Bombay High Court
Arunachalam Muthu vs Nafan Bv on 30 November, 2012
Bench: S. J. Kathawalla
KPP -1- Company Appeal (L) No. 28 of 2012
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPEAL (LODGING) NO. 28 OF 2012
ALONG WITH
COMPANY APPLICATION (LODGING) NO. 28 OF 2012
IN
CLB COMPANY APPLICATION NO. 275 OF 2012
IN
CLB COMPANY PETITION NO. 62 OF 2009
Arunachalam Muthu )
residing at No. 1 Hermes House, )
7B Worli Sea Face, Mumbai-400 030 )...Appellant
vs.
1. Nafan BV, having its registered office at )
Locatellikade 1, Parnassustrn, )
1076AZ Amsterdam )
2. Saf Yeast Co. Pvt. Ltd. )
having its registered office at 419 Swastik Chambers, )
Chembur, Mumbai-400 071 )
3. A.M. Arunachalam )
4. A.M. Muthiah )
Both residents at No.1, Hermes House, )
7B Worli Seaface, Mumbai-400 030 )
5. TNM Arunachalam, having his address at )
No.1 Hermes House, 7B Worli Sea Face, )
Mumbai-400 030 )
6. Helios Food Additives Pvt. Ltd. )
having its registered office at 421 Swastik Chambers, )
Chembur, Mumbai-400 071 )
7. Sharp and Tannan, )
Chartered Accountants, having their registered )
office at Ravindra Annex, Churchgate Reclamation, )
Mumbai-400 020 )
::: Downloaded on - 09/06/2013 19:27:00 :::
KPP -2- Company Appeal (L) No. 28 of 2012
8. Lesaffre et Cie, having its principal office at )
137 Rue Gabriel Peri, Marcq-en-Baroeul, 59700, )
France )..Respondents
Mr. Janak Dwarkadas, Senior Advocate, along with Mr. N.H. Seervai, Senior
Advocate, Mr. Sharan Jagtiani, Mr. Rohan Rajadhyaksha, Mr. Chirag Kamdar,
Mr. Gerald Misquitta, instructed by M/s. Mahendra Patil & Associates, for the
Appellant.
Mr. F.E. De'vetre, Senior Advocate, along with Mr. Virag Tulzapurkar, Senior
Advocate, Mr. Arun Siwach, Mr. Vaibhav Mishra and Mr. Omar Ahmad,
instructed by M/s. Amarchand & Mangaldas & Suresh A. Shroff & Co., for
Respondent No.1.
Mr. Dara Zaiwalla, Senior Advocate, along with Mr. Alok Patel, instructed by
M/s. Eastley Lam & Co., for Respondent No.2.
Mr. Aspi Chinoy, Senior Advocate, instructed by M/s. Eastley Lam & co., for
Respondent Nos. 3 and 4.
Mr. Mayur Khandeparkar along with Ms. Nidhi Shetye, instructed by M/s. Kanga
& Co., for Respondent No.7.
Mr. D. J. Khambata, Senior Advocate, along with Mr. Rohaan Cama, instructed
by M/s. Beni & Co., for Respondent No.8.
CORAM: S.J. KATHAWALLA, J.
Judgment reserved on : 7
September, 2012
th
Judgment pronounced on : 30 November, 2012
th
JUDGMENT:
1. The Appellant has filed the above Appeal under Section 10F of the
Companies Act, 1956 ("the Act") impugning the order dated 31st May 2012
passed by the Chairman, Company Law Board ("CLB"). By the said order, the
Chairman, CLB has rejected Company Application No. 275 of 2012 moved by
the Appellant under Regulation 4 and Regulation 44 of the Company Law Board
KPP -3- Company Appeal (L) No. 28 of 2012
Regulations, 1991 ("the CLB Regulations"). The said Application (which was
made to the Chairman and not to the Principal Bench of the CLB) was for the
following main reliefs:
"(a) The above captioned Company petition be transferred to
the Southern Bench of the Hon'ble Company Law Board for
hearing to be completed before the Hon'ble Company Law
Board Member Shri Kanthi Narahari on the already agreed
dates or any other mutually convenient dates;
(b) In the alternative, the Hon'ble Company Law Board
Member Shri Kanthi Narahari be permitted to preside over the
Hon'ble Company Law Board, Western Bench for the limited
purpose of completing the hearing in the above captioned
Company petition on the already agreed dates or any other
mutually convenient dates;
2. The following questions of law arise in the above Appeal which is
taken up for hearing and final disposal:
(a) Whether the impugned order is amenable to challenge
under Section 10F of the Act?
(b) Whether the Chairman of the CLB has the power under
the Act and the CLB Regulations to grant either of the reliefs
prayed for in the Company Application by the Appellant?
(c ) Whether the impugned order amounts to an abdication
or fettering of jurisdiction in a case where such power ought
to have been exercised?
KPP -4- Company Appeal (L) No. 28 of 2012
(d) Whether the impugned order is perverse, arbitrary,
unsustainable in law and therefore deserves to be set aside?
3. Some relevant facts which have led to the filing of the above Company
Application by the Appellant before the Chairman, CLB are set out hereunder:
3.1 Respondent No.1 (Original Petitioner) filed Company Petition No. 62
of 2009 under Sections 397 and 398 of the Act before the CLB, Western Region
Bench, Mumbai inter alia against the Appellant (Original Respondent No.2)
seeking various reliefs. The final hearing of Company Petition No. 62 of 2009
was expedited by an order of this Court dated 15th January 2010 with a
direction that the Company Law Board should conclude the hearing by 15th May
2010, which was subsequently extended to 31st July 2010. Company Petition
No. 62 of 2009 was heard by the learned Member Shri Kanthi Narahari for a
period of 23 days (full and half days) approximately spanning over two years.
During this period, a total of about 16 volumes of affidavits and documents were
filed by the parties. Detailed notes/written submissions were tendered by the
Appellant and Respondent Nos. 3 and 4 during the course of their arguments in
reply. In the course of Respondent No.1/original Petitioner's rejoinder
arguments, at least 19 notes and 30 additional cases were tendered by the
Respondent No.1/original petitioner. A few additional notes had been tendered
by the Appellant and Respondent Nos. 3 and 4 during the arguments in sur-
rejoinder as well. About 90 hours of judicial time was spent in hearing Company
Petition No. 62 of 2009. According to the Appellant, prior to 4th May 2012, the
KPP -5- Company Appeal (L) No. 28 of 2012
hearing of Company Petition No. 62 of 2009 had reached the stage of arguments
of sur-rejoinder which had already begun. All that remained was one and half
days of arguments in sur-rejoinder and one day of arguments in sur-sur-rejoinder
for which dates were also fixed i.e. 16th and 17th July 2012.
3.2 However, on 4th May 2012, the learned Member of the Western
Region Bench Shri Kanthi Narahari was transferred to the Southern Region
Bench at Chennai with effect from 7th May 2012. It will not be out of place to
mention here that though the Appellant has stated that only two and half days
were required by the Advocates for the respective parties to conclude the final
hearing of the Petition, upon perusal of the roznama this Court has noted that as
far back as on 7th July 2011, the learned Member of the CLB Shri Kanthi
Narahari had passed the following order:
"Adjournment request was made on behalf of the petitioner on
health grounds. The respondents opposed the same. Even
though the Learned Counsel for the petitioner and the
respondents, have argued the matter extensively on various
dates and requested the Bench to accommodate four more days
for further arguments. In spite of the fact that this Bench is
overburdened with the hearings, however, the Bench
accommodated the counsel for advancing their arguments on
four days. Therefore, the matter was fixed for four days for
hearing i.e. on 10th, 11th, 20th and 21st July, 2011. The
petitioners now sought adjournment on the health grounds and
requested the Bench to take up the matter as it is fixed on 20th
& 21st July, 2011. No further dates will be given to the parties
except the above dates and the Counsel shall confine their
arguments for two hours each i.e. the petitioners and the
respondents. If for any reason the Counsel not able to complete
their arguments, the Bench will reserve the matter for orders."
KPP -6- Company Appeal (L) No. 28 of 2012
Despite such a strong, clear and specific order, the parties have thereafter argued
the matter for almost a span of one year i.e. on 20 th July, 2011, 21st July, 2011,
19th September 2011, 22nd September 2011, 8th November 2011, 14th March
2012, 15th March 2012 and 26th April 2012.
3.3 In view of the transfer of Shri Kanthi Narahari to the Southern
Region Bench at Chennai on 7th May 2012, as set out hereinabove, the Appellant
filed Company Application No. 275 of 2012 before the Chairman, CLB, to
transfer Company Petition No. 62 of 2009 to the learned Member Shri Kanthi
Narahari to the Southern Bench of the CLB, for hearing or in the alternative to
permit Shri Kanthi Narahari to preside over the CLB, Western Bench, for the
limited purpose of completing the hearing on the dates assigned or on any other
mutually convenient dates. The said application was mentioned before the
Chairman, CLB on 22nd May 2012, when the learned Chairman, CLB passed the
following order:
"C.A. No. 275/2012 mentioned. Counsel appearing for the
Petitioner/non-applicant accepts notice and prays for time
to file response. Pleadings be completed before the next date
of hearing. List for hearing on 31.5.2012 at 3.30 p.m."
Thereafter the parties filed their respective affidavits and counter affidavits in the
said Company Application No. 272 of 2012. In the said affidavits both sides
attempted to blame each other for the delay caused, despite the matter being
expedited by this Court and directed to be heard by July, 2010.
KPP -7- Company Appeal (L) No. 28 of 2012
3.4 The Learned Chairman, CLB heard the parties on the reliefs sought in
the above Company Application No. 275 of 2012 and rejected the same by his
order dated 31st May 2012. As set out hereinabove, being aggrieved by the said
order of the Chairman, CLB, the Appellant has filed the above Appeal impugning
the said order under Section 10F of the Act.
4. As set out hereinabove, the first question of law which arises in the
present appeal is whether the impugned order is amenable to challenge under
Section 10F of the Act. It is now well settled that in order to determine whether
an order is a judicial order or a quasi-judicial order, the test is whether there is a
lis or contest between two contending parties making rival claims and a statutory
authority is required to adjudicate upon the rival contentions. The decision of
the Hon'ble Supreme Court in the case of Indian National Congress (I) vs.
Institute of Social Welfare and others1 is relevant in this regard wherein the
Hon'ble Supreme Court observed as follows:
"24. The legal principles laying down when an act of a
statutory authority would be a quasi-judicial act, which
emerge from the aforesaid decisions are these:
Where (a) a statutory authority empowered under a statute
to do any act (b) which would prejudicially affect the subject
(c ) although there is no lis or two contending parties and the
contest is between the authority and the subject and (d) the
statutory authority is required to act judicially under the
statute, the decision of the said authority is quasi-judicial.
25. Applying the aforesaid principle, we are of the view
that the presence of a lis or contest between the contending
1 (2002) 5 SCC 685
KPP -8- Company Appeal (L) No. 28 of 2012
parties before a statutory authority, in the absence of any
other attributes of a quasi-judicial authority is sufficient to
hold that such a statutory authority is quasi-judicial
authority. However, in the absence of a lis before a statutory
authority, the authority would be a quasi-judicial authority if
it is required to act judicially.
26.Coming to the second argument of learned counsel for the
respondents, it is true that mere presence of one or two
attributes of quasi-judicial authority would not make an
administrative act as a quasi-judicial act. In some case, an
administrative authority may determine question of fact
before arriving at a decision which may affect the right of an
appellant but such decision would not be a quasi-judicial act.
It is a different thing that in some cases, fair play may
demand affording of an opportunity to the claimant whose
right is going to be affected by the act of the administrative
authority, still such an administrative authority would not be
a quasi-judicial authority.
