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Judgment
Shreesha Merla, Member (T)
The present Application is filed by the Appellant/Applicants seeking recall of the final Order/Judgement dated 31.07.2023 and Order dated 19.07.2023 to the extent they relate to Company Appeal (AT) No.87/2020.
It is submitted by the Learned Sr. Counsel, Dr. UK Chaudhary that the Appellants/Applicants had filed two Company Appeals before this Tribunal against two different Impugned Orders, details of which are as hereunder:
“(a) Order dated June 5, 2020 passed by the Hon'ble NCLT, Kochi Bench in I.A. No. 64/KOB/2020 filed by the Respondents herein in Company Petition No. 02/KOB/2020 under Rule 11 of the NCLT Rules, 2016 [impugned under the captioned Company Appeal (AT) No.87 of 2020]; and
(b) Order dated September 15, 2020 passed by the Hon’ble NCLT, Kochi Bench in I.A. No. 44/KOB/2020 filed by the Appellants/Applicants herein in Company Petition No. 02/KOB/2020 under Section 8 of the Arbitration and Conciliation Act, 1996 [impugned under the Company. Appeal (AT) No. 204 of 2020].”
It is submitted that both the Company Appeals were initially listed and heard separately and thereafter vide Order dated 19.01.2021, this Tribunal had directed to list both the Company Appeals together and both the Appeals were being listed together though the Judgements and Impugned Orders in both the Company Appeals were different and unrelated. It is submitted that pursuant to the Orders of this Tribunal dated 17.01.2023, the Applicants had filed their Additional Written Submissions in Company Appeal (AT) No.204/2020 on 31.01.2023 and the Respondents had filed their Additional Written Submissions on 17.02.2023. Similarly, pursuant to the Order dated 24.01.2023 of this Tribunal, both the parties had filed their respective supplementary Written Submissions in Company Appeal (AT) No.204/2020 on 02.03.2023, which shows that only Company Appeal (AT) No.204/2020 was heard and Written Submissions were filed only in this Appeal and Judgement was also reserved only in this Appeal on 24.02.2023 and thereafter deferred its Order dated 23.03.2023, taking note of the 28.02.2023 Order passed by the Hon’ble Supreme Court in SLP (C) 3515 of 2023.
It is submitted that the Hon’ble Supreme Court has clarified in its Order dated 28.02.2023 regarding Company Appeal No.204/2020 only, as the Judgement was reserved only in that Appeal. It is further submitted that it is the case of both the parties that Company Appeal (AT) No.87/2020 has not been argued before this Appellate Tribunal. I.A. No.2178/2023 was filed by the Respondents in Company Appeal (AT) No.204/2020 placing the Order dated 24.04.2023 of the Hon’ble Supreme Court and seeking pronouncement of the Judgement in Company Appeal (AT) No.204/2020. This shows that it was only this Appeal which was argued and reserved. It is contended by the Learned Sr. Counsel that when I.A. No.2178/2023, filed by the Respondent, was listed for hearing before this Tribunal on 24.05.2023, this Tribunal conducted a short Virtual Hearing and recalled its Order dated 28.03.2023 on the basis of the Hon’ble Supreme Court Order dated 24.04.2023. It is strongly contended by the Learned Sr. Counsel that the Order dated 19.07.2023 wrongly notes that both these Appeals were heard at length and Judgements were reserved and parties were directed to file their Additional Written Submissions. To the surprise of the Appellants/Applicants herein, both the Company Appeals were listed for Orders on 31.07.2023 and the Judgement was pronounced in both the Company Appeals. During pronouncement of the Judgement, it was brought to the notice of this Tribunal that Company Appeal (AT) No.87/2020 was not heard at all, however, this Tribunal did not heed to the submission of the Applicant.
