9911796707
TMI Blog2023 (4) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... hosla, for the applicant/intervenor started his submission, Mr Mukul Rohatgi, learned senior counsel and Mr Tushar Mehta, Ld, SG tried to persuade the Court that the application was not maintainable. However, without taking note of submission of either side this Court called for a report from the Registry as to under what circumstances the present IA which was filed for recall of a final judgement was listed under the caption for 'Orders'. The Registry was directed to examine and submit the report and application was directed to be listed on 1.3.2023 under the same caption. On 01.03.2023 we perused the report submitted by the Registry and observed not to further examine the issue of listing. On 01.03.2023 we heard Mr. Deepak Khosla, learned counsel for the applicant in present IA No.647/2023 on the point of maintainability of the application. After he concluded his submission it was replied by Mr. Tushar Mehta, learned SG appearing for the Committee of Creditors, Dr. AM Singhvi, learned senior counsel appearing for Corporate Debtor and also Mr. Mukul Rohatgi, learned senior counsel who appeared on behalf of Successful Resolution Applicant. After completion of argument by learned s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy of appeal was available to the party. The appeals preferred against the judgement dated 4.7.2019 by this Appellate Tribunal were heard by Hon'ble Supreme Court and after hearing the parties a detailed judgement was passed by Hon'ble Supreme Court on 15.11.2019 which has been reported in (2020) 8 SCC 531. (Committee of Creditors of Essar Steel India Ltd Vs Satish Kumar Gupta). By virtue of detailed judgement passed by Hon'ble Supreme Court against judgement of this Tribunal the judgement of this Tribunal had already merged with the judgement of Hon'ble Supreme Court on the basis of doctrine of merger. Though the judgement of this Appellate Tribunal which was passed on 4.7.2019 and merged with judgement of Hon'ble Supreme Court on 15.11.2019, to the reasons best known to the applicant particularly applicant No.2, who was not party in either of the earlier proceedings, has preferred the present application taking the plea of derivative right in respect of applicant No.1 i.e. SREI Infrastructure Finance Ltd. M/s SREI Infrastructure Finance Ltd and applicant No.2 have been arrayed as applicants in the present IA. M/s SREI Infrastructure Finance Ltd has been arrayed as applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nificant. The Court will have to act in the interest of justice on a complaint or otherwise. Assuming that the complaint may have to be made at the instance of a party having an interest in the matter, still the court can take action in the matter otherwise than on a complaint, that is, when it has received information as to a crime having been committed covered by the said provision. Therefore, it is wholly unnecessary to examine this aspect of the matter. We proceed on the basis that the respondent has locus standi to present the complaint before the Designated Judge." By way of referring to para 153 and 154 of the present application which is at page 239 and 240 he tried to persuade us that in the case of fraud there is no question of finality of litigation. We propose to reproduce statement made in para 153 and 154 of the present application as follows: "153.At the cost of reiteration, the binding words of the Hon'ble Supreme Court expressed in the case of S.P. Chengal Varaya Naidu (Dead) By Lrs, Vs. Jagannath (Dead) By Lrs. & Ors. [(1994) 1 SCC 11 are again reproduced below, which make it clear that whether it is under the IBC or under any other law, there is no concept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach of the Hon'ble High Court of Calcutta, which latter Court, only because an earlier order passed by it had travelled all the way up to the Hon'ble Supreme Court, refused to entertain a challenge subsequent to passing of the order by the Hon'ble Supreme Court raised before the High Court on grounds of fraud, only on the ground that its order had 'merged' in the order of the Hon'ble Supreme Court, which is a position that is identical to the present case, and which approach of the Hon'ble Court of Calcutta had been disapproved by the Hon'ble Supreme Court, being patently contrary to law." On the question of doctrine of merger it was vehemently argued by Mr. Khosla, learned counsel that once it is established that fraud was committed in a proceeding before the Appellate Tribunal and by way of suppression of fact judgement from this Tribunal was obtained, in such situation the doctrine of merger may not apply even though judgement of this Appellate Tribunal was dealt with by Hon'ble Supreme Court and decided by a detailed judgement. He has further placed