27.What distinguishes an administrative act form a quasi-
judicial act is, in the case of quasi-judicial functions under
the relevant law the statutory authority is required to act
judicially. In other words, where law requires that an
authority before arriving at a decision must make an
enquiry, such a requirement of law makes the authority a
quasi-judicial authority"
The above decision is referred to by the Hon'ble Supreme Court in the case of
Manju Varma (Dr.) vs. State of U.P. and others1. In the said decision, the Hon'ble
Supreme Court concluded that where, by a detailed and reasoned order, the
Chief Justice heard the parties and directed a transfer, then in those
circumstances there can be no doubt that the order of the Chief Justice was, if
not judicial, at least quasi-judicial. In the instant case, the judicial/quasi-judicial
character of the impugned order is established by the fact that the Company
Application invoked, inter alia, Regulation 44 of the CLB Regulations, which is
1 (2005) 1 SCC 73
KPP -9- Company Appeal (L) No. 28 of 2012
the inherent power of the CLB. The exercise or refusal to exercise this power - or
any other power to transfer a matter or constitute a Special Bench under the Act
or CLB Regulations - on an application by a party, would require the Learned
Chairman to act judicially. In fact, prior to the impugned order, by order dated
22nd May 2012, the Learned Chairman directed the parties "to complete
pleadings" which itself is an indication that the Learned Chairman was acting
judicially or quasi-judicially when deciding the Company Application. The
impugned order passed in the present case therefore clearly satisfies the test laid
down by the Hon'ble Supreme Court in the above mentioned two cases i.e.
Indian National Congress (I) vs. Institute of Social Welfare and others (supra) and
Manju Varma (Dr.) vs. State of U.P. and others (supra) and is in fact of
judicial/quasi-judicial character and therefore amenable to Appeal under Section
10F of the Act.
5. There is one more reason why the impugned order must be held to
be appealable under Section 10F of the Act. The impugned order does raise
substantial questions of law, inter alia, as to whether the Learned Chairman of
the CLB in the facts of the present case as mentioned above, has validly
exercised his discretion and jurisdiction. The decision of the Hon'ble Supreme
Court in the case of Raj Kumar Shivhare vs. Assistant Director, Directorate of
Enforcement and another1 considered the scope of an appeal under the FEMA Act
under an appeal provision that is in pari materia to Section 10F of the Act. The
1 (2010) 4 SCC 772
KPP -10- Company Appeal (L) No. 28 of 2012
Hon'ble Supreme Court laid down the position as to the right to appeal, wherein
it observes as under:
"19. The word "any" in this context would mean "all". We
are of this opinion in view of the fact that this section confers
a right of appeal on any person aggrieved. A right of appeal,
it is well settled, is a creature of statute. It is never an
inherent right, like that of filing a suit. A right of filing a
suit, unless it is barred by statute, as it is barred here under
Section 34 of FEMA, is an inherent right (See Section 9 of
the Civil Procedure Code) but a right of appeal is always
conferred by a statute. While conferring such right a statute
may impose restrictions, like limitation or pre-deposit of
penalty or it may limit the area of appeal to questions of law
or sometime to substantial questions of law. Whenever such
limitations are imposed, they are to be strictly followed. But
in a case where there is no limitation on the nature of order
or decision to be appealed against, as in this case, the right
of appeal cannot be further curtailed by this Court on the
basis of an interpretative exercise.
20.Under Section 35 of FEMA, the legislature has conferred
a right of appeal to a person aggrieved from "any" "order or
"decision" of the Appellate Tribunal. Of course such appeal
will have to be on a question of law. In this context the word
"any" would mean "all""
Section 10F of the Act uses identical language and provides that "any person
aggrieved by any decision or order of the Company Law Board made before the
commencement of the Companies (Second Amendment) Act, 2002 may file an
appeal to the High Court within sixty days from the date of communication of the
decision or order of the Company Law Board to him on any question of law arising
out of such order..." It is therefore clear that the ambit of Section 10F of the Act,
by analogy, would include an appeal against any order, irrespective of its nature,
so long as the test of a "question of law" being raised, is met.
KPP -11- Company Appeal (L) No. 28 of 2012
6. In the circumstances, I hold that the impugned order is amenable to
Appeal under Section 10F of the Act.
7. As regards the second question of law raised herein viz. whether the
Chairman of the CLB has power under the Act and the CLB Regulations to grant
either of the reliefs prayed for in the Company Application by the Appellant,
extensive arguments were advanced on behalf of the Appellant, the Respondent
No.1 and the Respondent No.8. Before setting out in brief the submissions
advanced by the Learned Senior Advocates appearing for the parties, for the
purpose of convenience, it would be appropriate to reproduce certain provisions
of the Act as well as the CLB Regulations which have been repeatedly referred to
by the respective Learned Senior Advocates appearing for the parties. The same
are as follows:
I. Provisions under the Companies Act, 1956:
"10E. CONSTITUTION OF BOARD OF COMPANY LAW
ADMINISTRATION
(1) As soon as may be after the commencement of the
Companies (Amendment) Act, 1988, the Central Government
shall, by notification in the Official Gazette, constitute a Board
to be called the Board of Company Law Administration.
(1A) The Company Law Board shall exercise and discharge
such powers and functions as may be conferred on it, before the
commencement of the Companies (Second Amendment) Act,
2002 by or under this Act or any other law, and shall also
exercise and discharge such other powers and functions of the
Central Government under this Act or any other law as may be
KPP -12- Company Appeal (L) No. 28 of 2012
conferred on it before the commencement of the Companies
(Second Amendment) Act, 2002 by the Central Government, by
notification in the Official Gazette under the provisions of this
Act or that other law.
(2) The Company Law Board shall consist of such number of
members, not exceeding nine, as the Central Government deems
fit, to be appointed by that Government by notification in the
Official Gazette:
Provided that the Central Government may, by notification
in the Official Gazette, continue the appointment of the
Chairman or any other member of the Company Law Board
functioning as such immediately before the commencement of
the Companies (Amendment) Act, 1988, as the Chairman or
any other member of the Company Law Board, after such
commencement for such period not exceeding three years as may
be specified in the notification.
(2A) The members of the Company Law Board shall possess
such qualifications and experience as may be prescribed.
(3) One of the members shall be appointed by the Central
Government to be the Chairman of the Company Law Board.
(4) No act done by the Company Law Board shall be called in
question on the ground only of any defect in the constitution of,
or the existence of any vacancy in, the Company Law Board.
(4A) Omitted by the Companies (Amendment) Act, 1988 with
effect from 31-5-1991.
(4B) The Board may, by order in writing, form one or more
Benches from among its members and authorize each such
Bench to exercise and discharge such of the Board's powers and
functions as may be specified in the order; and every order
made or act done by a Bench in exercise of such powers or
discharge of such functions shall be deemed to be the order or
act, as the case may be, of the Board.
(4C) Every Bench referred to in sub-section (4B) shall have
powers which are vested in a Court under the Code of Civil
Procedure, 1908 (5 of 1908), while trying a suit, in respect of
the following matters, namely:-
KPP -13- Company Appeal (L) No. 28 of 2012
(a) discovery and inspection of documents or other material
objects producible as evidence;
(b)enforcing the attendance of witnesses and requiring the
deposit of their expenses;
(c)compelling the production of documents or other material
objects producible as evidence and impounding the same;
(d)examining witnesses on oath;
(e)granting adjournments;
(f)reception of evidence on affidavits.
(4D) Every Bench shall be deemed to be a civil court for the
purposes of Section 195 and Chapter XXVI of the Code of
Criminal Procedure, 1973 (2 of 1974), and every proceeding
before the Bench shall be deemed to be a judicial proceeding
within the meaning of Sections 193 and 228 of the Indian Penal
Code (45 of 1860), and for the purpose of Section 196 of that
Code.
(5) Without prejudice to the provisions of sub-sections (4C)
and (4D), the Company Law Board shall in the exercise of its
powers and the discharge of its functions under this Act or any
other law be guided by the principles of natural justice and shall
act in its discretion.
(6) Subject to the foregoing provisions of this Section, the
Company Law Board shall have power to regulate its own
procedure."
:
II. CLB Regulations, 1991
"2. Definitions.- (1) In these regulations, unless the context
otherwise requires._
..... ..... ....
(e) "Bench" means a Bench of the Board and includes the
principal Bench (Additional Principal Bench) and a member
sitting singly;
..... ..... .....
KPP -14- Company Appeal (L) No. 28 of 2012
(g) "Board" means the Board of Company Law Administration,
constituted under Section 10E o the Act;
...... ..... .....
(l) "Chairman" means Chairman of the Board;
..... ..... ....
(m) "Member" means a member (whether judicial or
technical) of the Board and includes the Chairman and Vice
Chairman.
..... ..... .....
3.Composition of Benches of the Board.- (1) Subject to
regulation 4, every Bench of the Board formed under sub-
section (4B) of Section 10E may consist of one or more
members.
(2) The order of the Chairman forming any Bench shall
specify therein the powers which shall be exercised and
functions which shall be discharged by the Bench.
3. The Chairman shall, in relation to each bench formed
specify the member of the Bench before whom every matter
requiring decision of the Board (not being a matter affecting
the final disposal of the petition) shall be placed for orders and
in the absence of the member so specified every such matter
shall be placed before any other member of the Bench who is
present.
4. Power of the Chairman to specify matters which may be
dealt with by a Bench.- (1) It shall be lawful for the
Chairman to provide that matters falling under Sections 247,
250, 269 and 388B of the Act and under Section 2A of the
Monopolies and Restrictive Trade Practice Act, 1969 (54 of
1969) shall be dealt with by the Principal Bench consisting of
one or more Members.
(2) The Principal Bench shall be at New Delhi but it may sit
at any other place in India at its discretion or at the joint
request of all the parties.
KPP -15- Company Appeal (L) No. 28 of 2012
(3) It shall be lawful for the Chairman to provide that
matters falling under all other sections of the Act shall be dealt
with by Regional Benches, namely, New Delhi Bench, Chennai
Bench, Kolkata Bench and Mumbai Bench, consisting of one or
more Members.
Provided that matters pending before the Principal Bench
and Additional Principal Bench as on 1st day of April, 2008
shall continue to be disposed of in the name of Principal Bench
and Additional principal Bench respectively.
Provided further that notwithstanding anything contained
in regulation 7, it shall be lawful for the Chairman to transfer
any matter pending before the Regional Benches to the
Principal Bench either at the joint request of all the parties or
for other reasons to be recorded in writing."
.... ...... .....
7. Jurisdiction of the Bench.- (1) All proceedings, other
than the proceedings before the Principal Bench under
regulation 4, shall be instituted before the Bench within whose
jurisdiction the registered office of the Company is situated.
(2) The States or Union-territories falling under the
geographical jurisdiction of the Regional benches shall be as
provided in Annexure-I.
(3) The Regional Benches shall ordinarily have their
sittings at Kolkata, Mumbai, Chennai and New Delhi:
Provided that the Bench may, at their discretion, hold
sittings in any other city or town falling within their respective
geographical jurisdiction or any other place outside their
jurisdiction with the consent of the parties."
..... ...... .......
"44. Saving of inherent power of the Bench._ Nothing in
these rules shall be deemed to limit or otherwise affect the
inherent power of the Bench to make such orders as may be
necessary for the ends of justice or to prevent abuse of the
process of the Bench."
KPP -16- Company Appeal (L) No. 28 of 2012
8. Mr. Janak Dwarkadas, the Learned Senior Advocate appearing for
the Appellant, has first submitted that the Learned Chairman of the CLB has the
power to transfer matters between Regional Benches of the CLB under Section
10E (4B) of the Act. He has submitted that Section 10E (4B) of the Act is
essentially a power to allocate work or matters to the different Benches that
constitute the CLB. The language would plainly include within its scope the
power to transfer a matter or a class of matters and is not restricted to general
administrative orders or notifications for constituting the various Benches and
indicating therein the class of matters to be dealt with by such Benches.
According to him, the exercise and discharge of powers and functions by a Bench
pursuant to an authorisation or order by the Board through the Learned
Chairman may in a given case be referable to the discharge of the Boards power
and function to hear and decide a specific matter transferred to such Bench. He
submitted that the hearing and decision of a specific matter would form part of
the CLB's powers and functions. He therefore submitted that the said Section
cannot be read so restrictively to suggest that the allocation of work,
authorisation of the powers and functions to be exercised and discharged must
be part of the very same order constituting the various Benches of the CLB.