It is further submitted by the Learned Counsel that an interim Order dated 14.07.2020 was passed by this Tribunal in favour of the Applicant staying the operation of the Impugned Order dated 05.06.2020 in Company Appeal (AT) No.87/2020 after appreciating the facts and circumstances of the matter on hand and thereafter without giving any opportunity for hearing the Company Appeal (AT) No.87/2020 was reserved and the Order was pronounced. Therefore, in the interest of justice, the Applicant seek for the recall of the Order and Judgement dated 31.07.2023 and 19.07.2023 passed by this Tribunal in Company Appeal (AT) No.87/2020.
Respondent’s Submissions:
As against this submission, Learned Sr. Counsel Mr. Amit Sibbal strongly resisted the recall of the Orders dated 19.07.2023 and 31.07.2023 passed by this Tribunal on the ground that the extent Appeal was listed for hearing more than 10 times, the Appellant had chosen to argue only the Appeal bearing Company Appeal (AT) No.204/2020, their approach being with respect to the extant Appeal was that if their Section 8 Appeal was allowed and the disputes between the parties were referred to were arbitrable, consequently, the extant Appeal impugning the Order granting forensic audit of the Company would also be allowed. It is for this reason that the Appellant had never questioned, rectified or challenged the directions passed by this Tribunal listing both the Appeals together for hearing or the Order dated 24.02.2023, where this Tribunal reserved the Order in both the Appeals and the Order dated 23.03.2023 recorded clearly that both the Appeals were heard at length. It was strongly advocated by the Learned Sr. Counsel that the Appellants had commenced their arguments in the Appeal on 04.08.2020, and the matter was fixed for final hearing and had drawn our attention to the following chronological dates and events in support of his argument that both the Appeals were heard, and only then Orders were reserved:
• On 09.11.2020 the Section 8 Appeal was admitted and fixed for hearing. The Appellants commenced arguments in the Section 8 Appeal on 27.11.2020 and the said Appeal was listed for continuation of arguments on 19.01.2021. However, on 19.01.2021 upon the request of the Appellants the Section 8 Appeal was tagged along with the CA AT 87/2020 for hearing.
• On 25.02.2021 both Appeals were taken up together and listed for hearing.
• On 14.06.2021 this Hon’ble Tribunal had directed both the parties to file Written Submissions along with the relevant case laws. After the tagging of the matters, arguments were heard by this Appellate Tribunal in these tagged matters on 08.07.2021, when the Appellants had submitted arguments only in the Section 8 Appeal.
• Even in the order dated 08.07.2021, this Appellate Tribunal recorded ‘list these appeals for further arguments of the Learned Sr. Counsel for the Appellant’. The Appellants accepted this position and raised no objection whatsoever.
• Since both these Appeals were part heard before this Tribunal, the Appeals were transferred back from the NCLAT Chennai and listed before this Bench as recorded in the Order dated 31.08.2021. Both Appeals were fixed for hearing on 26.10.2021.
• Once again on 26.10.2021 this Appellate Tribunal, while adjourning the matter at the request of the Appellant, records ‘list these two Appeals ‘For Hearing’. Once again, no objection was raised by the Appellant.
• On 21.12.2021, once again the Appellant addressed their arguments only in the Section 8 Appeal. Both matters were again listed ‘For Hearing’ on 09.02.2022.
• On 05.08.2022 this Tribunal had recorded that arguments by the Appellant were concluded and noted to ‘list these appeals ‘For Hearing’ on 12th October 2022 at 2:00pm for reply arguments on behalf of the Respondents’. Despite such a clear indication that the Tribunal is considering arguments in both these Appeals as concluded on behalf of the Appellant, the Appellants raised no objection and accepted the position.
• On 24.11.2022 this Tribunal passed an order that ‘heard Mr. Jayant Mehta, Sr. Advocate assisted by Mr. Manu Nair Advocate appears on behalf of the Respondents in both the matters’. After recording the request of adjournment by the Appellant on account of unavailability of their Sr. Counsel, the Tribunal records ‘with consent of the parties, list these Appeals ‘For Hearing' on 14th December 2022. Once again, no objection was raised by the Appellant and thereby, this position was accepted.
