SREI Industrial Finance Ltd. vs Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors.

O R D E R

“8.

In our view it is not necessary to pursue the approach of either of the party. It is well settled that in criminal law that a complaint can be lodged by anyone who has become aware of a crime having been committed and thereby set the law into motion. In respect of offences adverted to in Section 195 CrPC, there is a restriction that the same cannot be entertained unless a complaint is made by a court because the offence is stated to have been committed in relation to the proceedings in that court. Section 340 CrPC is invoked to get over the bar imposed under Section 195 CrPC. In ordinary crimes not adverted to under Section 195 CrPC, if in respect of any offence, law can be set into motion by any citizen of this country, we fail to see how any citizen of this country cannot approach even under Section 340 CrPC. For that matter, the wordings of Section 340 CrPC are significant. 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.”

“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 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 the High Court that "there is no legal duty cast upon the plaintiff to come to Court with a true case and prove it by true evidence" The principle of "finality of litigation cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property- grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the, illegal-gains indefinitely. We have no hesitation to say that a person whose case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of the litigation."

154 That it is most relevant to highlight that the afore-mentioned judgement delivered by it in the case of S.P. Chengal Varaya Naidu (Dead) By Lrs. Vs. Jagannath (Dead) By Lrs. & Ors. [(1994) 1 SCC 11 was relied upon by the Hon'ble Supreme Court while delivering its judgement in the case of Union of India vs. Ramesh Gandhi & Ors. [(202) 1 SCC 4761, which was a judgement in which the Hon'ble Supreme Court of India specifically found fault in the 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.”

“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 and approved by this Court and for the said reason no magistrate can, therefore, decide whether any unjust pecuniary advantage was made available to the private company. For coming to such a conclusion, the learned Judge made an `elaborate examination' of the Indian legal system. But, in our opinion, the entire enquiry proceeded on a wrong premise that no examination, as to how a judgment of a superior Court came into existence, is permissible in the system of law which we follow.

22.

This Court on more than one occasion held that fraud vitiates everything including judicial acts. In S.P. Chengal Varaya Naidu (Dead) By Lrs. Vs. Jagannath (Dead) By Lrs. & Ors., (1994) 1 SCC 1, this Court observed as follows in para 1:-

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 honest 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."

23.

Again in A.V. Papayya Sastry and Ors. Vs. Government of A.P. and Ors., AIR 2007 SC 1546, this Court reviewed the law 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 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 the larger public interest. Therefore, the conclusion reached by the judgment under appeal that no Court can examine the correctness of the contents of the impugned FIR, is unsustainable and without any basis in law. The very complaint in the FIR is that the judgment of the Calcutta High Court, as affirmed by this Court, is a consequence of a deliberate and dishonest suppression of the relevant facts necessary for adjudicating the rights and obligations of the parties to the said litigation

24.

Coming to the question as to what amounts for securing a judgment by playing fraud in the Court- In Chengal Varaya Naidu (supra), this Court categorically held that the non-disclosure of all the necessary facts tantamounts to playing fraud on the Courts. At para 6 of the said judgment, it was held as follows:

"..............If he withholds a vital document in order to gain advantage on the other side then he would he guilty of playing fraud on the court as well as on the opposite party."

25.

The allegation in the FIR is that the various accused deliberately withheld/suppressed the fact that the private company, by the time it approached the Calcutta High Court in writ petition Nos.940 and 941 of 1994, had already committed breach of its obligations arising of the contracts from out of which the entire litigation arose. A fact which is greatly relevant in deciding 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 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.”

“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 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.”

“41.

Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non- speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter 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)”

“22.

The Applicant/Appellant in IA No.265/2019 in Comp App (AT)(Ins) No.412/2019, has prayed for an exercise of inherent powers by this ‘Tribunal’ and to recall (Simpliciter) of the order dated 16.10.2019 pass by this Tribunal in Comp App (AT)(Ins) No.412/2019, on the ground of ‘Fraud’ played by the Respondents. Apart from this, a relief is sought for by the ‘’Applicant’’ for setting down the Appeal for ‘Hearing’ on its merits, after allowing of the ‘’Application’’.

32.

In view of the upshot, this Tribunal taking note of the prime fact that the Applicant/Appellant has sought for “recalling” the judgement dated 16.10.2019 passed by this Appellate Tribunal in Comp App (AT)(Ins) No.412/2019 etc., which is impermissible in Law and that this ‘Tribunal’ is of the earnest opinion that the appropriate course of action open to the Applicant / Appellant is to approach the Hon’ble Supreme Court of India as against the judgement in Comp App (AT)(Ins) No.412/2019 dated 16.10.2019 passed by this “Tribunal” if it so desires/advised. Looking at from that perspective, the I.A. No.265/2019 in Comp App (AT)(Ins) No.412/2019 is devoid of merits and it fails.”

“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 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).

“221.

