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TMI Blog2023 (4) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to the law in this regard. 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 counsel for the applicant has placed heavy reliance on a judgement of Federal Court reported in Dr Satya Charan Law and others Vs Rameshwar Prasad Bajoria and others [ 1949 (12) TMI 40 - FEDERAL COURT ]. The applicant may not get any benefit from this judgement in view of the fact that the Hon ble Federal Court also had considered that it is cardinal principle that in respect of any dispute, case is to be filed by the company itself to protect the right and interest of the company. However, exception has been noticed that the majority of the shareholders are also entitled to take steps to redress the wrong. The applicant in the present 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. Moreover in the present case the applicant was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Rohatgi, learned senior counsel who appeared on behalf of Successful Resolution Applicant. After completion of argument by learned senior counsel afore referred, in rejoinder Mr. Deepak Khosla, learned counsel started his submission. Instead of confining his submission to the reply he further wanted to introduce new argument which was not acceded to by us. The IA was heard purely on the maintainability and order was reserved. It is a peculiar application which was mentioned on 10.02.2023 and filed through e-filing and also hard copy was filed on 13.02.2023. The present application which has been filed in the second week of February, 2023 has primarily been filed for intervention/recall of detailed judgement passed by this Tribunal long back on 4.7.2019 and subsequently merged with the detailed judgment passed by Hon ble Supreme Court long back on 15.11.2019. This Tribunal had considered number of appeals together including Company Appeal (AT)(Ins) No.242/2019 which was filed by Standard Chartered Bank and was heard alongwith Company Appeal (AT)(Ins) No.243/2019 and other appeals. All those appeals by a detailed judgement dated 4.7.2019 were finally adjudicated by Division B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and applicant No.2 have been arrayed as applicants in the present IA. M/s SREI Infrastructure Finance Ltd has been arrayed as applicant No.1 through its shareholder Ms Limalemla Longkumer and Ms Limalemla Longkumer has been arrayed as applicant No.2. The present application has been filed after more than 3 years from the judgement of this Tribunal that too without any application for condonation of delay. However, the recall of the judgement has been sought for on a plea as if fraud was committed by the Respondents in the proceeding before this Tribunal in Company Appeal (AT)(Ins) No.242/2019 and other connected appeals. Since at the time when the application was first taken up serious objections were raised by the learned senior counsel for some of the Respondents, we proposed to request Mr. Deepak Khosla, learned counsel for the applicants to satisfy us on the question of maintainability of the present application. Accordingly Mr. Khosla, learned counsel for the applicants submitted that since the judgement from this Tribunal was obtained by committing fraud, the judgement of this Tribunal i.e. judgement dated 4.7.2019 is nullity and as such it needs to be recalled. In sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 994) 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 of finality of litigation if the so-called finality is constructed on fraud on any Court in the chain going up to superior / appellate Courts, even if the last link in such chain was the Hon'ble Supreme Court itself: 1. Fraud-avoids all judicial acts, ecclesiastical or temporal observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes of law. Such a judgment/ decree-by the first court or by the highest court has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings 7. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on Ramesh Gandhi s case (Supra) he has drawn our attention to para 167 and 168 of the present application. We may reproduce the same as follows:- 167. The above submissions are reflected in no better manner than in the case of Union of India Vs Ramesh Gandhi and Ors (2012) 1 SCC 476, when it comes to fraud played upon a Court or Tribunal, the Hon ble Supreme Court, very decisively, settled the proposition that even if an order has travelled all the way up to the Hon ble Supreme Court, the same can be assailed before any Court, even an inferior Court, meaning thereby that if a fraud had been played upon Hon ble NCLT, rendering its proceedings and orders into a nullity in law, a declaration can be sought from any court or tribunal including from this Tribunal. Paras 21-26 of that judgement are reproduced below:- 21. Coming to the judgment under appeal, as it is already noticed that the High Court quashed the FIR only on the ground that the supply of coal had been obtained in terms of a decision given by the Calcutta High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained 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 est and cannot be allowed to stand. This is the fundamental principle of law and needs no further elaboration. Therefore, it has been said that a judgment, decree or order obtained by fraud has to be treated as nullity, whether by the court of first instance or by the final court. And it has to be treated as nonest by every Court, superior or inferior. [emphasis supplied] If a judgment obtained by playing fraud on the Court is a nullity and is to be treated as non est by every Court superior or inferior, it would be strange logic to hear that an enquiry into the question whether a judgment was secured by playing fraud on the Court by not disclosing the necessary facts relevant for the adjudication of the controversy before the Court is impermissible. From the above judgments, it is clear that such an examination is permissible. Such a principle is required to be applied with greater emphasis in the realm of public law jurisdiction as the mischief resulting from such fraud has larger dimension affecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act 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 Appellate Tribunal, eventually going all