reliance on a case reported in (2012) 1 SCC 476 (Union of India Vs Ramesh Gandhi). While placing reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw on this position and reiterated the principle. In paras 38 and 39 it was held as follows: 38. The matter can be looked at from a different angle as well. Suppose, a case is decided by a competent Court of Law after hearing the parties and an order is passed in favour of the applicant/plaintiff which is upheld by all the courts including the final Court. Let us also think of a case where this Court does not dismiss Special Leave Petition but after granting leave decides the appeal finally by recording reasons. Such order can truly be said to be a judgment to which Article 141 of the Constitution applies. Likewise, the doctrine of merger also gets attracted. All orders passed by the courts/authorities below, therefore, merge in the judgment of this Court and after such judgment, it is not open to any party to the judgment to approach any court or authority to review, recall or reconsider the order. 39. The above principle, however, is subject to exception of fraud. Once it is established that the order was obtained by a successful party by practising or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is non- existent and non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the entitlement of the private company to seek various reliefs such as the ones sought by it before the Calcutta High Court. It is further specific allegation in the FIR such a non-disclosure/suppression of the crucial fact was wilful and deliberate pursuant to a conspiracy between all the accused to secure an illegal and wrongful monetary gain to the private company. Therefore, in our opinion the Judgment under appeal cannot be sustained. 26. Coming to the question of the scope of the jurisdiction to quash an FIR, either in the exercise of statutory jurisdiction under Section 482 of Cr.P.C. or under Article 226 of the Constitution of India, the law is well settled and this Court in a catena of decisions laid down clear principles and indicated parameters which justify the quashing of an FIR. We do not propose to catalogue all the cases where the issue was examined but notice only two of them and indicate the consistent principles laid down by this Court in this regard. 168. Therefore, the fact that the Resolution Plan has been approved by the order dated 08.03.2019 of the Hon'ble NCLT (Ahmedabad), upheld in modified form by judgement dated 4.7.2019 passed by this Hon'ble App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C Online NCLAT 402 "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma" he has specifically drawn our attention to para 6, 7 and 8 of the said judgement which are quoted hereinbelow:- "6. Rule 11 of the NCLAT Rules, 2016 reads as hereunder:- "11. Inherent Powers. - Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal." 7. It is noted that in the scheme of IBC, there is no provision for review of a final order passed by NCLAT. Section 61 in Chapter VI of IBC provides for "Appeals and Appellate Authority" wherein the grounds of filing an appeal of the order of NCLT/Adjudicating Authority are provided. Section 62 of the IBC provides for filing of appeal to Hon'ble Supreme Court on the question of law arising out of an order of NCLAT. 8. It is noted that in the matter of Agarwal Coal Corporation Pvt. Limited vs. Sun Paper Mills Limited (2018) 1 SCC 407 IA No. 3303 of 2022 in Company Appeal (AT) (Insolvency) No. 359 of 2020 Page 7 of 11 passed by the NCLAT, it is held that "in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court. 42."To merge" means to sink or disappear in something else; to become absorbed or extinguished; to be combined or be swallowed up. Merger in law is defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, but the greater is not increased; an absorption or swallowing up so as to involve a loss of identity and individuality. (See Corpus Juris Secundum, Vol. LVII, pp. 1067-1068)" He submits that once the judgement of this Tribunal has already been merged with judgement of Hon'ble Supreme Court the applicant is not entitled to maintain the present application and as such the application is fit to be rejected on the ground of maintainability itself. Dr. A.M. Singhvi, learned senior counsel has appeared on behalf of the Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a proceeding in which a judgement is passed and if the said judgement has merged with the order of Hon'ble Supreme Court, applying the doctrine of merger no one is entitled to approach the Court/Tribunal whose judgement/order has been merged with the judgement of the Hon'ble Supreme Court. On this score alone it has been argued that the present application is not maintainable and is fit to be rejected. In rejoinder Mr. Khosla, learned counsel for the applicant reiterated