• On 17.01.2023 this Tribunal passed a very clear order, while listing both Appeals for hearing on another date at the request of the Appellant, this Tribunal records that ‘it is made clear that on that day the Ld. Counsel for the Appellant may argue the maters. No further adjournment shall be granted’. The parties were given liberty to file Written Submissions/ Additional Written Submissions along with relevant case laws. No objection was raised by the Appellant and the position was once again accepted.
• Thereafter on 24.02.2023, after hearing the parties on the submissions they chose to advance, the Tribunal reserved Orders in both the appeals. Once again, no clarity was sought nor any objections raised by the Appellant that the Appeal has not been argued and Order in said Appeal shall not be reserved. No such statement was made.
• On 23.03.2023 this Tribunal once again records in its order that ‘both these Appeals were heard at length and judgment was reserved on 24.02.2023’. The Appellants took no steps whatsoever to bring it to the attention of this Tribunal that the Appellants would like to argue the forensic audit Appeal and that the recorded statement in the order is incorrect.
• On 24.05.2023 only the Section 8 Appeal was listed inasmuch as the Respondents chose to file an Application seeking pronouncement of Judgement in the Section 8 Appeal on the basis of the clarification given by the Hon'ble Supreme Court.
Learned Sr. Counsel also submitted that despite ample opportunities, the Appellant haD made a conscious decision and now cannot take advantage of their own wrong. Further, it is contended that there is no evidence on record to establish that there was any violation of Principles of Natural Justice.
Evaluation :
A brief perusal of the daily Orders shows that on 19.01.2021, both the Appeals were taken up together and listed for hearing on 27.01.2021:
“On 15-01-2021 the matter was ‘De-Part Heard’. After that, the new date matter was listed before us. List the Appeal ‘For Hearing’ on 27th January, 2021 along with Company Appeal (AT) No. 87 of 2020.”
Thereafter on 25.02.2021, the Appeals were taken up together and listed for hearing on 08.07.2021, when both the Appeals were tagged and this Tribunal had recorded ‘to list these Appeals for further arguments of the Learned Senior Counsel for the Appellant’. After the matters were transferred back from NCLAT Chennai, once again on 26.10.2021, this Tribunal had recorded ‘to list both these Appeals for hearing’ and no objection was raised by the Appellant. The Order dated 05.08.2022 reads as hereunder:
“The Ld. Counsel for the Appellant and Respondents are present. From the perusal of the order dated 21.12.2022 it appears that the arguments on behalf of the Appellant is concluded. -2- List these Appeals ‘For Hearing’ on 12th October, 2022 at 2:00 PM for reply arguments on behalf of the Respondents.”
(Emphasis Supplied)
Even in this Order, the Appeals were posted for ‘hearing’ on 12.10.2022 and for reply arguments on behalf of Respondents. Subsequently, in the Order dated 24.11.2022, this Tribunal had recorded that the Respondent arguments were heard in ‘both the matters’ and with the consent of the parties, the Appeals were listed for hearing on 14.12.2022. Once again, on 17.01.2023, both the Appeals were taken up together and were proceeded for hearing for 22.02.2023 at 2:00 PM. Subsequently, though the matter was reserved for Orders on 24.02.2023, there was no objection raised by the Applicants herein that their arguments in Company Appeal (AT) No.87/2020 were not heard. The Order dated 23.03.2023, which is subsequent to the Hon’ble Supreme Court’s Order passed in SLP (C) No. 3515/2023 is reproduced as hereunder:
“1. Both these Appeals were heard at length and judgment was reserved on 24.02.2023. Further, the Ld. Counsel for the parties were directed 2 to file their hardcopy of ‘Additional Written Submission’ not exceeding three pages along with relevant case laws, within a week.