the way up to the Hon ble Supreme Court is of no relevance whatsoever in itself, because even the Hon ble Supreme Court was misled by this Plan, it not being made aware that it was being approved not just by fraud, but also, that it was not Code-complaint; worse, that also was in contempt of the order dated 22.12.2016 passed by the Hon ble High Court of Calcutta, and the order dated 07.02.2018 passed by the Hon ble NCLT (Ahmedabad). None of these extremely vital aspects of the matter were brought before the Hon ble Supreme Court for its attention/examination, thus, entitling the Hon ble NCLT (Ahmedabad) to examine these aspects while re-evaluating its order dated 08.03.2019, and/or entitling Hon ble NCLAT to examine the same aspects while re-evaluating its judgement dated 04.07.2019. He concluded that though the judgement dated 4.7.2019 passed by this Appellate Tribunal travelled to the Hon ble Supreme Court, there is no hesitation for agitation to this T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 absence of any power of review or recall vested with the Adjudicating Authority/Appellate Authority, any order/judgment passed by it cannot be either reviewed or recalled . It is further held by NCLAT in the same judgment that a judgment passed by the Tribunal becomes conclusive , final and binding and the Applicant cannot take recourse to rule 11 of the NCLAT Rules, 2016, which provide inherent powers . The same judgment held that appropriate course of action open to the applicant is to approach the Hon ble Supreme Court under section 62 against the said judgment, if the Applicant so desires. Taking clue from aforesaid observation it was argued that entertaining the present application for recall of a detailed judgement passed by this Appellate Tribunal is impermissible and the present application is liable to be rejected. Mr. Mehta, learned SG has further argued that besides non-availability of any provision for review or recall of earlier judgement dated 4.7.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled 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 Debtor. In the present case the Corporate Debtor was Essar Steel India Ltd. Dr. Singhvi, learned senior counsel has argued that judgement of this Tribunal was assailed before Hon ble Supreme Court and Hon ble Supreme Court by its judgement dated 15.11.2019 has set the matter at rest. He submits that the judgement of Hon ble Supreme Court against the judgement of this Appellate Tribunal is already reported in (2020) 8 SCC 531. Mr. Mukul Rohatgi, learned senior counsel for Resolution Applicant, by way of referring to an order passed by a Coordinate Bench of this Tribunal in an unreported case in IA No.265/2019, dated 25.10.2021 in the matter of Aggarwal Coal Corporation Pvt Ltd Vs Sun Paper Mills Ltd and another, has argued that almost on similar plea i.e. an order was obtained from this Tribunal by committing fraud, the application for recall was rejected by this Tribunal. In the said case also a plea was taken that by way of committing fraud judgement from this Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 words, when any one or more of the 2 limbs of Section 44 of the Evidence Act get(s) attracted, it is immaterial whether the order in question has travelled all the way upto a superior/Appellate court(s) or not, including upto the Hon ble Supreme Court. The doctrine of merger never gets attracted in such case, because of application on the principles of underlying the maxim cadit opus fondamento sublato, read with the well settled principle that once a nullity, always a nullity , and that nothing can be mounted/superimposed upon a nullity (because if it can, then what is being referred to as a nullity is not actually a true nullity) (This submission is made subject to the condition that the question of fraud and/or lack of jurisdiction should not have been part of the issues adjudicated by the superior/Appellate Court, if it was, then the doctrine of merger will most certainly apply). In sum and substance it has been argued that fraud was pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. On 25.10.2018 RP filed an IA No.431/2018 before the Adjudicating Authority seeking approval of final resolution plan. Finally on 8.3.2019 the Adjudicating Authority passed a common order partially allowing the approval of the resolution plan as submitted by Arcelormittal India (P) Ltd. It is reflected from the record that the total admitted claims as on 24th October, 2018 in relation to Corporate Debtor was Rs.54549,88,56,433/- (Rupees fifty four thousand five hundred forty nine crores eighty eight lakhs fifty six thousand four hundred thirty three only). After the order passed by the Adjudicating Authority partially allowing resolution plan of Arcelormittal, number of appeals were filed before this Appellate Tribunal. Standard Chartered Bank filed an appeal under Section 32 read with Section 61 of the I B Code vide Company Appeal (AT)(Ins) No.242/2019. The Company Appeal (AT)(Ins) No.242/2019 alongwith other connected appeals were finall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td 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 party either before the NCLT, before this Tribunal or before Hon ble Supreme Court in connection with the present dispute, verified the present IA No.674/2023 on 10.02.2023 and thereafter the application was listed under the caption for orders on 15.02.2023 and finally on 01.03.2023 after hearing the parties order was reserved. The applicant No.2 though was not party in earlier proceeding claiming to be shareholder of SREI Industrial Finance Ltd who is intervenor/Applicant No.1, has filed the present application. The applicant No.2 to maintain the present application has claimed that she has exercised her derivative right on behalf of applicant No.1. To satisfy her derivative right in the present application at Page 53 in para 4 (c) it has been stated c) In the present case, it is the admitted position that on 08-10-2021, Applicant No. 1 (SREI Infrastructure Finance Ltd, herein, 'SIFL') has been placed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. 