Such a restrictive and technical interpretation would run counter to the
fundamental nature of the power conferred by that Section and overlooks the
fact that under the CLB Regulations, even after the constitution of Benches, the
Learned Chairman is empowered to determine the matters to be dealt with by
KPP -17- Company Appeal (L) No. 28 of 2012
the Regional Benches, without necessarily having to alter the formation or
constitution of Regional Benches. He submitted that therefore Section 10E (4B)
of the Act must be read to mean that in a given case the Learned Chairman has
the power to pass an order, which would pertain only to transfer of a matter
without anything more. Referring to Section 10E (5) of the Act which provides,
inter alia, that the powers and functions of the CLB under the Act are required to
be exercised in accordance with the "principles of natural justice", the Learned
Senior Counsel submitted that on a fair, proper and contextual interpretation of
the relevant language of Section 10E (4B) of the Act, it is clear that an order
under that Section may be in relation to the hearing of a transferred matter by a
Regional Bench, which would also be a power and function of the CLB.
9. Mr. Dwarkadas next submitted that the above submissions pertaining
to interpretation of Section 10E (4B) of the Act are in fact buttressed by the
recent notification of 4th May 2012 . Paragraph 2 of the order dated 4th May
2012 reads thus:
"2. Matters in which upon conclusion of final hearing orders
have been reserved by the Members under transfer vide office
order of even number dated 30/4/2012, such Members
would pass orders in such matters at their new place of
posting after due notice to the parties"
It is submitted that on a reading of paragraph 2 of the said order, it is apparent
that matters in which hearings have been concluded and orders were reserved
have been, in effect, transferred by the Learned Chairman of the CLB from the
KPP -18- Company Appeal (L) No. 28 of 2012
Bench in which they were heard to the Bench where the Member who heard the
matter is currently sitting. It is submitted that since these transfers have stated
to have been effected by the Learned Chairman of the CLB pursuant to the
power granted by Section 10E (4B) of the Act, it is clear that the power to
"transfer" matters from one Bench to another Bench is within the power given by
Section 10E (4B) of the Act to the Learned Chairman of the CLB to decide the
"powers and functions" of each Bench. It is therefore submitted that since it is
permissible for the Learned Chairman of the CLB to effect the aforesaid transfers
of the said matters from one Bench of the CLB to another, it would obviously
also be within the implicit and inherent powers of the Learned Chairman of the
CLB to transfer an individual matter from one Bench of the CLB to another upon
application by one or more of the parties thereto.
10. Mr. Dwarkadas has, referring to Regulation 3 (2) of the CLB
Regulations which provides that "the order of the Chairman forming any Bench
shall specify therein the powers which shall be exercised and functions which shall
be discharged by the Bench", submitted that the plain language of the aforesaid
Regulation would establish that the Learned Chairman has the power to grant
prayer (b) of the Company Application for the formation or constitution of a
Western Region Bench comprising of Shri Kanthi Narahari for completing the
hearing of the matter. Independent of this submission, Mr. Dwarkadas has
submitted that the power to grant either of the prayers of the Company
KPP -19- Company Appeal (L) No. 28 of 2012
Application is also to be found in Regulation 44 of the CLB Regulations. The CLB
which would include the Chairman of the CLB, is possessed of "inherent powers"
to make such orders as may be necessary to meet the ends of justice or to prevent
abuse of the process of law. In support of this submission, he has relied on the
decision of a Division Bench of the Punjab & Haryana High Court in Devi Dass
Gopal Krishnan vs. The State of Punjab1 wherein it is held that where a controlling
authority has been given the power to superintend the administering and
functioning of certain other authorities, the power to transfer matters between
the said authorities is "inherent and implicit" in the power of the controlling
authority. The Court held that the exercise of such a power is sufficiently
guided and controlled by the statutory purpose of the statute, which in that case
was the convenient and efficient assessment and collection of tax, consistent with
the reasonable convenience of the assessee. It is submitted that in the said
decision the High Court expressly rejected the contention that the controlling
authority had no power to transfer matters unless the same was specifically
conferred by the statute. It is submitted that there are several matters in which
the Learned Chairman of the CLB has passed orders transferring the matters from
one Bench of the CLB to another Bench, either with the consent of the parties or
upon application by one of the parties. Matters which have been transferred as
such are continuing before the respective Regional Benches to which they have
been transferred and would be vitally affected if this Court were to come to the
conclusion that there is no inherent and/or implicit power in the learned
1 (1973) 31 STC 536 ( P & H)
KPP -20- Company Appeal (L) No. 28 of 2012
Chairman of the CLB to transfer matters from one Bench to another.
11. Mr. Dwarkadas next submitted that the second proviso to Regulation
4 of the CLB Regulations is not a provision that deals with transfer of matters
and does not impinge upon the power of the Learned Chairman of the CLB to
transfer a matter from one Bench to another Bench in exercise of powers under
Section 10E (4B) of the Act or under Regulation 44 of the CLB Regulations. He
has submitted that on a reading of Regulations 4 and 7 of the CLB Regulations,
the Principal Bench would have jurisdiction only to "deal with" matters
pertaining to Sections 247, 250, 269 and 388 B of the Act. The jurisdiction to
deal with all other matters (including matters under Sections 397 and 398 of the
Act) would necessarily be with the respective Regional Benches. He has
submitted that therefore it is in this context that the first proviso to Regulation 4
of the CLB Regulations provides that "matters pending before the Principal Bench
and Additional Principal bench as on 1st day of April, 2008 shall continue to be
disposed of in the name of Principal Bench and Additional Principal Bench
respectively". In other words, even if the power under Regulation 4 (3) of the
CLB Regulations has been exercised, and all matters arising under provisions
other than Sections 247, 250, 269 and 388 B of the Act are required to be "dealt
with" by the Regional Benches, the first proviso creates an exception with
regard to matters which are pending before the Principal Bench and Additional
Principal Bench as on 1st April 2008 and allows them to continue before the
KPP -21- Company Appeal (L) No. 28 of 2012
Principal Bench and Additional Principal Bench. He has submitted that similarly
the second proviso to Regulation 4 of the CLB Regulations provides that
notwithstanding anything contained in Regulation 7, it shall be lawful for the
Chairman to transfer any matter pending before the Regional Benches to the
Principal Bench..." If the power given to the Learned Chairman of the CLB under
Regulation 4 (1) and 4 (3) of the CLB Regulations is exercised, as it has been
under the present order of 4th May 2012, the matters pending before the
Regional Benches would necessarily be matters arising under provisions other
than Sections 247, 250, 269 and 388B of the Act. He therefore submitted that
the purport of the said second proviso to Regulation 4 of the CLB Regulations is
only to clarify that even if all matters other than those arising under Sections
247, 250, 269 and 388B of the Act are to be "dealt with" by the Regional
Benches and not by the Principal Bench, it shall be lawful for the Principal bench
to deal with a matter not arising under the provisions which it is supposed to
deal with, if the same is transferred to it by the Learned Chairman of the CLB.
12. Mr. Dwarkadas has relied on the decision of this Court in C.R.H.
Readymoney Ltd. vs. State of Bombay1 and the decision of the Hon'ble Supreme
Court in Madanlal Fakirchand Dudhediya vs. Shree Changdeo Sugar Mills Ltd.2 and
submitted that no negative import can be implied from the words "it shall be
lawful" used in the second proviso to Regulation 4 (3) of the CLB Regulations. It
1 AIR 1956 Bom 304
2 AIR 1962 SC 1543
KPP -22- Company Appeal (L) No. 28 of 2012
is submitted that the purport of the second proviso to Regulation 4 (3) of the
CLB Regulations is meant to get over an order, if any, passed under Regulation 4
(3) of the CLB Regulations by which only the Regional Benches could "deal
with" matters falling under all other sections of the Act other than those arising
under Sections 247, 250, 269 and 388 B of the Act. It does not carry the
negative import of depriving the Learned Chairman of the CLB of his inherent
power or power under Section 10E (4B) of the Act to allocate work which would
include the power to transfer matters from one Regional Bench to another
Regional Bench, more so when there is no express bar from doing so. Mr.
Dwarkadas has therefore submitted that strictly without prejudice to his above
submissions and in the alternative if this Court were to come to the conclusion
that the second proviso to Regulation 4 of the CLB Regulations does provide for a
positive power of transfer to the Learned Chairman of the CLB to transfer matters
from the Regional benches to the Principal Bench, it would be incorrect to
proceed on the footing that the second proviso to Regulation 4 is the sole
repository of the power of transfer available with the Learned Chairman of the
CLB to transfer matters. The power to transfer matters from one Bench to
another is within the implicit and inherent powers of the Learned Chairman of
the CLB and therefore the same would not be restricted in any way by the
second proviso to Regulation 4 of the CLB Regulations providing for a limited
power of transfer.
KPP -23- Company Appeal (L) No. 28 of 2012
13. Relying on the decision of the Hon'ble Supreme Court in Tanusree
Basu and others vs. Ishani Prasad Basu and others1, Mr. Dwarkadas has submitted
that it is settled law that despite Order 39 of the Code of Civil Procedure, 1908
("CPC"), providing for the circumstances in which the Court may grant interim
injunctions, the Court nevertheless has the inherent power under Section 151 of
the CPC to grant interim injunctions in circumstances not covered by Order 39
of the CPC. Mr. Dwarkadas has therefore drawn an analogy and submitted that
merely because the second proviso to Regulation 4 of the CLB Regulations
provides for transferring matters from the Regional Benches to the Principal
Bench, it does not ipso facto mean that the power to transfer matters from one
Regional Bench to another Regional Bench is excluded from the inherent powers
of the Learned Chairman of the CLB.
14. Mr. Chinoy, the Learned Senior Advocate appearing for Respondent
Nos. 3 and 4, submitted that the power to transfer matters from one Bench to
another is within the implicit and inherent powers of the Learned Chairman of
the CLB and the said power is in no way limited by the second proviso to
Regulation 4 of the CLB Regulations. He submitted that the contesting
Respondents have not considered the true import of Regulation 4 and the proviso
thereto and Regulation 7 of the CLB Regulations. He has submitted that the
Chairman who is undisputedly the head of the CLB enjoys the power of
superintendence and does not require any delegation of power.
1 (2008) 4 SCC 791
KPP -24- Company Appeal (L) No. 28 of 2012
15. Mr. De' vetre, Learned Senior Advocate appearing for Respondent
No.1, has first submitted that Section 10E (4B) is contained in a part of the Act
headed "Constitution of Board of Company Law Administration". That provision
deals only with the Constitution of the Board and formation of the Benches of
the Board. It does not at all deal with the power to transfer matters. The only
provision for "transfer" of any matters is to be found in the second proviso to
Regulation 4 (3) of the CLB Regulations. The said proviso expressly sets out the
power of the Chairman to transfer any matter pending before any Regional
Bench. The intent is plainly and unambiguously expressed. Relying on the
decision of the Hon'ble Supreme Court in Ansal Properties and Industries Ltd. vs.
State of Haryana1, it is submitted on behalf of Respondent No.1 that it is settled
law that the Court cannot read anything into a statutory provision, which is plain
and unambiguous and if the language of the enactment is clear and
unambiguous, it would not be proper for the Courts to add any words thereto
and evolve some legislative intent, not found in the statute.
16. Mr. De'vetre has further submitted that the Appellant's reliance on
Regulation 44 of the CLB Regulations is misplaced. Regulation 44 of the CLB
Regulations relates to inherent powers of the "Bench" and does not provide for
inherent powers of the Chairman. The "inherent powers" under Regulation 44 of
the CLB Regulations do not cover cases of "transfer" of matters by the Chairman.
1 (2009) 3 SCC 553
KPP -25- Company Appeal (L) No. 28 of 2012
If the Appellant's contention on the applicability of Regulation 44 of the CLB
Regulations were to be accepted as correct, viz. that by reason of Regulation 44
of the CLB Regulations, every "Bench" has the inherent power to transfer
matters, it would mean that every Member of every "Bench" would have
"inherent power" to transfer matters from/to any Regional Bench, including
itself, to/from another Regional Bench, which is plainly untenable. It is true that
the Chairman is also a "Member" of the Bench, but in deciding matters relating
to transfer of matters, he acts not as a member of any Bench, but in his
independent and individual capacity as Chairman of the Board. Thus the order
is not that of any "Bench". In dealing with the matter, the Chairman does not sit
as the "Principal Bench" or as a member of any "Regional Bench".