that a judgement which is nullity cannot be merged with any judgement or order. He submits that doctrine of merger may not be applicable in an order/judgement which has been obtained by playing fraud with the Court. Even in the rejoinder he has drawn our attention to statement made in para 166 of the present application which is reproduced hereinbelow: "166. It is most respectfully submitted that when it comes to fraud played upon a Court (leading to its judgement, order or decree being a nullity in law, void ab initio as if non est), and/or when a Court acts 'without jurisdiction' (this also leading to its judgement, order or decree being a nullity in law, void ab initio as if non est), meaning, in other word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank as well as State Bank of India were complete in all respects, for triggering the CIRP against Corporate Debtor company. It was held that Corporate Debtor had committed default in making payment of its financial debt to the financial creditors including Standard Chartered Bank and SBI. The amount of debt was quantified by the Adjudicating Authority stating inter alia that Standard Chartered Bank (SCB) had provided loan of USD 4,13,00,000 to M/s Essar Steel Offshore Limited which was disbursed on 03.01.2014. The said loan was secured as guarantee was given by the Corporate Debtor company namely M/s Essar Steel Holding India Ltd. During CIRP on 7.9.2018 the Adjudicating Authority on challenge to ineligibility of the resolution applicant as well as Numetal Limited, the judgement was passed by the Adjudicating Authority and thereafter Resolution Applicant filed a SLP before the Hon'ble Supreme Court on 10.09.2018 assailing the judgement of the Adjudicating Authority. The Hon'ble Supreme Court by its order dated 4.10.2018 gave all resolution applicants two weeks time to cure their ineligibility under Section 29A of the I&B Code so as to entitle them to submit their resolution plans. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant' made it clear that the 'Resolution Plan' do not relate to any outstanding debt in 'Odisha Slurry Pipeline Infrastructure Limited'. 223. Company Appeal (AT) (Insolvency) Nos. 242, 243, 266, 279, 290, 291, 292, 293, 300, 302-303, 304-305, 332-333, 337, 338, 345, 349, 361, 374, 376, 449, 454, 580 & 551 of 2019 are allowed with observations and directions as made above; Company Appeal (AT) (Insolvency) Nos. 517 & 518 of 2019 stand disposed of with liberty as given to them and Company Appeal (AT) (Insolvency) Nos. 257, 265, 375, 428, 429 & 181 of 2019 are dismissed. No costs." Again judgement of this Appellate Tribunal was assailed before the Hon'ble Supreme Court by filing number of appeals. The Hon'ble Supreme Court by a detailed judgement dated 15.11.2019 finally adjudicated the matter. The judgement of Hon'ble Supreme Court against judgement of this Appellate Tribunal is reported in (2020) 8 SCC 131 (Essar Steel India Ltd Committee of Creditors Vs Satish Kumar Gupta). Despite the fact that the judgement of this Appellate Tribunal dated 04.07.2019 was finally merged with the judgement of Hon'ble Supreme Court on 15.11.2019, after more than 3 years Applicant No.2 who was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reserve Bank of India, and whose activities are overseen by some of the banks who are arrayed as Respondents herein, and who are also Defendants in Money Suit No. 27 of 2022. Therefore, in the opinion of the COC Members of SIFL (who control the actions of the Administrator of SIFL), it is in the interests of these banks that comprise the Committee of Creditors of SIFL that their misdeeds in the affairs of ESSAR Steels India Ltd (herein, "ESIL") and OSPIL not be exposed, neither in the present recall proceedings, nor in the contempt proceedings pending before the Hon'ble High Court of Calcutta and for Hon'ble NCLT (Ahmedabad), nor in the aforementioned Money Suit No. 27 of 2022." On admission of the applicant it is clear that the management of Applicant No.1 on the date of filing of the present application was under the control of Administrator appointed by NCLT Kolkata at the instance of Reserve Bank of India. To justify for approaching this Tribunal in para 5 a stand has been taken as if the Administrator of the Applicant No.1 had not taken any step to protect the interest of the company. It is necessary to reproduce statement made in paras 5, 6, 7 at page 56:- "5.In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta High Court in the name of SIFL. For the ease of referral, the contents of this email are extracted and reproduced verbatim below, it is very last para being the legal justification for a shareholder to come forward by claiming derivative rights to act for, on behalf of, and in the name of the company. From: dk dandklaw.in-dka dandklaw in Sent: 09 February 2023 11:34 To: [email