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TMI Blog2021 (5) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... th 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. - I.A. No. 608 of 2019 in C.P. No. 68/NCLT/AHM/2017 - - - Dated:- 26-4-2021 - Manorama Kumari , Member ( J ) And Chockalingam Thirunavukkarasu , Member ( T ) For the Appellant : Suriyanarayanan , Advocate For the Respondents : Dhiren Dave , PCS ORDER Manorama Kumari , Member ( J ) 1. The instant application is filed by the Applicant for recall of the order dated 23.11.2017 in CP 68 of 2017 passed by this Adjudicating Authority. 2. The facts of the case are: 2.1. Respondent no. 1 company (herein after R1 company ) has been dealing in purchase of land, development of the same, making plots and thereafter selling them either as plots or as constructed houses. Accordingly, R1 company bought land and developed 179 plots at Bhestan, Surat under the chairmanship of Mr. Shailesh P Gonawala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Surat. In one of the minutes of the said meeting, R2 was appointed as the chairman of the R1 Company instead of the Applicant no. 1. The copy of both these minutes is annexed as Annexure- A2. Moreover, Applicant no. 1 made various efforts to inspect the records of the R1 company but was denied inspection by R1 company vide its letter dated 17.03.2017. 2.5. It is further submitted that after the cessation of Applicant no. 1 from the chairmanship of the R1 Company with effect from 02.05.2013, R1 Company did not compiled its accounts for the FYs 2012-2013, 2013-2014, 2014-2015, and 2015-2016 till June 2016. Even the audited accounts for the financial year 2011-2012 were not placed before any AGM because no AGM was held after 30.09.2011, after repetitive reminders given by Applicant no. 1 to then chairman. Thereafter, R1 Company held an EGM on 19.04.2016 appointing Ms. T.R. Mody and associates, Chartered Accountants, as the statutory auditors of R1 Company on the ground that the previous auditors resigned from their auditorship. 2.6. It is submitted that a copy of notice of AGM for FY 2015-2016 were received by Applicant no. 1 on 23.09.2016 scheduling the AGM on 30.09.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the two consecutive AGMs. On going through the financial statements, certain discrepancies were observed and the same was conveyed to this Tribunal through a rejoinder filed in CP 68 of 2017. On conclusion of the pleadings and the arguments by both the parties, this Tribunal pronounced an order dismissing CP 68 of 2017 vide its order dated 23.11.2017 stating the reason that an FIR was pending against Applicant no. 1. Hence, Tribunal did not interfere with the removal of the Applicant no. 1 from the directorship of R1 company because the Applicant no. 1 executed certain conveyance deeds on his favour and other third parties without allegedly not remitting the money with the company even though the single act of removal of a founder director in a private company has been held to be an act of oppression by various courts. The denial of the inspection to Applicant no. 1 was also justified by this Adjudicating Authority on the same ground. 2.9. Thereafter, Applicant no. 1 appealed against the order dated 23.11.2017 before the Hon'ble NCLAT which was dismissed by the Hon'ble NCLAT upholding the order passed by this Adjudicating Authority dated 23.11.2017. Applicant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. When he was informed about the Meeting, the Appellant No. 1 cleverly chose to remain absent and the required quorum was present in the Meeting, Respondent No. 2 was elected Chairman of the Board, R1 company and to give/change authority relating to execution of sale deed was validly given to Respondent No. 2. Therefore, the Appellant No. 1 has no right to question about the resolution passed in the said Meeting. However, the Appellant No. 1 knowing fully well that his authority has been validly withdrawn still he continued to execute the sale deed. We observe from the record that the Appellant No. 1 has executed 12 sale deeds subsequent to Meeting dated 02.05.2013 and out of these 12 sale deed, he executed 7 sale deeds in his own name (Page 329 of the Appeal Paper Book.) Even if he has the authority to execute the sale deed and for executing sale in his own name/favour, he can only do after prior disclosure to all other Directors/Board of Directors as per Section 297 of the Companies Act, 2013. In this case his authority has been validly withdrawn by passing a valid resolution and he is continuing to execute sale deed, therefore, the conduct and behavior of the person is a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the company did not communicate with the auditors since 2013. In the EOGM held on 19.04.2016 itself M/s. T.R Mody associates were appointed as statutory auditors. The statutory auditors in the first instance prepared accounts for the year 2015-16 and, thereafter finalised the accounts for the years 2011-12 to 2014-15. No doubt, such practice of finalising the accounts for the year 2015-16 without finalising accounts for previous years is against the established practice but in the given facts and circumstances when there are disputes between Directors and when there was non-cooperation from the management and the Directors, non-finalisation of accounts cannot be treated as a ground of mismanagement and more so it cannot be alleged by a Director of the company. Petitioner No. 1 being Director of the first respondent company is equally responsible for non-finalisation of accounts of the first respondent company from 2011-12 to 2014-15. This point is answered accordingly. Non-filing of accounts within time is punishable under the Companies Act and it is for the regulating authority to take action against the company. Therefore, it cannot be treated as a ground of mismanagement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 23.11.2017 made by this Adjudicating Authority in CP 68 of 2017 and allied appeals stands finally merged into the order dated 10.08.2018 made by the Hon Tale Supreme Court. 6. 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 Hon'ble Supreme Court in Kunhayammed Ors. vs State of Kerala Anr. on 19 July, 2000 observed that: The doctrine of merger is neither a doctrine of constitutional law nor a doctrine statutorily recognised. It is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery system. On more occasions than one this Court had an opportunity of dealing with the doctrine of merger. It would be advisable to trace and set out the judicial opinion of this Court as it has progressed through the times . 7. In Commissioner of Income-tax, Bombay Vs. M/s. Amritlal Bhogilal and Co. AIR 1958 SC 868 this Court held: There can be no doubt that, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e NCLAT observed that: ...power to 'Review' is not an 'inherent power' and must be showered by Law either expressly or by necessary implication. As a matter of fact, the power to 'Review' is a creation of statute. Indeed, a 'Review of Jurisdiction' cannot be pressed into service as an 'Appellate Jurisdiction'. Moreover, the 'Power of Review' is not to be confused with an Appellate power. It is further observed that; 23. A mere perusal of the 'NCLAT' Rules, 2016 unerringly point out that there is no express provision for 'review' and further that the Review Applicant/Appellant cannot seek the aid of Rule 11 of the 'NCLAT' Rules, 2016 which speaks of inherent powers. Also, that the Review Applicant cannot seek umbrage under section 420(2) of the Companies Act, 2013 for filing the 'Review Application' on the purported ground of rectifying any mistake apparent from the record, within two years from the date of order passed, in the considered opinion of this Court. 10. Thus, under the facts and circumstances discussed in sequel herein above, the application so filed by the Applicant for r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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