17. Mr. De'vetre has submitted that but for the second proviso to
Regulation 4 (3) of the CLB Regulations, there was no right or authority in the
Chairman to transfer matters, not even an "inherent power" to transfer matters
pending before the Regional bench to the Principal Bench. The position cannot
be any different in regard to the Chairman's power to transfer any matter
pending before a Regional Bench to another Regional Bench. Mr. De'vetre has
submitted that the second proviso to Regulation 4 (3) of the CLB Regulations is
an express provision relating to the power of transfer. There being no other
provision authorizing the transfer, the Court cannot add to the Chairman's power
of transfer. The implied prohibition in the CLB Regulations cannot be defeated
KPP -26- Company Appeal (L) No. 28 of 2012
by an interpretative process or by recourse to inherent powers. Mr. De'vetre has
relied on the decision of the Hon'ble Supreme Court in Arjun Singh vs.
Mohindra Kumar and others1 and also certain other decisions wherein it is inter
alia held that the inherent power of the Court cannot override the express
provisions of the law. Mr. De'vetre has submitted that reading into the second
proviso of Regulation 4 (3) of the CLB Regulations, an inherent power to transfer
a matter pending before one Regional bench to another would stultify the
scheme of Regulation 4 read with Regulation 7 of the CLB Regulations. The
inherent power of the Court cannot be invoked to nullify a statutory provision.
Mr. De'vetre submitted that hearing of Company Petition No. 62 of 2009 by the
same Member Shri Kanthi Narahari would entail reconstitution of Benches of
the Board. Regulation 7 of the CLB Regulations fixes the jurisdiction of each
bench (dependent on the location of the registered office). The present Member,
Southern Bench, CLB has no jurisdiction to hear matters instituted before the
Western Region bench under Regulation 7 of the CLB Regulations. He can hear
the matter only if he was a Member of the Western Region Bench. No such
application was made by the Appellant. The question of granting either of the
two reliefs to the Appellant therefore does not arise.
18. Mr. De'vetre has further submitted that the Appellant has relied on
certain touring orders dated 17th May 2012, 14th June 2012 and 13th July 2012
passed by the CLB. The first two orders dated 17th May 2012 and 14th June
1 AIR 1964 SC 993
KPP -27- Company Appeal (L) No. 28 of 2012
2012 were issued to grant leave to Shri Amalesh Bandopadhyay (Member, CLB,
Kolkata Bench). Consequently, Shri B.S.V. Prakash Kumar (Member, CLB, New
Delhi Bench) was temporarily (for a period of 11 days and 25 days respectively)
assigned an additional charge of the Kolkata Bench. The third order dated 13th
July 2012 was issued to grant leave of absence to Shri A.K. Tripathi, Member
(Judicial), Mumbai Bench. Consequently, matters relating to Mumbai Bench
that were within Shri Tripathi's jurisdiction, were temporarily (i.e. for a period of
12 days) ordered to be heard by Member (Technical), Mumbai Bench, Smt.
Vimala Yadav. Mr. De'vetre submitted that these orders cannot become the
basis of assigning or conferring any alleged power or jurisdiction upon the
Chairman. Notwithstanding and without prejudice to the said contention, he
submits that all three orders relied upon have been passed "by the order of the
Company Law Board and not Chairman, CLB". The Chairman's name does not
feature in any of the three orders sought to be relied upon. This only strengthens
the Respondent No.1's contention that the power to constitute Benches under
Section 10E (4B) of the Act lies with the CLB and not Chairman, CLB in his
individual capacity who has limited powers under Regulation 4 of the CLB
Regulations. Admittedly, the application of the Appellant was to the Chairman,
CLB in his capacity as the Chairman and not to him as a "Member" or
"representative" of the CLB. Without prejudice to the above submissions, Mr.
De'vetre has submitted that the reasoning behind passing the first two orders
(i.e. orders dated 17th May 2012 and 14th June 2012) was that Shri
KPP -28- Company Appeal (L) No. 28 of 2012
Bandopadhyay is the only Member in the Kolkata Bench. It was thus necessary to
allow another member to take temporary additional charge of the Kolkata Bench
to enable parties to be able to apply for urgent ad-interim reliefs during that
period. Assuming (whilst denying) that there is any such power, the same has
never been resorted to merely accommodate a single matter and even the
Appellant has failed to demonstrate a single such instance where Benches have
been reconstituted to accommodate a single matter. Further, in the instant case
there are two members in the Mumbai Bench who are available to hear and
dispose of the Company petition. As regards the third order dated 13th July
2012, the CLB had assigned the matters belonging to Mumbai Bench Member
Shri Tripathi to another Member (Smt. Yadav) of the Mumbai Bench itself. No
Member from any other Bench or jurisdiction was assigned those matters or the
additional charge. Mr. De'vetre has therefore submitted that assuming that the
Chairman of the CLB has the power to re-constitute Benches under Section 10E
(4B) of the Act giving Shri Kanthi Narahari (Member, CLB, Chennai Bench) an
additional charge of the Mumbai Bench, to specifically hear this matter alone
(being prayer (b) sought for by the Appellant), the same would disrupt the entire
working of the Chennai Bench, and such disruption would be merely to
accommodate this matter. This would be completely contrary to the scope and
scheme with which the said "touring" orders sought to be relied upon by the
Appellant were passed by the CLB.
KPP -29- Company Appeal (L) No. 28 of 2012
19. Mr. Khambata, the Learned Senior Advocate appearing for
Respondent No. 8, has submitted that the Chairman, CLB has no power to grant
the reliefs prayed for. Relying on the decision of the Hon'ble Supreme Court in
The Member, Board of Revenue vs. Arthur Paul Benthall1, B.R. Enterprises vs. State
of U.P & Ors.2 and the decision of this Court in Maharana Jaywantsinhji
Ranmalsinhji Thakore Saheb of Sanand vs. The State of Bombay3, Mr. Khambata
submitted that where a statute uses different expressions they mean different
things. The Act and the CLB Regulations make a clear distinction between the
three entities i.e. the Chairman, the Bench and the Company Law Board,
although in a given case the same person may wear more than one hat. He has
submitted that this distinction is apparent from a mere reading of Section 10E of
the Act. He has submitted that the CLB Regulations which were made by the
CLB, that is to say all the members, by virtue of the power conferred under
Section 10E (6) of the Act also maintain this distinction. Mr. Khambata has
submitted that the power in law to form a Bench and to authorise such Bench to
discharge the powers and functions of the CLB, as may be specified, is
exclusively that of the CLB as provided in Section 10E of the Act. The power to
transfer matters is part of the power of the Company Law Board to regulate its
own procedure. However, the CLB itself has by virtue of the CLB Regulations
delegated the exercise of some of its powers to its Chairman under Regulations 3
and 4 of the CLB Regulations. The Chairman cannot have direct recourse to the
1 AIR 1956 SC 35
2 (1999) 9 SCC 700
3 (1954) 56 BLR 1054 (DB)
KPP -30- Company Appeal (L) No. 28 of 2012
powers of the CLB over and above what is delegated to him under the CLB
Regulations. It is submitted that the powers conferred upon the Chairman under
Regulations 3 and 4 of the CLB Regulations are conferred upon him as Chairman
and not as a Bench of the CLB. Relying on the decisions of the Hon'ble Supreme
Court in Rasid Javed & Ors. vs. State of Uttar Pradesh and another 1 and District
Collector, Chittoor vs. Chittoor District Groundnut Traders Association & Ors. 2,
Mr. Khambata has submitted that it is well settled that the powers of a delegate
cannot be expanded to anything beyond the scope and terms of the delegation. If
any order is framed in excess of the powers delegated, such order would be
illegal and void. No such order can be passed relying upon the general powers.
Mr. Khambata has submitted that it is untenable in law to contend either that
the delegation of powers under Regulations 3 and 4 of the CLB Regulations is
merely clarificatory or that some undefined and indeterminate "inherent powers"
vest in the Chairman of the CLB by virtue of Regulation 44 of the CLB
Regulations.
20. Mr. Khambata has submitted that Regulation 44 of the CLB
Regulations pertains to inherent powers of the Benches. Therefore, there is no
question of attributing the inherent powers referred to in Regulation 44 of the
CLB Regulations to either the Chairman or the Vice-Chairman when they act as
such. The provisions of Regulation 44 of the CLB Regulation by themselves
1 (2010) 7 SCC 781
2 (1989) 2 SCC 58
KPP -31- Company Appeal (L) No. 28 of 2012
cannot confer any new power (independent of the Company Law Board) in the
Chairman, who acts exclusively as a delegate of powers from the CLB. Mr.
Khambata has submitted that in any event a Bench will enjoy inherent powers
only in respect of such matters as validly lie before it. A Regional Bench has no
power to pass any orders in exercise of its inherent powers that go beyond the
jurisdiction of that Regional Bench. Hence one Regional Bench cannot direct
another Regional Bench to do anything or to hear any matter.
21.
Mr. Khambata has submitted that Regulation 7 (1) of the CLB
Regulations provides that all proceedings, other than the proceedings before the
Principal Bench under Regulation 4, shall be instituted before the Bench within
whose jurisdiction the registered office of the Company is situated. He submits
that this is the mandate of the CLB as a whole and the manner in which the CLB
has chosen to regulate its own procedure as provided by Section 10E (6) of the
Act. Nothing in the CLB Regulations can ever be read as authorizing any organ
of the CLB, including the Chairman or any Bench to depart from the clear
mandate of Regulation 7 (1) of the CLB Regulations. The power delegated to
the Chairman is to transfer matters before the Regional benches only to the
Principal Bench, since any other transfer inter se between Regional Benches
would violate the mandate of Regulation 7 (1) of the CLB Regulations.
22. Relying on the decision of the Hon'ble Supreme Court in Arjun Singh
KPP -32- Company Appeal (L) No. 28 of 2012
vs. Mohindra Kumar & Ors. (supra), Mr. Khambata has without prejudice to the
aforestated submissions, submitted that it is also well settled that inherent
powers cannot be used to negate specific provisions covering the field of their
exercise. Regulation 4 of the CLB Regulations deals with the field of transfer of
matters pending before any Regional Bench. Regulation 4 (second proviso) of
the CLB Regulations cannot be rendered nugatory or meaningless by resorting
to some alleged inherent powers of the Chairman based on Regulation 44 of the
CLB Regulations, to permit transfer of matters other than those permitted by
Regulation 4 of the CLB Regulations. Mr. Khambata has therefore submitted
that prayer clause (a) of Company Application No. 275 of 2012 is directly
contrary to Regulation 7 (1) of the CLB Regulations and the Chairman has no
power to make such a transfer, since the registered office of Respondent No.2 is
in Mumbai and the Southern Region Bench can never have jurisdiction in respect
of any matter concerning it. As regards prayer clause (b), Mr. Khambata has
submitted that the Chairman has no power to empower the Southern Region
Bench to hear matters instituted before the Western Region Bench. The
Chairman would have to pass a fresh order modifying the provisions of his
previous order dated 4th May 2012, whereby he would have had to appoint Shri
Kanthi Narahari as a Member of the Western Region Bench. No such application
was made by the Appellant. Prayer clause (b) too therefore seeks a relief that the
Chairman could not have granted under the provisions of the CLB Regulations.
KPP -33- Company Appeal (L) No. 28 of 2012
23. Mr. Dwarkadas, Learned Senior Advocate appearing for the
Appellant, in rejoinder has submitted that prior to the Amending Act of 1988
(with effect from 31st May 1991), the CLB was a delegate of the Central
Government by virtue of Section 637 of the Act. Section 10E (4A) was
introduced into the Act (with effect from 15th October 1965) which reads as
under:
" (4A) The Board, with the previous approval of the Central
Government, may, by an order in writing authorise the
Chairman or any of its other members or its principal officer
(whether known as Secretary or by any other name) to
exercise and discharge, subject to such conditions and
limitations, if any, as may be specified in the order, such of its
powers and functions as it may think fit; and every order
made or act done in the exercise of such powers or discharge
of such functions shall be deemed to be the order or act, as
the case may be, of the Board."