The Ld. Counsel for the Appellants have filed the ‘Supplementary Additional Written Submissions’ in which he has brought on record the Order of Hon’ble Supreme Court passed in “Special Leave to Appeal (c) No. 3515/2023, Ajit Nair v. Pullikkal Veetil Abdul Wahab & Ors., dated 28.02.2023”, wherein the Hon’ble Supreme Court passed the following orders:
“Issue notice returnable in the month of August 2023. Ms. Charu Mathur, learned counsel, who is present, waives service and accepts notice on behalf of respondent No. 1.
The unserved respondents would be served on steps being taken within 7 days from today, by all modes including dasti.
Counter affidavit/reply will be filed within six weeks from today in case of respondent No. 1 and within six weeks from the date of service of notice in case of other respondents. Rejoinder thereto, if any, will be filed within six weeks after service of counter affidavit/reply.
We are inclined to examine the issue raised in view of the ratio in Sukanya Holdings Pvt. Ltd. vs. Jayesh H. Pandya & Anr. reported in (2003) 5 SCC 531 and the decision in Vidya Drolla vs. Durga Trading Corporation reported in (2021) 2 SCC 1.
Till the next date of hearing, there will be stay of operation of the impugned judgment/order dated 10.01.2023.
We clarify that we have not stayed the proceedings pending before the National Company Law Tribunal.”
Today, heard the Ld. Sr. Counsel for the Appellants and Ld. Counsel for the Respondents.
In view of the aforesaid Order of Hon’ble Supreme Court, list these Appeals again ‘For Order’ on 28th
August, 2023. On that day, the Ld. Counsel for the parties will inform the status of the aforesaid Special Leave to Appeal (c) No. 3515 of 2023.”
(Emphasis Supplied)
From this aforenoted Order, it is clearly seen that subsequent to the Orders of the Hon’ble Supreme Court ‘both these Appeals were listed again for Orders on 28.08.2023’. It is categorically recorded in the aforenoted detailed Order that ‘both these Appeals were heard at length and Judgement was reserved on 24.02.2023’. Even at this juncture, the Applicants had not raised any objection that Company Appeal (AT) No.87/2020, ought to be delinked and heard separately or that they were not heard at all.
It is the main contention of the Learned Sr. Counsel, Dr. UK Chaudhary that on 24.05.2023, I.A. No.2178/2023 filed in Company Appeal (AT) No.204/2020 with a prayer to pronounce the Judgement was only in that Appeal which was reserved on 24.02.2023, in which matter the Order of the Hon’ble Supreme Court was brought on record. At this juncture, it is relevant to reproduce the Order dated 19.07.2023 on which date, both the Appeals were heard and reserved for Judgement:
From the perusal of the order dated 24.02.2023 it appears that both these Appeals i.e. Company Appeal (AT) Nos. 87 of 2020 and 204 of 2020 were heard at length and judgment was reserved and further parties were directed to file their ‘Additional Written Submissions’ not exceeding three pages along with relevant case laws within a week. In the meanwhile, Learned Counsel for the Appellants have filed the ‘Supplementary Additional Written Submissions’ in which he has brough on record the Order of Hon’ble Supreme Court passed in “Special Leave to Appeal (c) No. 3515/2023, Ajit Nair v. Pullikkal Veetil Abdul Wahab & Ors., dated 28.02.2023”. Therefore, vide order dated 23.03.2023 passed by this Bench, these aforesaid Appeals were directed to be listed again on 28th August, 2023 ‘For Order’.