protected] Subject: Protecting of SIFL's interests Mr. Rajneesh Sharma Ld Administrator SREI Group of Companies arciadministratoriare.com 09-02-2023 Dear Sir, I serve upon you this representation cum request on behalf of my client, Ms. Limalemia Longkumer, who is a shareholder of SREI Infrastructure Finance Ltd (herein, "SIFL) It has come to her knowledge that a Contempt Petition (being CPAN No. 922 of 2022) has been filed by certain parties before the Calcutta High Court in relation to an order obtained by SIFL in FMAT 1310 of 2016 dated 22-12-2016, which came up for hearing on 31-01-2023. The order dated 22-12-2016 was in the nature of a status quo direction, resulting in a 253 Km pipeline from Dabuna to Paradip (herein. "the pipeline") being required to be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -02-2018 during the insolvency resolution process of Essar Steel India Lad therein "ESIL") that the pipeline could not be treated as an asset of ESIL and was an asset of OSPIL until decided otherwise by the Sealdah Civil Court However, it is clear that such directions were not followed, thereby constituting contempt of the order of the Calcutta High Court order dated 22-12-2016. In fact, and as you are aware that SIFL had taken the pointed stand before Hon'ble NCLT. Ahmedabad Bench that various payments (namely "right-to-use charges") were payable by ESIL to OSPIL (this naturally could not be if ESIL and various other parties involved in the ESIL insolvency resolution process were not in violation/contempt of the Calcutta High Court order dated 22-12-2016), and ch stand eventually culminated in the 325 page judgement of the NCLT, Ahmedabad Bench dated 10-11- 2020 wherein it found that such payments amounting to Rs. 1.300 Crores were in fact liable to be paid to OSPIL from ESIL. This order, as you are aware, is currently under challenge before the Hon'ble NCLAT New Delhi but SIFL's stand has been consistent throughout in its understanding of the order dated 22-12-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EA), and it cannot possibly be that while wearing the cap of ESIL's PEA/BEA, he was of the view that the pipeline was an asset of ESIL, and while wearing the cap of RP of OSPIL, he was of the view that the pipeline belonged to OSPIL These 2 vital and material facts were consciously and deliberately withheld from Hon'ble NCLAT, because if they it had been disclosed, this meant also disclosing that these OSPIL lenders had not ensured, while acting as Members of ESIL's COC, that ESIL's RP paid RTU charges to OSPIL during the CIRP in compliance with the NCLT order dated 07-02-2018 and that these RTU charges were not included in the CIRP costs in the ESIL Resolution Plan. These two affidavits are attached In other words, by suppression of these so very vital and material facts, in consequential effect, they suppressed the very vital fact that the Plan approved by Hon'ble NCLT by order dated 08-03-2019 was not Code-compliant, and, in fact, was in contempt both of the NCLT order dated 07-02-2018 as well as the injunction dated 22-12-2016. Please note that if no steps are taken, my client intends to exercise derivative rights as a shareholder in representing SIF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ony NEW DELHI 110 024 Land +91 11 4109 9467 Fax: +91 11 4109 9467 Cell: +91 98 110 54200 Email: ddan.dklaw.in On examination of aforesaid two emails a very disturbing fact has come to fore. In email dated 09.02.2023 where time is mentioned as 11.34 A.M an event which took place on subsequent date i.e. 10.02.2023 has been incorporated at Page 59 in 5th para which is again highlighted below, where the event of 10.02.2023 has been mentioned. "It has come to my client's knowledge that SMAIT along with OPSI has filed a Contempt Petition against various defendants and wherein SIFL has also been arrayed as a proper party, and that the said Contempt Petition (CPAN 922 of 2022) came up for hearing on 31-01-2023 and 10-02-2023 and alongwith CPAN No, 70 of 2023 filed by SIFL+ another shareholder (then latter acting for the former), and now is coming up for hearing on 20-02-2023. On 31-01-2023, one Mr. Mitra, Sr Advocate, appeared for SIFL and made the statement that he has no objection to CPAN No. 70 of 2023 petition going forward, but not where P-2 acts for P-1. At the same time, he was inexplicably silent as to whether he would like to prosecute the contempt petition for P-1." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of applicant No.1. The applicant No.2 has not bothered to indicate as to what was the percentage of its share in Applicant No.1. Considering the volume of admitted debt which has been referred in resolution plan admitted debt i.e. Rs.545498856433/- (Rupees Fifty four thousand five hundred forty nine crores eighty eight lakhs fifty six thousand four hundred thirty three only) which is reflected in the application filed by the RP before the Adjudicating Authority vide IA No.431/2018. It appears that the present application may has been filed due to some oblique motive which may require in depth enquiry. It can be enquired as to whether the present application has been filed only by one person or deep routed conspiracy was hatched to frustrate the proceeding under the IBC which was long back adjudicated by Hon'ble Supreme Court as on 15.11.2019. In so far as reliance of Mr. Khosla, learned counsel for applicant on Ramesh Gandhi's case (Supra) on the doctrine of merger is concerned, we are of the opinion that the applicant may not get any assistance from the said case. In Ramesh Gandhi's case FIR lodged by the CBI was quashed by Hon'ble Calcutta High Court. While considering the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, for instance, furnish cases under this category. Cases may also arise where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not. In such cases it would be legitimate for the High Court to hold that it would be manifestly unjust to allow the process of the criminal court to be issued against the accused person. A third category of cases in which the inherent jurisdiction of the High Court can be successfully invoked may also arise. In cases falling under this category the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support of the case or evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is manifest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4). Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated Under Section 155(2) of the Code. (5). Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6). Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7). Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) The jurisdiction conferred by Article 136 of the Constitution is divisible into two stages. First stage is upto the disposal of prayer for special leave to file an appeal. The second stage commences if and when the leave to appeal is granted and special leave petition is converted into an appeal. (iii) Doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgment-decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter. (iv) An order refusing special leave to appeal may be a non- speaking order or a speaking one. In either case it do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and set the law into motion. However, same principle is not applicable in a case where Section 195 of the Cr PC is attracted. Meaning thereby that if in a Court proceeding any offence is committed without, an order passed by the concerned Court under Section 340 of the Cr PC there is difficulty to proceed in the matter. In the present application admittedly till date no direction has been issued under Section 340 of the Cr PC and as such locus of the applicant in respect of recall of the judgement passed by this Tribunal which was passed long back on 04.07.2019 approving the order of the NCLT with certain modification and subsequently order of this Tribunal once merged with the order of the Hon'ble Supreme Court is questionable . Accordingly it would be difficult to entertain the present application particularly on the ground of locus of the applicant. Accordingly we are of the opinion that the applicant in the present case may not get any advantage from the judgement of the Hon'ble Supreme Court in Natarajan's case (Supra) To justify the locus of the applicant No.2 and showing entitlement to file application on behalf of the applicant No.1 company Mr Deepak Khosla, learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent application has admitted that the Management of the company is under Administrator. Once Administrator was there, in normal course having been satisfied that by committing fraud judgement was obtained, then in that event it was expected for applicant No.2 to request the Administrator to take appropriate steps. In the present application applicant by way of referring to two emails purported to be sent to the Administrator of the company, i.e. email dated 09.02.2023 at 11.34 hours and email dated 10.02.2023 at 18.07 hours (as reproduced in the order) has tried to develop a case that earlier Administrator was requested to protect the interest of the company in the present context and thereafter the applicant filed the present application. However, on the face of aforesaid emails it is difficult to place reliance on the same. In email dated 09.02.2023 some event which took place on 10.02.2023 has been referred. Whereas second email dated 10.02.2023 reflects that it was sent on 10.02.2023 at 18.07 hours, however, the present application itself was verified on 10.02.2023. If we propose to further verify the genuineness on this issue we will have to conduct an enquiry whether on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