In this background, the cases in which the Adjudicating Authority or this Appellate Tribunal could not decide the claim on merit, we have allowed such Appellants to raise the issue before an appropriate forum in terms of Section 60(6) of the ‘I&B Code’. The ‘Financial Creditors’ and the ‘Operational Creditors’ whose claims have been decided by the Adjudicating Authority or this Appellate Tribunal, such decision being final and is binding on all such ‘Financial Creditors’ and the ‘Operational Creditors’ in terms of Section 31 of the ‘I&B Code’. Their total claims stand satisfied and, therefore, they cannot avail any remedy under Section 60(6) of the ‘I&B Code’. The ‘Financial Creditors’ in whose favour guarantee were executed as their total claim stands satisfied to the extent of the guarantee, they cannot reagitate such claim from the Principal Borrower.

222.

It is made clear that this decision relates to ‘Corporate Insolvency Resolution Process’ initiated against ‘Essar Steel India Limited’. It does not relate to ‘Odisha Slurry Pipeline Infrastructure Limited’. Mr. Harish Salve, learned Senior Counsel for the ‘Resolution Applicant’ 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.”

“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 the care of an Administrator on the request of the Reserve Bank of India, under Section 7 of the IBC.

d)

It is also the admitted position that Applicant No. 1 Co is a public limited company whose shares are listed on the National Stock Exchange and the Bombay Stock Exchange, and notwithstanding appointment of an Administrator over its affairs, its shares are reported to be continuing to be traded.

e)

It is also the admitted position that Applicant No. 2 is a shareholder of Applicant No. 1. (Leave is craved to file evidence of his shareholding, upon being required to do so.)

f)

SIFL is acting in the present proceedings through Applicant No. 2. its shareholder, the latter claiming derivative rights of a shareholder to act for, on behalf of, and in the name of a Company in circumstances that are squarely attracted here. Leave is craved to present judicial precedents on the subject. which, in the circumstances presented herein, fully justify the actions of Applicant No. 2, as a shareholder of Applicant No. 1 Co, acting for, on behalf of, and in the name of the Applicant No. 1 Co. some of which judicial precedents are set out below.

g)

Applicant No. 2: Applicant No. 2 is Ms. Limalemla Longkumer, who is a shareholder of Applicant No. 1 Co (SIFL). She is aggrieved by the fact that Applicant No. 1 Co is presently under the care of an Administrator appointed by Hon'ble National Company Law Tribunal (herein, NCLT), Kolkata at the instance of the 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.”

“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 respectfully submitted that it is an admitted case, albeit, only ordinarily, that it is only the duly-authorised Directors of a Company who can conduct litigation in its name. In other words, the action on the part of Applicant No. 2 in purporting to act for OSPIL on the ground that he is its shareholder, ordinarily, is not admissible in law.

“12.

That to urge the SREI Administrator to come forward to act to protect and promote the interest of SIFL, the Applicant No.2 had her counsel address to him his email dated 10.02.2023 urging him to go forward and seek recall of the judgement dated 04.07.2019, and also to seek impleadment in the contempt proceedings pending before the Hon’ble Calcutta High Court, or to file his own proceedings, but to which no reply was received, leading to other shareholders seeking impleadment in the contempt proceedings pending before the Hon’ble Calcutta High Court by acting for and on behalf of, and in the name of SIFL, and also filing a stand-alone petition before the Hon’ble Calcutta 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 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 (P) Ltd dated 02-03-2020, eventually resulting in the order passed by the Hon'ble National Company Law Tribunal (herein, "NCLT") dated 08-07-2020, is a nullity in law, which is, therefore, void ab initio as if non est.

Therefore, a consequence of such contention is that SMAIT, through IGOF. continues to hold 69.81% of the lawful equity capital of OSPIL even as of today, which means that SIFL also has a live claim and interest in the matter, given that SIFL has contributed 52% of the funds that acquired 69.81% of the equity of OSPIL

My client believes that as the Resolution Professional (Administrator) of SIFL, you have been positioned to commandeer SIFL in order to protect the interests, rights and the important strategic positions taken by SIFL in the past.

This creates a fiduciary duty towards its stakeholders as well, which includes, inter alia, all the shareholders of SIFL, such as my client.

My client has been closely following the litigation that is being conducted by OSPIL. in Kolkata and Ahmedabad, and it has become clear to her that the positions taken by SMAIT are essentially executions/furtherance (or "the next steps", so to speak) of many actions that have been initiated by SIFL itself.

Therefore, all these actions by SMAIT are in the interests of SIFL, and SIFL ought to join in these efforts.

FMAT 1310 of 2016 is an appeal that has been filed by SIFL itself, and it is on the basis of the order dated 22-12-2016 that the NCLT. Ahmedabad Bench decided in their order dated 07-02-2018 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 22-12-2016

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 are also concerned about SIFL's position with regard to these orders, believe that it is imperative that SIFL joins cause in the matter, as at is intrinsically SIFL's cause.

Not doing the same would result in huge monetary loss to SIFL, and in fact, would result in all the hard work and effort of SIFL in achieving great advances in exercise of its legal rights going to waste.

Therefore, it is my client's humble request as a bona fide shareholder of SIFL that appropriate steps be taken by you to protect SIFL's interests, by joining cause with the Petitioners in CPAN 922 of 2022 and CPAN No. 70 of 2023.