In the meanwhile, I.A. No. 2178 of 2023 filed in Company Appeal (AT) No. 204 of 2020 with a prayer to pronounce judgment in Company Appeal (AT) No. 204 of 2020 which was reserved on 24.02.2023. While taking I.A. No. 2178 of 2023 on 24.05.2023, this Bench passed following order:
“I.A. No. 2178 of 2023 filed in Company Appeal (AT) No. 204 of 2020 with prayer to pronounce judgment in Company Appeal (AT) No. 204 of 2020 which was reserved on 24.02.2023. In the said application he has brought on record the Order of Hon’ble Supreme Court passed in “Special Leave to Appeal (c) No. 3515/2023, Ajit Nair v. Pullikkal Veetil Abdul Wahab & Ors., dated 24.04.2023”, wherein the Hon’ble Supreme Court passed the following orders: “IA No. 65875/2023 In our order dated 28.02.2023, while issuing notice and staying the operation of the impugned judgment/order dated 10.01.2023 passed by the High Court, we had clarified that we had not stayed the proceedings pending before the National Company Law Tribunal (NCLT). In other words, the NCLT or the National Company Law Appellate Tribunal (NCLAT), if they so desire, and deem appropriate can proceed with the matter/appeal. We make it clear that we have not expressed any opinion either way. The application is accordingly disposed of.”
Heard the Counsel for the parties and perused the aforesaid order passed by the Hon’ble Supreme Court. The Order dated 23.03.2023 passed by this Bench is hereby recalled and the matter is directed to be listed on 19.07.2023 at 02:00 PM for hearing.
In the meanwhile, Counsel for the Parties may file Reply and Written Submissions/Additional Written Submissions.”
Heard Learned Counsel for the Respondents/Applicants and also heard Learned Counsel for the Appellant on I.A. No. 2178 of 2023 filed in Company Appeal (AT) No. 204 of 2020. Heard in Company Appeal (AT) Nos. 87 of 2020 and 204 of 2020 are reserved for Judgment.”
(Emphasis Supplied)
It is clear from the aforenoted Order that though the I.A. 2178/2023 was filed in Company Appeal (AT) No.204/2020, it is pertinent to mention that both these Appeals were tagged and heard together since 2021 and after multiple hearings, it is also significant to mention that there was no whisper on behalf of the Applicants either on 21.12.2021, 09.02.2022, 05.08.2022, 24.11.2022, 14.12.2022, 17.01.2023 and ‘specifically on 24.02.2023, when initially both the Orders were reserved’. It is relevant to state here that on 23.03.2023 it was recorded by this Tribunal that both these Appeals were heard at length and Judgement was reserved. Even at this juncture, the Appellant had taken no steps to mention that they were not heard or that this Tribunal had wrongly recorded that both these matters were heard and Judgement was reserved. Company Appeal (AT) No.204/2020 was argued elaborately and it is not the case of the Applicants that they were not heard at all. It is stated in para 10 of their own recall Application that on 19.07.2023 this Appellant had conducted a short Virtual Hearing and the matter was reserved for Judgement. In para seven of the recall Application, it is stated that ‘it is the case of both the parties that Company Appeal (AT) No.87/2020 has not been argued before this Hon’ble Appellate Tribunal’. Learned Counsel for the Respondents had vehemently denied this contention and submitted that it was not their case at all.
This Tribunal is of the earnest view that even on 19.07.2023, when it was recorded ‘heard in Company Appeal (AT) Nos.87/2020 and 204/2020 and are reserved for Judgement’; (that is before the pronouncement of the Order), the Applicant had remained silent, till the pronouncement of the Judgement on 31.07.2023. Therefore, we are of the considered view that Principles of Natural Justice were followed, the Applicants were always represented and though the Appeals were clubbed and heard together there was absolutely no whisper on their behalf, till, after, the pronouncement of the Judgement that only Company Appeal (AT) No.204/2020 was heard. At this juncture, we find it pertinent to extract the relevant portion of the Judgement in `Union Bank of India’ Vs. `Dinkar T Venkatasubramanian & Ors.’ reported in 2023SCC OnLine NCLAT 283, in which matter a five Judge Bench of this Tribunal has examined the power to recall its Judgement relying upon the Hon’ble Supreme Court’s decision in the case of `Budhia Swain & Ors.’ Vs. `Gopinath Deb & Ors.’ reported in (1999) 4 SCC 396, wherein the criteria on which basis recall can be granted was recorded:
“17. In another judgment of “(1999) 4 SCC 396, Budhia Swain v. Gopinath Deb”, the Hon'ble Supreme Court has dealt with power to recall. In Paras 5, 6, 7 and 8 following has been laid down:
“5. The only provision for review in the Act is to be found in Section 38-A whereunder a review may be sought for within one year from the date of the decision or order but only on the ground that there has been a clerical or arithmetical mistake in the course of any proceedings in the Act. It was also conceded by the learned counsel for the appellants that the proceedings initiated by the appellants were certainly not under Section 38A. It was also conceded at the bar that the subsequent action of the O.E.A. Collector could be sustained only if supportable by the power to recall.
