arrangement, the transferee company has come to court complaining of a mistake on the court's pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd in course of these proceedings since, even if this application were to be allowed, its rights would not be compromised as Bowreah Jute would have a chance to have its say if the order allowing this application is made the basis for any future action against it. At any rate, even if this application were to be allowed, Bowreah Jute's interest, if any, in the North Mill would remain unaffected since its alleged possession thereof and any interest therein does not fall within the ambit of the assessment that the court is called upon to make now. Bowreah Jute has already instituted a suit in this court against, inter alia, Hooghly Mills, Fort Gloster and the applicant herein, seeking specific performance of its agreement with Hooghly Mills. 3. At the time that the scheme of arrangement was propounded, the two companies involved therein had a common management or, in any event, the two belonged to the same business family. It is not uncommon for divisions in the family business being effected by a scheme of arrangement, though the applicants in such cases in the yesteryears were known to be much more secretive of the real intention than they are now. The obvious benefit of having a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gloster. Notices were required to be issued to both Fort Gloster and Bowreah Jute. The order dated December 16, 2010 declining the applicant's request under Section 11 of the 1996 Act recorded that Fort Gloster went unrepresented, but Bowreah Jute participated in the proceedings. 5. It is necessary that the order dated December 16, 2010 be referred to in some detail to ascertain whether it was permissible for the applicant herein to carry the present application upon its request under Section 11 of the 1996 Act having been dismissed on the premise that the North Mill did not pass to the applicant under the scheme. Such order recorded that it was the applicant's case that it was a party to the agreement of March 24, 1988; that it invoked the arbitration clause therein by requiring the arbitrator named in the clause to take up the reference; that the named arbitrator refused to take up the matter; that the applicant called upon Hooghly Mills to concur in the appointment of one of the two names suggested by the applicant as the arbitrator; and, that Hooghly Mills' response thereto was that it was not a party to the arbitration agreement asserted by the applicant. The order of Decem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the properties mentioned in that schedule were the properties of the jute division that were to vest in the petitioner. Therefore, although there is a lot of ambiguity in paragraph 1 of the order of this court as discussed above, this problem is resolved by the statement made at the top of the schedule. Therefore, the jute division described in para 1 of the scheme which is schedule 'A' to the order relates to the properties in schedule 'B' only. Only those properties have vested in the petitioner by the scheme of de merger as confirmed by this court." (Emphasis as in the order.) 7. It is, thus, plain to see that the applicant herein asserted in the previous proceedings that it was a party to the agreement of March 24, 1988 consequent upon the scheme of arrangement having been sanctioned under which the North Mill and all rights pertaining thereto allegedly passed from Fort Gloster to the applicant. It is also evident from the stand taken by Hooghly Mills that it squarely denied that the North Mill passed to the applicant herein upon the sanction of the scheme. It was, then, open to the applicant to either pursue its case that the North Mill stood transferred to and vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the Section 11 proceedings in its tracks and sought leave to urge what it perceived and returned to the Section 11 proceedings upon such perception being validated. In the applicant not having exercised the option that it certainly had, or even attempted to exercise it, as to whether there is a mistake or not in the order sanctioning the scheme as drawn up is a closed chapter and not amenable to be urged, at any rate, by the applicant. 9. The applicant has sought to put a date to its discovery of the mistake. It insists that the realization that the order sanctioning the scheme as drawn up bore a mistake dawned on the applicant only upon the order declining its request under Section 11 of the 1996 Act interpreting the order sanctioning the scheme as drawn up to not mandate the North Mill being transferred to or vesting in the applicant. The applicant needed to assign a date to the discovery of the mistake in view of the law of limitation. It now presents a red herring in its argument that a mistake of court can be corrected at any time. Such contention only skirts the issue. There are precedents legion that espouse the principle that a mistake of court can be corrected at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded from turning around and changing tack to now suggest that the order sanctioning the scheme was erroneously drawn up. Never mind that it would have been of little inconvenience to the applicant to urge the point of mistake that it now asserts when its request under Section 11 of the 1996 Act was live and yet undecided, for the necessary application had to be made before the same Bench (arbitration and company matters have, for years, been allotted to the same judge in this court until as recently as a couple of weeks), in the applicant not having raised the subject of a mistake in the order sanctioning the scheme as drawn up at such stage, it stands condemned by its conduct. After all, the order rejecting the applicant's request under Section 11 of the 1996 Act did not introduce the mistake in the order sanctioning the scheme as drawn up. The mistake, if any, existed since the day that the order sanctioning the scheme was drawn up. It would have been permissible for the applicant to urge the argument of mistake even today had the proceedings and the order on the proceedings under Section 11 of the 1996 Act not intervened. It is also altogether irrelevant that a petition for sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 1996 Act. The scope of the previous proceedings, therefore, included an assessment of whether the applicant herein was a party to the agreement of March 24, 1988 consequent upon the sanction of the scheme of demerger. The answer to the issue that arose in the previous proceedings lay in whether the North Mill had passed under the order sanctioning the scheme to the applicant. The order rejecting the request under Section 11 of the 1996 Act found that it had not. As to whether the North Mill had passed to the applicant under the sanctioned scheme was integral to the issue that arose in the previous case and was necessary to be adjudicated upon. It was not merely the reason for the decision, but central to and an inseparable part of the decision. The first limb of the rule in res judicata is fulfilled; whether the other limb " pertaining to the identity of the parties " is also satisfied has next to be seen. Fort Gloster was not a party to the previous proceedings, as Hooghly Mills is not a party herein; and it is irrelevant that Fort Gloster was issued notice by court in the previous proceedings and Bowreah Jute has now ambled into court proclaiming to be the present torchbea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous matter may not operate as res judicata in the subsequent matter. But if an issue which is central to a particular matter is finally decided one way, it cannot be reopened in a subsequent matter if the other conditions as to the applicability of the doctrine are satisfied. There are many facets to a legal principle. But the applicant appears to be right in its assertion that the principle of res judicata would not apply in terms to this matter on the basis of the decision rendered in its failed request under Section 11 of the 1996 Act; and there is no virtue in flogging a dead horse. 17. In the light of the view taken here, the judicial precedents referred to by the applicant are of no relevance. A judgment reported at Induben Ashokrao Nalvade v. Dhirajlal Shivlal Surati [1995] Supp. 3 SCC 541, relied upon by the applicant for the proposition that a later inaccuracy as to the description of a property under a document cannot whittle down what was intended to pass thereunder, pertains to the merits of the matter which, for the reasons indicated above, cannot be gone into. For the same reason, the judgment reported at Indowind Energy Ltd v. Wescare India Ltd (2010) 5 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red that its request under Section 11 of the 1996 Act was decided with its reservation that the order sanctioning the scheme may have been mistaken, it is now precluded from making out the case that it has attempted to in the present proceedings. Once the applicant had asserted its right to the North Mill on the basis of the order sanctioning the scheme as drawn up, and failed; it was no longer open to it to claim that the order was erroneously drawn up in the North Mill not being included in the schedule thereto. A mistake of court in an order that operates in rem may be corrected at the instance of any person demonstrating to be prejudiced thereby; but the right of such person may not be recognised any longer if he has stood by and allowed a previous opportunity to pass when he ought to have asserted the mistake and attempted to have it rectified, particularly if such conduct has resulted in a right having accrued to any other. 19. CA No 145 of 2011 fails. The consequence may be harsh and may confer an undeserving windfall on another. But the ethos of the applicable principles in matters of public policy demands that the applicant be left to its fate for a course of conduct tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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