Similarly, the judgement dated 04-07-2019 was obtained from Hon'ble NCLAT by fraud by the lenders of OSPIL (SBI, ICICI and Edelweiss ARC) who formed part of the COC of ESIL The fraud was that around 1 week before passing of this judgement (i.e. on 28-06-2019), they filed affidavits before the learned Civil Court at Sealdah, swearing that the Rs. 4,000 crore pipeline belongs to OSPIL, and stands mortgaged by OSPIL to them.

Similarly, the 2nd fact withheld from Hon'ble NCLAT was that Ashish Chhawchharia (Grant Thornton), the RP of OSPIL. had stated in COC meetings of OSPIL well prior to 04-07-2019 that he was of the view that the pipeline was an asset of OSPIL, so much so that he filed an affidavit on 16-07-2019 before the Ld. Sealdah Court to such effect.

The relevance of the view of Ashish Chhawchharia is that he was also the Plan Evaluation Advisor (PEA) of ESIL, as also the Bid Evaluation Advisor (BEA), 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 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 ESIL as well, and who are members of the SIFL COC also),

Thanking You

Deepak Khosla D&K Law Offices D-367 Defence Colony NEW DELHI 110 024 Cell: +91 98 110 54200

13.

Applicant No. 2 caused to address a similar email to the SREI Administrator again on 10-02-2023 in relation to these very (intended) proceeding, but, again, no reply was received, thereby entitling the Applicant No. 2 to come forward as a shareholder, and by claiming derivative rights of a shareholder, to act for, on behalf of, and in the name of Applicant No. 1 Co in the present proceedings. The same is reproduced verbatim below, to which no reply has been received at the time of drafting and executing the present application:

From: [email protected] <[email protected]> Sent: 10 February 2023 18:07 To: [email protected] Subject: FW: Protecting of SIFL's interests. To:

Mr. Rajneesh Sharma Ld. Administrator SREI Group of Companies [email protected] 10-02-2023

Dear Sir

Please see my earlier email dated 09-02-2023 in trail below), to which I have not received any reply

I note that despite the email, SIFI, has taken no steps before the Han’ble NCLAT or the Hon’ble High Court of Calcutta to protect and promote its interests in terms of preferring for joining) proceedings for seeking recall of the judgement dated 04.07. 2019 and or proceedings for contempt of Court for violation of the order dated 22-12- 2016.

Therefore, my client intends to take appropriate steps as are permitted in law.

Cordially,

Deepak Khosla D&K Law Offices D-367 Defence Colony NEW DELHI 110 024 Land +91 11 4109 9467 Fax: +91 11 4109 9467 Cell: +91 98 110 54200 Email: ddan.dklaw.in

“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.”

“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 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.

32.

In R.P. Kapur Vs. State of Punjab, AIR 1960 SC 866, this Court at para 6 held:

"6.................It is well-established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. It is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction. However, we may indicate some categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings. There may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice. If the criminal proceeding in question is in respect of an offence alleged to have been committed by an accused person and it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding the High Court would be justified in quashing the proceeding on that ground. Absence of the requisite sanction 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 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 the matter of quashing criminal proceedings, ...................."

33.

In State of Haryana and others Vs. Ch. Bhajan Lal and others AIR 1992 SC 604, this Court after reviewing large number of cases on the question of the quashing the FIR held at paras 108 and 109 as follows: (SCC pp. 378-79, paras 102-103)

"102.

In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extra-ordinary power under Article 226 or the inherent powers Under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1). Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima-facie constitute any offence or make out a case against the accused.

(2). Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers Under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3). Where the 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 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 in the above mentioned judgments, the impugned FIR does not merit interference, as it is not a case of even the respondent (writ petitioners) that the FIR is required to be quashed on any one of the grounds legally recognised by this Court to be sufficient ground for quashing an FIR.

35.

For all the above reasons, we are of the opinion that the judgment under appeal cannot be sustained and the same is required to be set aside and we, accordingly, set aside the same. The appeal stands allowed.”

“44.

To sum up our conclusions are :-

(i)

Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.

(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 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 findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.

(vi)

Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.

(vii)

On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of Rule (1) of Order 47 of the C.P.C.”

“The correct position seems to us to be that ordinarily the directors of a company are the only persons who can conduct litigation in the name of the company, but when they are themselves the wrongdoers against the company and have acted mala fide or beyond their powers, and their personal interest is in conflict with their duty in such a way that they cannot or will not take steps to seek redress for the wrong done to the company, the majority of the shareholders must in such a case be entitled to take steps to redress the wrong. There is no provision in the articles of association to meet the contingency, and therefore the rule which has been laid down in a long time of cases that in such circumstances the majority of the shareholders can sue in the name of the company must apply. In MacDougall V. Gardiner and Pender V Lushington, specific reference was made to the fact that the directors, being the custodians of the seal of the company, were the persons who should normally sue in the name of the company, but nevertheless it was held that the majority of the shareholders were entitled to sue in the name of the company when relief was sought against the directors themselves.”