Under this provision, the Chairman could only exercise such powers as were
delegated to the Chairman with the previous approval of the Central
Government. Section 10E (1), as it stood then, read as under:
"(1) As soon as may be after the commencement of the
Companies (Amendment) Act, 1963 (53 of 1963) the Central
Government shall, by notification in the Official Gazette,
constitute a Board to be called the Board of Company Law
Administration to exercise and discharge such powers and
functions conferred on the Central Government by or under
this Act or any other law as may be delegated to it by the
Government".
In 1991, by reason of the Amending Act of 1988, Section 10E (1) was amended
KPP -34- Company Appeal (L) No. 28 of 2012
and read as under:
"As soon as may be after the commencement of the
Companies (Amendment) Act, 1988, the Central Government
shall, by notification in the Official Gazette, constitute a
Board to be called the Board of Company Law
Administration".
Further, Section 10E (1A) was inserted and read as under:
"The Company Law Board shall exercise and discharge such
powers and functions as may be conferred on it before the
commencement of the Companies (Second Amendment) Act,
2002, by or under this Act or any other law, and shall also
exercise and discharge such other powers and functions of the
Central Government under this Act or any other law as may
be conferred on it before the commencement of the
Companies (Second Amendment) Act, 2002 by the Central
Government, by notification in the Official Gazette under the
provisions of this Act or that other law."
By the same Act, Section 10E (4A) which read as above was also expressly
omitted and Section 10E (4B) was introduced which read as under:
"The Board may, by an order in writing, form
one or more Benches from among its members and authorise
each such Bench to exercise and discharge such of the Board's
powers and functions as may be specified in the order, and
every order made or act done by a Bench in exercise of such
powers or discharge of such functions shall be deemed to be
the order or act, as the case may be, of the Board."
24. As a result of the aforesaid amendments, the CLB was no longer a
delegate of the Central Government except to the limited extent provided for in
Section 10E (1A) of the Act and could exercise and discharge such powers and
KPP -35- Company Appeal (L) No. 28 of 2012
functions as were conferred upon it by the Act. The question therefore of the
powers and functions of the Board being delegated by the Central Government to
the Board and further delegated to the Chairman of the CLB did not arise.
Simultaneously with the constitution of the Board, under Section 10E (1), the
Board was conferred with the jurisdiction to exercise and discharge such powers
and functions which may be conferred upon it by the Act. The Companies Act
was also amended to confer on the Board the powers of the Company Court
under the Act, inter alia, under Sections 111, 397 and 398 of the Act. Thus the
CLB was effectively a substitute of the Company Court with regard to certain
powers and functions under the Act.
25. Mr. Dwarkadas has submitted that it is thus established that the
Board is not a delegate of the Central Government. The question that arises is -
What is the meaning to be given to the expression "the Board" as appearing in
Section 10E (1) of the Act? The expression has not been defined under the Act.
However, a conjoint reading of the provisions in Section 10E (1) to (5) would
indicate that the Board consists of such number of members not exceeding nine,
as the Central Government deems fit to be appointed by notification in the
Official Gazette. Section 10E (3) of the Act provides that one of the members
shall be appointed as the Chairman of the CLB. Mr. Dwarkadas has submitted
that the purpose and object behind Section 10E (3) of the Act namely to appoint
one of the members as Chairman of the CLB can only mean that the function of
KPP -36- Company Appeal (L) No. 28 of 2012
forming Benches and authorising each such bench to exercise and discharge such
of the Board's functions as may be specified by an order in writing can only refer
to the Chairman exercising the power of the Board. There is no question of
either the Board as constituted under Section 10E(1) of the Act or of the
Chairman appointed under Section 10E (3) of the Act being delegated by the
Central Government or by any other authority to exercise and discharge any
powers and functions as may be specified by the Act absent a specific delegation
in that behalf by the Central Government. Mr. Dwarkadas has submitted that
the appointment of the Chairman under Section 10E (3) of the Act ipso facto
confers powers of superintendence upon the Chairman with respect to the
functioning of the CLB. The fact that such is the nature of the power of the
Chairman is clear from Section 10E (3) and (4B) of the Act read with
Regulations 3 and 4 of the CLB Regulations which have been framed under
Section 10E (6) of the Act. Mr. Dwarkadas has submitted that the expression
"the Board" under Section 10E (4B) of the Act, must be interpreted reasonably
and in accordance with common sense, for giving effect and meaning to Section
10E (4B) of the Act read as a whole. If Respondent No.8 is correct in its
submission, it would mean that the power conferred on the Board under Section
10E (4B) of the Act of forming Benches and authorising each such Bench to
exercise and discharge such functions of the Board as may be specified, would
have to be an order of all the members constituting the Board. This would lead
to a wholly absurd situation where unanimity of all the Members of the Board
KPP -37- Company Appeal (L) No. 28 of 2012
would have to be obtained in the matter of constituting Benches and allocating
work. It is submitted that the argument of Respondent No. 8 does place an
unreasonable meaning on the expression "Board" in Section 10E (4B) of the Act
and does not explain what would happen if there is no consensus amongst all the
Members of the Board in the matter of constituting Benches and authorising such
Benches to discharge the powers and functions of the Board.
26. Mr. Dwarkadas has submitted that looking to the scheme of Section
10E read as a whole, it is clear that for the purpose of exercising powers under
Section 10E (4B) of the Act, the Board acts through the Chairman of the Board
appointed under Section 10E (3) of the Act. He submits that this is the only
reasonable meaning to be given to the expression "the Board". He submits that
if the expression "Board" as it appears in Section 10E (4B) is given any other
meaning than the Board acting through the Chairman, a conflict would arise
inasmuch as the same power under Section 10E (4B) of the Act and Regulation
3 (2) of the CLB Regulations for constitution of Benches and allocating work
would be exercised by two different repositories i.e. the Board other than the
Chairman under Section 10E (4B) of the Act and the Chairman under Regulation
3 of the CLB Regulations.
27. Mr. Dwarkadas has further submitted in his rejoinder that now it is
well settled that once the power is conferred upon any person, such as the
KPP -38- Company Appeal (L) No. 28 of 2012
Chairman of the CLB or the Chief Justice of the High Court or the Supreme
Court, the head of the Institution does not require any further delegation from
the Institution to which he belongs. In fact, he is as much a part of the
Institution as any other member of the Institution, save and except that he has
the power of superintendence. He has submitted that therefore the argument
that the Chairman can only exercise such powers as are expressed in the CLB
Regulations is incorrect. In support of his contention that the Chairman is
therefore the administrative head of the CLB and his position is akin to the Chief
Justice of any High Court or the Supreme Court who is regarded as the master
of the roster, Mr. Dwarkadas has relied on the decision of the Hon'ble Supreme
Court in the case of State of Rajasthan vs. Prakash Chand & Ors.1 and the
judgments dealt with therein. Mr. Dwarkadas thus submitted that on a parity of
reasoning it is clear that the Chairman of the CLB who is akin to the Chief
Justice of a High Court exercises, by the very nature of his functions and status,
the power to allocate work and constitute Benches of the CLB. Mr. Dwarkadas
has also relied on the decision of a Division Bench of the Madras High Court in
The President, Income Tax Appellate Tribunal vs. Mr. A. Kalyanasundaram2 in
which the Madras High Court has equated the position of the President of the
ITAT with that of the Chief Justice of a High Court.
28. Mr. Dwarkadas has in his rejoinder submitted that Regulation 44 of
1 (1998) 1 SCC 1
2 Judgment dated 29th September 2005 of the Division Bench of Madras High Court in WP No. 25484 of
2005 etc.
KPP -39- Company Appeal (L) No. 28 of 2012
the CLB Regulations is a saving clause. What Regulation 44 of the CLB
Regulations does is to save the inherent power of the Bench to make such orders
as may be necessary to secure the ends of justice. The argument that the word
"Bench" in Regulation 44 of the CLB Regulations must be interpreted differently
from the word "Chairman" and the word "Board" appearing in the Regulations
overlooks that Regulation 2 which is the definition clause, opens with the words
"in these Regulations unless the context otherwise requires". Thus where the
expression "Bench" includes a "Member" and the word "Member" includes the
"Chairman", it would mean that the saving of the inherent powers in the Bench,
contextually would include the saving of the Chairman's powers as the master of
the roster i.e. in charge of the administrative functions of the Board. It is
therefore submitted that the argument of the Respondents that the inherent
power of transfer would be available to every member of the Bench would be to
read the definitions out of context, which is impermissible.
29. Mr. Dwarkadas has also relied on Rule 4 of the Income Tax Appellate
Tribunal Rules, 1963, which reads as under:
""4. (1) A Bench shall hear and determine such appeals and
applications made under the Act as the President may by
general or special order direct.
(2) Where there are two or more Benches of the Tribunal
working at any headquarters, the President or, in his absence,
the Senior Vice-President /Vice-President of the concerned zone
or, in his absence, the senior most member of the station
present at the headquarters may transfer an appeal or an
application from any one of such Benches to any other."
KPP -40- Company Appeal (L) No. 28 of 2012
Mr. Dwarkadas has submitted that in exercise of the power conferred by Rule 4
(1) read with Section 255 of the Income-Tax Act, 1961 , the President of the
Income-Tax Appellate Tribunal has constituted 48 Benches falling in nine
different geographical zones. The President has in exercise of the power of
allocation of work conferred by Rule 4 (1) of the ITAT Rules has in fact routinely
transferred matters from one zone to another. Mr. Dwarkadas has produced
some of the orders passed by the President of the Income-Tax Appellate Tribunal.
Mr.Dwarkadas has submitted that by virtue of the power conferred upon the
President under Section 252 (5) of the Income-Tax Act, 1961, the President has
delegated certain powers to the Vice-President of the ITAT which include inter
alia the power to transfer any appeal or application filed before any Bench
within a Zone to any other Bench within the same Zone. Thus whereas the
delegated powers of the Senior Vice-President and the Vice-President are limited
to intra-zone transfers (contemplated by Rule 4 (2) of the ITAT Rules) the
powers of the President under Rule 4 (1) is much wider and includes the power
to transfer matters inter zone i.e. from a Bench in one Zone to a Bench in
another Zone.
30. Mr. Dwarkadas has submitted that further orders have also been passed
by the Registrar of the ITAT, which have been issued with the approval of the
President of the ITAT, by which certain members appointed to a particular Bench
KPP -41- Company Appeal (L) No. 28 of 2012
of a particular Zone have been deputed 'on tour' to hear matters for a particular
number of days, whilst on tour, of another Bench in a different Zone. Mr.
Dwarkadas has therefore submitted that the argument of the Respondents that
unless and until a Bench is reconstituted and a member is appointed as a
member of the reconstituted Bench it would not be appropriate for such a
member to hear and dispose of a matter filed before another Regional Bench is
not a correct reading of the Act or of the CLB Regulations.
31.
Mr. Khambata, Learned Senior Advocate appearing for Respondent No.8,
has submitted that the office of the Chief Justice is an institution predating the
Government of India Act, 1915, the Government of India Act, 1935 and the
Constitution of India. Section 108 (2) of the Government of India Act, 1915
expressly vested power in the Chief Justice of the High Court akin to the master
of the roster. He submitted that the recitals to the Letters Patent provided that it
was an act for establishing High Courts, each of which shall consist of a Chief
Justice. Clause 8 of the Letters Patent authorised and empowered the Chief
Justice to make appointments as "shall be found necessary for the administration
of justice, and the due execution of all the powers and authorities granted and
committed to the said High Court". Mr. Khambata submitted that Article 225 of
the Constitution of India saves the jurisdiction of the then existing High Courts,
and the respective powers of the Judges therein in relation to administration of
justice, as also the power to make rules of the Court and to regulate the sittings
KPP -42- Company Appeal (L) No. 28 of 2012
of the Court and of members sitting alone or in Division Benches. Clearly the
aforesaid power in respect of administrative matters, which is exercised by the
Chief Justice, is a power which predated the Constitution and hence that power
was expressly saved in the Constitution of India. It is in that light of the matter,
given the long-standing exercise of such powers that it is said that the powers
exercised by the Chief Justice vest in him by the very nature of his position.