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 the present case, the Administrator of SIFL has shown over the last 6-8 months that he will not come forward to protect the interests of SIFL if, while protecting such interests, it amounts to taking action against certain lenders who form the COC of SIFL. There are many such members of the COC of SIFL who are sought to be taken action against in the present proceedings, hence, the Administrator is not coming forward to take action against them in the name of SIFL, as is self- evident from the emails reproduced in paras 10-11 below. 6.In other words, he is in breach of his fiduciary duty, given that he prefers to place the interests of the lenders to SIFL on a higher pedestal than the interests of the very company (SIFL) whose affairs he has been appointed to safeguard. 7. On the point of the derivative right of Applicant No. 2 to appear and act in the present proceedings also for SIFL, it is most respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asset of Odisha Slurry Pipeline Infrastructure Limited an (herein, OSPIL ) until decided otherwise by the Sealdah Civil Court in Title Suit No. 177 of 2016 filed by SIFL as the plaintiff. As you are aware, SIFL is a contributory to the extent of 52% of the corpus of India Growth Opportunity Fund' (herein, IGOF ), a fund operated by SREI Multiple Asset Investment Trust (herein, SMAIT ), and which fund held (and is contended by SMAIT to still hold) around 70% of the equity capital of OSPIL (precisely, 69.81% of the equity capital). It has come to my client's knowledge from open court hearings and court orders available in the public domain that it is the considered contention of SMAIT that the entire insolvency-resolution process pertaining to OSPIL, which culminated in the order approving the (alleged) Resolution Plan filed by Arcelor Mittal India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hmedabad 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 22-12-2016 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. In light of this situation, my client, along with various other shareholders of SIFL who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial 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 SIFL and protecting its interests, because it would be clear that your refusal to join these proceedings, or initiate independent contempt or to initiate proceedings for recall of the July 2019 judgement, is because such steps would injure the interests of certain lenders to ESIL and OSPIL, which lenders are also Members of the COC of SIFL. In fact, since all these 3 lenders who filed affidavits before the Sealdah Court are Members of the COC of SIFL, it would be a breach of fiduciary duty if you were to place their interests over and above those of SIFL and not seek recall of the judgement dated 04-07-2019 which would unarguably advance SIFL's interests only because of the potential fall-out against these 3 lenders (rather, against all the 12 OSPIL lenders. all of whom were members of the COC of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The second email aforementioned which starts from Page 60 of the present application makes it clear that this email was sent on 10.02.2023 at 18.07 hours (06.07 PM). In email dated 10.02.2023 which was purported to be issued at 18.07 hours it was stated as if the Administrator of applicant No.1 since has not taken any steps before the NCLT or before Hon ble High Court of Calcutta, to protect and promote its interest in terms of referring proceeding for seeking recall of the judgement dated 04.07.2019 and/or proceed for contempt of court for violation of the order dated 20.12.2016 the applicant may take appropriate steps as permitted in law. However, the present application itself has been shown to be verified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acy 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 correctness of the order of Hon ble High Court the Hon ble Supreme Court was pleased to record certain observation, however, finally order of Hon ble Calcutta High Court setting aside the FIR WAS QUASHED. We feel necessary to reproduce concluding portion of the Judgement of Hon ble Supreme Court in (2012) 1 SCC 476 (Union of India Vs Ramesh Gandhi) from para 31 to 35 as under:- 31. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In exercising its jurisdiction under Section 561-A the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial magistrate, and ordinarily it would not be open to any party to invoke the High Court's inherent jurisdiction and contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained. Broadly stated that is the nature and scope of the inherent jurisdiction of the High Court under Section 561-A in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the Court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice. 34. Tested from the point of view of the law laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. (v) If the order refusing leave to appeal is a speaking order, i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 counsel for the applicant has placed heavy reliance on a judgement of Federal Court reported in AIR 1950 FC 133 Dr Satya Charan Law and others Vs Rameshwar Prasad Bajoria and others. The applicant may not get any benefit from this judgement in view of the fact that the Hon ble Federal Court also had considered that it is cardinal principle that in respect of any dispute, case is to be filed by the company itself to protect the right and interest of the company. However, exception has been noticed that the majority of the shareholders are also entitled to take steps to redress the wrong. The Federal Court finally concluded as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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 same date and before 18.07 hours any communication was made by the applicant or on her behalf to this Tribunal or not. We consider that at the moment such enquiry is not needed particularly when we are dealing with the issue of maintainability of the present application. In so far submission made by Mr. Deepak Khosla, learned counsel for the applicant that fraud vitiates everything and his reliance on the judgement of Hon ble Supreme Court in (1994) 1 SCC 1 (S.P. Chengalvaraya Naidu (dead) by LRs Vs Jagannath (Dead) by LRs and others) is concerned we are also in agreement with his submission that fraud vitiates everything. How ..... X X X X Extracts X X X X X X X X Extracts X X X X
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