What is a power to recall? Inherent power to recall its own order vesting in tribunals or courts was noticed in Indian Bank v. Satyam Fibres India Pvt. Ltd. (1996) 5 SCC 550 Vide para 23, this Court has held that the courts have inherent power to recall and set aside an order
(i) obtained by fraud practised upon the Court,
(ii) when the Court is misled by a party, or
(iii) when the Court itself commits a mistake which prejudices a party.
In A.R. Antulay v. R.S. Nayak (1988) 2 SCC 602 (vide para 130), this Court has noticed motions to set aside judgments being permitted where
(i) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all and was shown as served or in ignorance of the fact that a necessary party had died and the estate was not represented,
(ii) a judgment was obtained by fraud,
(iii) a party has had no notice and a decree was made against him and such party approaches the Court for setting aside the decision ex debito justitiae on proof of the fact that there was no service.
In Corpus Juris Secundum (Vol. XIX) under the Chapter “Judgment - Opening and Vacating” (paras. 265 to 284 at pages 487-510) the law on the subject has been stated. The grounds on which the courts may open or vacate their judgments are generally matters which render the judgment void or which are specified in statutes authorising such actions. Invalidity of the judgment of such nature as to render it void is a valid ground for vacating it at least if the invalidity is apparent on the face of the record. Fraud or collusion in obtaining a judgment is a sufficient ground for opening or vacating it. A judgment secured in violation of an agreement not to enter judgment may be vacated on that ground. However, in general, a judgment will not be opened or vacated on grounds which could have been pleaded in the original action. A motion to vacate will not be entered when the proper remedy is by some other proceedings, such as by appeal. The right to vacation of a judgment may be lost by waiver or estoppel. Where a party injured acquiesces in the rendition of the judgment or submits to it, waiver or estoppel results.
In our opinion a tribunal or a court may recall an order earlier made by it if
(i) the proceedings culminating into an order suffer from the inherent lack of jurisdiction and such lack of jurisdiction is patent,
(ii) there exists fraud or collusion in obtaining the judgment,
(iii) there has been a mistake of the court prejudicing a party, or
(iv) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all or had died and the estate was not represented.
The power to recall a judgment will not be exercised when the ground for re-opening the proceedings or vacating the judgment was available to be pleaded in the original action but was not done or where a proper remedy in some other proceeding such as by way of appeal or revision was available but was not availed.
The right to seek vacation of a judgment may be lost by waiver, estoppel or acquiescence.”
In this paragraph, the grounds on which a Tribunal or a Court can recall the Order has been clearly laid down. We are of the considered view that there is no element of ‘fraud’ or ‘collusion’; that this Tribunal did not commit any ‘mistake’ or ‘prejudice any party’ or has acted outside its jurisdiction. We have adhered to Principle of Natural Justice, and therefore, we are of the earnest view that the power to ‘recall’ our Orders/Judgements dated 19.07.2023 and 31.07.2023 ought not to be exercised in the facts of the attendant matter on hand.
For all the foregoing reasons, this I.A. 4359/2023 in Comp. App. (AT) No.87/2020 is dismissed accordingly. No Order as to costs.