32. Mr. Khambata submitted that the Chairman of the CLB is a creature of
statute, whose powers are circumscribed by Section 10E of the Act and by the
CLB Regulations. Hence, the Chairman is bound to exercise his power within
the four corners of the CLB Regulations. Relying on the decision of the Hon'ble
Supreme Court in Transcore vs. Union of India1 Mr. Khambata submitted that the
power of the Chairman being confined to the provisions of the Regulations, no
action could have been taken by him contrary to or inconsistent therewith. Mr.
Khambata submitted that it is obvious that if it was intended to invest any power
in the Chairman aside from those expressly delegated to him, the same would
have been expressly provided for by the statute framers. In the present case,
there is nothing in the CLB Regulations as would indicate any intention that the
Chairman was intended to be vested with any powers, aside from those
expressly delegated to him under Regulations 3 and 4 of the CLB Regulations.
Mr. Khambata therefore submitted that the position of the Chairman of the CLB
is therefore not akin to that of the Chief Justice of a High Court.
1 (2008) 1 SCC 125
KPP -43- Company Appeal (L) No. 28 of 2012
33. Mr. Khambata further submitted that as already held in Manju Verma vs.
State of U.P (supra), the power of the Chief Justice to transfer a case from one
territorial jurisdiction to another is distinct from his power to frame a roster to
determine the distribution of judicial work in the High Court. In that case, the
Chief Justice of the Allahabad High Court had express power under Clause 14 of
the United Provinces High Courts (Amalgamation) Order, 1948 to transfer
matters from cases in specified areas of U.P. to Allahabad (similar to the second
proviso to Regulation 4 (3) of the CLB Regulations 1991). Mr. Khambata
therefore submitted that the transfer of matters inter-jurisdictionally, apart from
the Principal bench, not being part of the power to frame the roster has to be
expressly conferred on the Chairman. In the absence of any express power, the
Chairman cannot claim such a power. Mr. Khambata submitted that the
judgment of the Madras High Court in President, Income Tax Appellate Tribunal v.
A. Kalyanasundaram (supra) compares the President of the ITAT to the Chief
Justice of a High Court only in the context of the Income Tax Act which expressly
conferred the power of constitution of Benches upon the President. Mr.
Khambata further submitted that if the Chairman enjoyed inherent powers of
superintendence, as claimed by the Appellant, then ipso facto there would have
been no need for Regulations 3 and 4 of the CLB Regulations vesting power in
the Chairman. The express stipulation/vesting of power in the Chairman by the
said Regulations make it clear that there is no supervening or inherent power of
KPP -44- Company Appeal (L) No. 28 of 2012
superintendence vested in the Chairman. Mr. Khambata has also submitted that
the argument that it will be impractical if only the entire CLB and not the
Chairman is held to have the power to transfer cases from one Regional Bench to
another Regional Bench is misconceived. He submitted that even assuming that
the Chairman of the CLB has powers similar to those of the Chief Justice of the
High Court, he nevertheless cannot act contrary to Regulation 7. Mr. Khambata
also submitted that the interpretation of the provisions of law relating to the
powers of the Chairman cannot be determined on the basis of any previous
orders that may have been issued.
34. I have considered the submissions advanced by the Learned Senior
Advocates appearing for the parties as regards the aforestated question of law
viz. whether the Chairman of the CLB has the power under the Act and the CLB
Regulations to grant either of the reliefs prayed for by the Appellant in the
Company Application?. As submitted on behalf of the contesting Respondents,
the clear cut and demarcated position of the three entities that are referred to in
the Act and the CLB Regulations and relevant for the purpose of deciding the
issue in hand are the following:
(i) The Board of Company Law Administration constituted under Section
10E (1) of the Act ("the Company Law Board") and also defined under
Regulation 2 (1) (g) of the CLB Regulations - the Company Law Board consists
of all the members appointed to it by the Central Government by Notification in
KPP -45- Company Appeal (L) No. 28 of 2012
the Official Gazette under Section 10E (2) of the Act.
(ii) The Chairman of the Company Law Board who is defined by Regulation 2
(1) (I) to be the Chairman of the Board i.e. the Company Law Board; and
(iii) Bench of the Company Law Board - "Bench" is defined under Regulation
2 (1) (e) as meaning a Bench of the Board and includes the Principal Bench, the
Additional Principal Bench and a member sitting singly.
35. As held by the Hon'ble Supreme Court in its decisions in The Member,
Board of Revenue vs. Arthur Paul Benthall (supra), B.R. Enterprises vs. State of
U.P. & Ors. (supra) and the decision of this Court in Maharana Jaywantsinhji
Ranmalsinhji Thakore Saheb of Sanand vs. The State of Bombay (supra), where a
statute uses different expressions they mean different things. Such distinction is
also clearly brought out in Section 10E of the Act as follows:
(i) The CLB is constituted and empowered by the provisions of Section 10 E;
(ii) Section 10E (4B) empowers only the CLB, that is to say all the members
of the Company Law Board appointed by the Central Government by Notification
as provided in Section 10E (2) of the Act. The powers conferred by Section 10E
(4B) are not conferred on any one or more members of the CLB nor on the
Chairman or Vice-Chairman of the CLB nor even on any Bench of the CLB;
(iii) Benches of the CLB are separately and independently referred to in
KPP -46- Company Appeal (L) No. 28 of 2012
Section 10E (4C) and (4D), apart from the reference in sub-section (4B) itself.
36. As set out hereinabove, the power in law to form a Bench and to
authorize such bench to discharge the powers and functions of the CLB as may be
specified is exclusively that of the CLB as a whole as provided in Section 10E
(4B). Section 10E (6) vests power in the CLB as a whole to regulate its own
procedure. Transfer of matters and hearing of them by particular Benches or
Members are obviously matters relating to the procedure of the CLB. These
matters could very well be regulated by the CLB acting as a whole. Such
regulation has in fact been made by the CLB acting as a body in the form of the
CLB Regulations. The CLB Regulations, inter alia provide for delegation to the
Chairman of the CLB of the powers of the CLB for formation of Benches, and
specification of powers and discharge of functions by the respective Benches and
their members and transfer of matters pending before any Bench. These
delegated powers are the following:
(i) Formation of Bench and specification of the powers and functions to be
discharged by that Bench [Regulation 3 (2) ];
(ii) Specification of the Member of the Bench before whom every matter
should be placed for orders and the Member before whom the matter should be
placed in default of the first named Member [Regulation 3 (3) ];
(iii) Specification by the Chairman of the matters falling within Regulation 4
(1) to be dealt with by the Principal Bench [Regulation 4 (1) ];
KPP -47- Company Appeal (L) No. 28 of 2012
(iv) Specification by the Chairman of matters falling under Regulation 4 (3)
to be dealt with by Regional Benches [Regulation 4 (3) ];
(v) The power to transfer any matter pending before the Regional benches to
the Principal Bench [second proviso to Regulation 4 (3) ].
37. A reading of Regulation 3 of the CLB Regulations makes it clear beyond
any doubt that the Chairman of the CLB is empowered by the Board to
constitute the Benches of the Board as per the composition of Benches
prescribed under Section 10E (4B) of the Act. Regulation 3 (3) of the CLB
Regulations empowers the Chairman to specify the Member of the Bench before
whom every matter requiring decision by the Board shall be placed for orders
and in the absence of such Member so specified every such matter shall be placed
before any other member of the Bench who is present. Thus Regulation 3 (3) of
the CLB Regulations delegates the power of intra Bench allocation of matters to
the Chairman i.e. transfer of a matter from one Member of a Bench to another
Member of a Bench but not inter Bench transfer i.e. from one Member of the
Bench to a Member of another Bench. Regulation 4 empowers the Chairman to
provide that matters falling under Sections 247, 250, 269 and 388B of the Act
and under Section 2A of the Monopolies and Restrictive Trade Practice Act, 1969
shall be dealt with by the Principal Bench consisting of one or more Members.
Therefore matters arising out of the Sections set out in Regulation 4 may be
dealt with only by the Principal Bench consisting of one or more members of the
KPP -48- Company Appeal (L) No. 28 of 2012
CLB which shall be at New Delhi as provided in Regulation 4 (2) of the CLB
Regulations. Regulation 4 (3) of the CLB Regulations provides that matters
falling under all other sections of the Act [i.e. matters falling under Sections
other than those set out in Regulation 4 (1) ], shall be dealt with by Regional
benches, namely, New Delhi Bench, Chennai Bench, Kolkata Bench and Mumbai
Bench, consisting of one or more Members. Since Regulation 4 came to be
substituted by the CLB Amendment Regulations vide GSR 185 (E) dated 17th
March, 2008 w.e.f. 1st April, 2008, it was provided in proviso (1) to Regulation
4 (3) that the matters pending before the Principal Bench and Additional
Principal Bench as on 1st day of April 2008 shall continue to be disposed of by the
Principal Bench and Additional Principal Bench respectively. In other words,
the matters not falling under the Sections set out in Regulation 4 (1) and which
were required to be dealt with by the Regional Benches under Regulation 4 (3)
were allowed by the first proviso to Regulation 4 (3) to be continued and
disposed of by the Principal Bench and Additional Principal Bench, in the event
of such matters being pending before the Principal Bench as on 1st April, 2008.
By proviso (2) to Regulation 4 (3), it was provided that notwithstanding
anything contained in Regulation (7), the Chairman could transfer any matter
pending before the Regional benches to the Principal Bench either at the joint
request of all the parties or for other reasons to be recorded in writing.
Regulation 7 (1) of the CLB Regulations provides as follows:
7. Jurisdiction of the Bench - (1) All proceedings, other than
the proceedings before the Principal bench under Regulation 4,
KPP -49- Company Appeal (L) No. 28 of 2012
shall be instituted before the Bench within whose jurisdiction the
registered office of the Company is situated"
In view of this Regulation, none of the proceedings other than the proceedings
under Regulation 4 (1) and Regulation 4 (3) of the CLB Regulations could have
been dealt with by the Principal Bench. All other proceedings are required to be
instituted before and consequently to be heard by the respective Benches within
whose jurisdiction the registered offices of Companies are situated. To this rule,
the only exception is carved out in the second proviso to Regulation 4 (3), which
contains the non obstante clause i.e. "Notwithstanding anything contained in
Regulation 7". This exception empowers the Chairman to transfer any matter
from the Regional Benches to the Principal Bench. Thus the power delegated to
the Chairman is the power to transfer matters before the Regional Benches only
to the Principal Bench since any other transfer inter se between Regional Benches
would otherwise violate the mandate of Regulation 7 (1), and this is not the
power that the Company Law Board has delegated to the Chairman.
38. Thus the subject of "power to transfer" has been expressly and
exhaustively provided in and limited by the second proviso to Regulation 4 (3)
of the CLB Regulations. The Chairman cannot have direct recourse to the powers
of the CLB over and above what is delegated to him under the CLB Regulations.
The Appellant's contention based on the judicial interpretation of the words "it
shall be lawful..." in the second proviso of Regulation 4 (3), also tends to
KPP -50- Company Appeal (L) No. 28 of 2012
support the Respondents' above contention. According to the Appellant, "it
shall be lawful" means "providing as lawful what would not be legal without
the said provision" or "merely making that legal and possible which there would
otherwise be no right or authority to do". Thus, but for the second proviso to
Regulation 4 (3), there was no right or authority in the Chairman to transfer
matters, not even an "inherent power" to transfer matters pending before the
Regional Bench to the Principal Bench. The position cannot be any different with
regard to the Chairman's power to transfer any matter pending before a
Regional Bench to another Regional Bench.
39. The Appellant has also contended that the Chairman has inherent powers
under Regulation 44 of the CLB Regulations and that the Chairman can exercise
his inherent powers and transfer a matter from one Regional Bench to another.
What Regulation 44 does is to save the inherent power of the "Bench" to make
such orders as may be necessary for the ends of justice. It is argued on behalf of
the Appellant that the word "Bench" in Regulation 44 of the CLB Regulations
must be interpreted differently and held to cover the "Chairman" acting as such
since the context so requires. The Appellant points out that the definition clause
opens with the words "in these regulations unless the context otherwise
requires". Thus, where the expression "Bench" includes a Member and the word
Member includes the Chairman, it would mean that the saving of the inherent
powers in the Bench contextually would include the saving of the Chairman's
KPP -51- Company Appeal (L) No. 28 of 2012
powers as the master of the roster i.e. in charge of the administrative functions of
the Board.
40. As discussed hereinabove, "Chairman", "Bench" and "Company Law
Board" are three different and distinct entities and the distinction is apparent in
Section 10E of the Act as analysed hereinabove. The CLB Regulations were
made by the CLB, that is to say, by its Members acting as a body by virtue of the
powers conferred under Section 10E (6) of the Act and they also maintain this
distinction.
(i) Regulations 3 and 4 refer to the Chairman viz. The Chairman of the
Company Law Board as such and not to the Principal Bench of the CLB of which
the Chairman may or may not be a Member or of which the Chairman may even
be the only Member;
(ii) Regulation 4 (2), for example, separately refers to the Principal Bench
and Regulation 4 (3) also separately refers to Regional Benches both as
distinguished from the Chairman of the CLB;
(iii) Regulation 2 (1) (e) includes within the meaning of the word "Bench"
even a Member sitting singly. This only means that a Bench need not be
constituted of two or more Members but can be validly constituted even of one
member whether it be the Principal Bench or a Regional bench. The fact that the
definition of "Bench" includes a Member sitting singly does not in any manner
dilute the clear distinction made in the Act as well as under the CLB Regulations
KPP -52- Company Appeal (L) No. 28 of 2012
between the Chairman of the CLB on the one hand and the Benches of the CLB
including even the Principal Bench on the other;
(iv) Regulation 2 (1) (m) clarifies that the term "member" includes the
Chairman and Vice-Chairman. This is because a Bench may consist exclusively of
one member viz. the Chairman of the CLB;
(v) The CLB Regulations make a distinction between the Chairman acting as
such and Benches, even if constituted of the Chairman as the sole or as one of
the members;
(vi)
Consequently the reference to the inherent powers of the Bench in
Regulation 44 must necessarily be a reference to the inherent powers of each
bench which could either be the Principal Bench or the Regional Benches, which
are empowered to hear any particular matter, which in turn may include the
Chairman acting as the sole or one of the Members of the Principal Bench but
cannot be a reference to the powers of the Chairman of the CLB exercised as such
Chairman.
41. As correctly submitted on behalf of the contesting Respondents,
Section 10E (4B) deems that any Bench duly constituted, in exercising and
discharging powers and functions is deemed to exercise the powers and
functions of the CLB and any order made or act done by such a Bench shall be
deemed to be the order or act of the CLB. There is no similar provision in the
Act or the CLB Regulations in respect of the powers/functions/acts/orders of the
KPP -53- Company Appeal (L) No. 28 of 2012
Chairman or of the Vice-Chairman acting as such. There is therefore no
question of attributing the inherent powers referred to in Regulation 44 to either
the Chairman or the Vice-Chairman when they act as such. The fact that the
Chairman or the Vice-Chairman may also form part of a Bench including even
the Principal Bench does not affect this clear position. As further submitted on
behalf of the contesting Respondents, resorting to the inherency of powers of
any organ of the CLB (assuming that any such powers exist) is completely
unjustified since the CLB Regulations merely regulate the procedure by which
the CLB operates. The provisions of Regulation 44 by themselves cannot confer
any new power (independent of the CLB) in the Chairman who acts exclusively
as a delegate of powers from the CLB. In any event, even a Bench will enjoy
inherent powers only in respect of such matters as validly lie before it. A
Regional Bench has no power to pass any order in exercise of its inherent powers
that go beyond the jurisdiction of that Regional Bench. Hence one Regional
Bench cannot direct another Regional Bench to do anything or to hear a matter.
Similarly a Regional Bench cannot direct that a matter before it be transferred to
another Regional bench for hearing nor can it transfer a matter pending before
another Regional Bench to itself for hearing. This is because inherent powers
cannot transcend jurisdiction.
42. Mr. Dwarkadas has, relying on the decision of Punjab & Haryana
High Court in Devi Das Gopal Krishnan's case (supra), argued that the Chairman
KPP -54- Company Appeal (L) No. 28 of 2012
of the CLB can transfer matters from one Regional Bench to another under his
power as a controlling authority to superintend the administering and the
functioning of the CLB including the Regional Benches. Unlike the case of Devi
Das Gopal Krishnan (supra) where, under the Punjab General Sales Tax Act,
1948, the Excise and Taxation Commissioner was the final controlling authority
and was empowered to superintend the administrative and collection of leviable
tax, there is no general controlling authority or power to superintend vested in
the Chairman of the CLB under the Act. The powers of CLB as a body to fix the
roster and assign work to the individual members have been delegated to the
Chairman under the CLB Regulations. There is no general delegation to
superintend the work of the respective Benches or Members to the Chairman
beyond the aforesaid express delegation and as discussed herein, the Chairman
must act within such express delegation. The ratio of the decision of Devi Das
Gopal Krishnan's case is thus not applicable in the instant case.
43. The other submission of Mr. Dwarkadas, based on the decision of
Tanushee Basu's case (Supra), that the Chairman could pass an order of transfer
from one Regional Bench to another on the basis of his inherent powers on the
analogy of Section 151 of the Code of Civil Procedure also deserves to be
rejected in the light of what is discussed above. Even if there might be inherent
powers to do so with the CLB acting as a body, such power unless delegated to
the Chairman cannot be exercised by him as explained above.
KPP -55- Company Appeal (L) No. 28 of 2012
44. As observed hereinabove, Section 10E (4B) does not vest any power
in the Chairman. The powers under Section 10E (4B) vest exclusively in the
Board, which Board pursuant to its powers under Section 10E (6) of the Act has
regulated its own procedure and in so doing has delegated some of the powers to
the Chairman. If the Chairman enjoyed inherent powers of superintendence, as
claimed by the Appellant, then ipso facto there would be no need for Regulation
3 and Regulation 4 vesting power in the Chairman. The very fact that the above
Regulations expressly stipulate/vest power in the Chairman make it clear that
there is no supervening or inherent power of superintendence vested in the
Chairman. It is therefore clear that the extent of powers vested in the Chairman
of the CLB are specified in Regulation 3 and Regulation 4, and aside from those
powers, the Chairman has not been vested with or been delegated with any other
powers.
45. Further, in the light of the above discussion, the other submission of
Mr.Dwarkadas about the Board not being the delegate of the Central
Government need not be considered, as we are not concerned here with the
Board's powers, whether as a delegate or otherwise, but with the powers of the
Chairman as an express delegate of the Board. The question of what is meant by
the expression 'Board' has been addressed herein separately and the submissions
made in regard hereto cannot be accepted for the reasons stated.
KPP -56- Company Appeal (L) No. 28 of 2012
46. As pointed out by the contesting Respondents that in statutes where
the Chairman/President of the Tribunal is intended to exercise power to transfer
cases from one Bench to another, the said power is expressly provided for in the
statute. Some illustrations in this regard are given hereunder:
"(i) Sections 5, 12, 18 and 25 of the Administrative
Tribunals Act, 1985, and in particular Sections 12 and
25 which read as follows:
"12. FINANCIAL AND ADMINISTRATIVE POWER OF
THE CHAIRMAN.-
The Chairman shall exercise such financial and
administrative power over the Benches as may be vested in
him under the Rules made by the appropriate government;
(2) The appropriate government may designate one or more
Members to be the Vice-Chairman or, as the case may be,
Vice-Chairman thereof and the Members so designated shall
exercise such of the powers and perform such of the functions
of the Chairman as may be delegated to him by the
Chairman by a general or special order in writing.
25. POWER OF CHAIRMAN TO TRANSFER CASES FROM
ONE BENCH TO ANOTHER._
On the application of any of the parties and after notice to
the parties, and after hearing such of them as he may desire
to be heard, or on his own motion without such notice, the
Chairman may transfer any case pending before one Bench,
for disposal, to any other Bench".
(ii) Section 91 of the Trade Marks Act, 1999:
"96. Power of Chairman to transfer cases from one Bench to
another._ On the application of any of the parties and after
notice to the parties and after hearing such of them as he
may desire to be heard, or on his own motion without such
notice, the Chairman may transfer any case pending before
one Bench, for disposal, to any other Bench."
KPP -57- Company Appeal (L) No. 28 of 2012
(iii) Section 64 in The Delhi Rent Act, 1995.
"64. Power of Chairman to transfer cases from one Bench to
another._ On the application of any of the parties and after
notice to the parties, and after hearing such of them as he
may desire to be heard, or on his own motion without such
notice, the Chairman may transfer any case pending before
one Bench, for disposal, to any other Bench."
47. In any event, it is also well settled that the inherent powers cannot
be used to negate specific provisions covering the field of their exercise. In
Arjun Singh vs. Mohindra Kumar and others1, the Hon'ble Supreme Court held
thus:
" 19. ... it is common ground that the inherent power of the
court cannot override the express provision of the law. In
other words, if there are specific provisions of the Code dealing
with a particular topic and they expressly or by necessary
implication exhaust the scope of the powers of the Court or the
jurisdiction that may be exercised in relation to a matter the
inherent power of the court cannot be invoked in order to cut
across the powers conferred by the Code. The prohibition
contained in the Code need not be express but may be implied
or be implicit from the very nature of the provisions that it
makes for covering the contingencies to which it relates...."
48. The second proviso to Regulation 4 (3) is an express provision
relating to the power of transfer. The power to transfer any matter pending
before a Regional bench only authorises the Chairman to transfer any matter
pending before the Regional benches to the Principal Bench. There is an implied
prohibition against the transfer from one Regional Bench to another. This is in
view of Regulation 7 (1) as well. There being no other provision authorising
1 AIR 1964 SC 993
KPP -58- Company Appeal (L) No. 28 of 2012
transfer, the Court cannot add to the Chairman's power of transfer. Regulation
4 (second proviso) cannot be rendered nugatory or meaningless by resort to
some alleged inherent powers of the Chairman based on Regulation 44 to permit
transfers of matters other than those permitted by Regulation 4. The argument
of impracticability of certain previous orders passed by the CLB cannot be the
basis for interpreting a provision of a statute.
49. The Learned Senior Advocates appearing for the parties have also
advanced lengthy submissions on the issue as to whether the position and
powers of the Chairman, CLB are akin to that of the Chief Justice of a High
Court. As submitted on behalf of the contesting Respondents, the Office of the
Chief Justice is an institution predating the Government of India Act, 1915, the
Government of India Act, 1935 and the Constitution of India. Section 108 (2) of
the Government of India Act, 1915 expressly vested power in the Chief Justice of
the High Court akin to the master of the roster. The Learned Senior Counsel
appearing for Respondent No. 8 submitted that the recitals to the Letters Patent
provided that it was an act for establishing High Courts, each of which shall
consist of a Chief Justice. Clause 8 of the Letters Patent authorised and
empowered the Chief Justice to make appointments as "shall be found necessary
for the administration of justice, and the due execution of all the powers and
authorities granted and committed to the said High Court" by the Letters Patent.
Article 225 of the Constitution of India saves the jurisdiction of the then existing
KPP -59- Company Appeal (L) No. 28 of 2012
High Courts, and the respective powers of the Judges therein in relation to
administration of justice in the Courts, as also the power to make rules for the
Court and to regulate the sittings of the Court and of members sitting alone or in
Division Benches. Clearly the aforesaid power in respect of administrative
matters, which is exercised by the Chief Justice, is a power which predated the
Constitution and hence that power was expressly saved in the Constitution of
India. It is in that light of the matter that it is said that the powers exercised by
the Chief Justice inhere in him by the very nature of his position, given the long-
standing exercise of such powers. In The Mayavaram Financial Corporation Ltd.,
Mayiladuturai vs. The Registrar of Chits, Pondicherry1, the Full Bench of the
Madras High Court noted the statutory and constitutional basis for the exercise
of power by the Chief Justice and held as under:
"8.....It is thus clear from the judgment of the Supreme
Court's rule making power under S. 108 of the Government
of India Act, 1915 read with the corresponding provision in
the Government of India Act, 1935 and under Art. 225 of
the Constitution of India remained unaffected and so is the
power of the Hon'ble the Chief Justice to decide who
amongst the Judges be assigned the work as a Judge sitting
alone or a Judge sitting in a Division Bench of two or three
Judges."
The Chairman of the CLB is a creature of statute, whose powers are
circumscribed by Section 10E of the Act and by the CLB Regulations. Hence,
the Chairman is bound to exercise his power within the four corners of Section
10E and the CLB Regulations. As the power vested in the Chairman is clearly
1 (1991) 2 LW 80
KPP -60- Company Appeal (L) No. 28 of 2012
stipulated in the said Regulations, the Chairman can only act within the ambit of
the Regulations to exercise the powers delegated to him. The power of the
Chairman being confined to the provisions of the Regulations, no action could
have been taken by him contrary to or inconsistent therewith. It is settled that
where a person or authority is a creature of statute, the said person/authority is
bound by the Rules and provisions unless the Act or Rules provide to the
contrary. In the present case there is nothing in the CLB Regulations as would
indicate any intention that the Chairman was intended to be vested with any
powers aside those from expressly delegated to him under Regulations 3 and 4
of the CLB Regulations. It therefore cannot be said that the position of the
Chairman of the CLB is akin to that of the Chief Justice of a High Court.
50. As held in Manju Varma vs. State of U.P (supra), the power of the
Chief Justice to transfer a matter from one territorial jurisdiction to another is
distinct from his power to frame a roster to determine the distribution of judicial
work in the High Court. In that case the Chief Justice of the Allahabad High
Court had express power under Clause 14 of the United Provinces High Courts
(Amalgamation) Order, 1948, to transfer matters from specified areas of U.P. to
Allahabad, which is similar to the second proviso to Regulation 4 (3) of the CLB
Regulations. The transfer of matters inter-jurisdictionally, apart from the
Principal Bench, not being part of the power to frame the roster, has to be
expressly conferred on the Chairman. In the absence of any express power, the
KPP -61- Company Appeal (L) No. 28 of 2012
Chairman cannot claim such a power. The Judgment of the Madras High Court
in The President, Income Tax Appellate Tribunal vs. A. Kalyanasundaram (supra)
compares the President of the ITAT to the Chief Justice of a High Court only in
the context of the Income Tax Act, which expressly conferred the power of
constitution of Benches upon the President.
51. Even if we proceed on the basis that the Chairman of the CLB has
similar powers to those of the Chief Justice of the High Court, the Chairman
cannot exercise powers contrary to Regulation 7 which places an embargo on a
matter being heard before any Regional Bench other than the Regional Bench
within whose territorial jurisdiction the Registered Office of the Company is
situated. It is well settled that the inherent powers referred to in a rule made
under a Statute cannot provide a justification for committing breach of the
provisions of the statute under which the Rule was made. In the present case,
Regulation 7 embodies a prohibition placed by the CLB on any Regional Bench
hearing a matter in respect of a Company not having its registered office within
the territorial jurisdiction of that Regional Bench. The only exception to this is
the second proviso to Regulation 4 which permits the Chairman to transfer any
matter pending before any of the Regional Benches to the Principal Bench. The
Chairman cannot rely upon any alleged inherent power to direct a transfer to be
made from one Regional Bench to another Regional Bench in contravention of
the said embargo under Regulation 7. The inherent powers arise within
KPP -62- Company Appeal (L) No. 28 of 2012
jurisdiction. They cannot be used to create a jurisdiction. The Chairman cannot
in the exercise of any purported inherent power, vest jurisdiction in a Regional
Bench, which in the light of the express provisions of Regulation 7 it does not
possess. In view of the aforesaid reasoning, I am of the view that the Chairman,
CLB has no power and/or jurisdiction to grant prayer (a) of the Company
Application viz. to transfer Company petition No. 62 of 2009 from the Western
Region Bench to the Southern Region Bench.
52.
In prayer clause (b), the Appellant has in the alternative prayed that
the Hon'ble CLB Member Shri Kanthi Narahari be permitted to preside over the
Hon'ble CLB, Western Bench for the limited purpose of completing the hearing
of Company Petition No. 62 of 2009, on the already agreed dates or any other
mutually convenient dates. Under Section 10E of the Act read with Regulation 3
of the CLB Regulations, the Chairman of the CLB certainly has the power to
form any Bench and specify therein the powers and functions which shall be
exercised/ discharged by such Bench. What is sought by the Appellant through
prayer clause (b) is nothing but formation of a Bench presided by Kanthi
Narahari at the Western Region, with a specification/direction to dispose of
Company Petition No. 62 of 2009. The Chairman, CLB certainly has the power
to accede to this request of the Appellant, as sought to be made in the said
prayer clause (b). I am therefore of the view that the Chairman, CLB has the
power and jurisdiction to grant the prayer sought in the alternative i.e. prayer
KPP -63- Company Appeal (L) No. 28 of 2012
clause (b). Prayer clauses ( c) and (d) are consequential prayers and need not
be commented upon.
53. The third and the fourth questions of law which need to be
addressed are:
Whether the impugned order amounts to an abdication or fettering of
discretion/jurisdiction in a case where such power ought to have been exercised?
and
Whether the impugned order is perverse, arbitrary, unsustainable in law
and therefore deserves to be set aside?
Both the questions are together dealt with hereinafter.
54. It appears that the contesting Respondents have at the time of
making submissions before the Chairman - CLB have not pressed the contention
that the Chairman - CLB has no powers under the Act or the CLB Regulations to
grant either of the reliefs sought in Company Application No. 275 of 2012. The
Learned Chairman of the CLB has therefore without going into the question as to
whether he has the power and jurisdiction to grant prayer clauses (a) and/or (b)
sought in Company Application No. 275 of 2012, has after hearing the parties on
merits rejected the reliefs sought by the Appellant and dismissed the Company
Application. The order passed by the Chairman, CLB which is impugned by way
of the present Appeal is reproduced hereunder:
KPP -64- Company Appeal (L) No. 28 of 2012
"Arguments heard on CA No. 275/2012 filed under
Regulations 4 & 44 of the Company Law Board Regulation
1991 which seeks following directions:-
(a) The above captioned Company Petition be transferred
to the Southern Bench of the Company Law Board for
hearing to be completed before the Company Law Board
Member m Shri Kanthi Narahari on the already agreed
dates or any other mutually convenient dates;
(b) In the alternative, the Company Law Board Member
Shri Kanthi Narahari be permitted to preside over the
Company Law Board, Western Bench for the limited purpose
of completing the hearing in the above captioned company
petition on the already agreed dates or any other mutually
convenient dates;
(c ) In addition to prayer (a), it be ordered and directed
that the records and proceedings of Company petition 62 of
2009 be transferred to Chennai and the parties be directed
to bear the cost in relation to the same if deemed necessary;
(d) In addition to prayer clause ii, if deemed necessary, the
parties be directed to equally bear the costs in relation to the
travel of the Learned Member from Chennai to Mumbai for
completion of the hearing of Company Petition 62 of 2009;
(e ) For such further and other reliefs as the Principal
Bench may deem fit in the facts and circumstances of the
case.
In exercise of the power conferred on me by Section 10E
(4B) and Regulation 4 of the Company Law Board
Regulation, 1991 an administrative order dated 04.05.2012
regarding Constitution of Benches has already been passed
by me. The said order provides in para 2 as under:-
"Matter in which upon conclusion of final hearing orders
have been reserved by the Members under transfer vide office
order of even number dated 30.4.2012, such Members
would pass orders in such matters at their new place of
posting after due notice to the parties".
KPP -65- Company Appeal (L) No. 28 of 2012
Merely because C.P. No. 62/2009 is part heard and
hearing is at closing stage an exception ought not to be
carved out for this matter alone as it would be creating a
precedent and similar applications in all such matters would
start pouring in from all Benches causing not only the
disruption of work in the Benches as the Member would be
required to visit other Benches to complete hearing in part
heard matters. If part heard matters are transferred to a
Bench where the Member, before whom hearing was part
heard, is posted it would cause inconvenience to the parties
as the parties would be required to travel distances to
appear before other Benches in which the Member before
whom the matter was part heard is posted. I have enquired
from the Benches and I am told that such part heard matters
are many.
A perusal of para 10 of CA No. 275/2012 shows that
while the arguments for the Petitioner's side were concluded
in four hearings, the Respondents took eleven hearings to
complete their arguments. Then after completion of the
arguments of the Petitioner in rejoinder in another four
hearings, the Respondents again took three more hearings
for arguments in sur rejoinder. What is even more surprising
is that the matter has now been listed on 16th, 17th and 25th
July 2012 for arguments in sur sur rejoinder. This kind of
procedure is unknown and I am unable to understand why
after hearing arguments in rejoinder further opportunity for
arguments in sur rejoinder and thereafter more opportunity
for arguments in sur sur rejoinder should have been granted
by the Member. Be that as it may applicant/Respondents
are also, to a great extent, responsible for the delay caused
in conclusion of hearing in C.P. No. 62/2009. Granting any
of the reliefs as prayed would therefore militate against the
administrative order dated 4.5.2012 and create a precedent
whereby a chaotic situation would arise in all Benches if in
all such matters on the basis of such a precedent applications
start pouring in. I therefore decline to grant the prayers in
CA No. 275/2012 which is accordingly dismissed.
The present Member, Western Regional Bench, Mumbai
would be well advised to hear arguments de-novo in C.P. No.
62/2009 in such a manner that hearing concludes before
31.8.2012.
Sd/-
(Justice D.R. Deshmukh)
Chairman."
KPP -66- Company Appeal (L) No. 28 of 2012
55. The Learned Senior Advocate appearing for the Appellant, relying
on the observation in the impugned order that "...Granting any of the reliefs as
prayed would therefore militate against the administrative order dated 4.5.2012
and create a precedent whereby a chaotic situation would arise in all Benches if in
all such matters on the basis of such a precedent applications start pouring in...",
has submitted that the Learned Chairman of the CLB has abdicated and fettered
his jurisdiction and power to transfer the Company Petition No. 62 of 2009 and
has for extraneous reasons refused to invoke/exercise his discretion and powers
which ought to have been exercised in favour of the Appellant. It is submitted
that the Learned Chairman has also based his refusal to exercise his power on
the basis that by so doing the same would run contrary to the Administrative
Order dated 4th May 2012. Relying on the decision of the Hon'ble Supreme Court
in U.P. State Road Transport Corporation & another vs. Mohd. Ismail & Ors.1, it is
submitted that the finding of the Learned Chairman is clearly contrary to the
well settled position of law that an authority in which a discretionary power is
vested cannot by a self-imposed policy, curtail or abdicate the discretion which
it is required to exercise on a case by case basis. It is submitted that the
Learned Chairman is required in law to consider the said Application in light of
the relevant facts and circumstances arising therein and after applying his mind
to the merits of the same, exercise his discretion on that basis. The Learned
Senior Advocate for the Appellant has submitted that in rejecting the said
application, the Learned Chairman has given distinct and separate reasons for
1 (1991) 3 SCC 239
KPP -67- Company Appeal (L) No. 28 of 2012
rejecting the two prayers made by the Appellant in the said application which
are as follows:
". (i) In relation to prayer (b) the learned Chairman
observed that "merely because C.P. No. 62/2009 is part heard
and hearing is at closing stage an exception ought not to be
carved out for this matter alone as it would be creating a
precedent and similar applications in all such matters would
start pouring in from all Benches causing not only the
disruption of work in the Benches as the Member would be
required to visit other Benches to complete hearing in part
heard matter"
(ii) In relation to prayer (a), the learned Chairman
observed that "If part heard matters are transferred to a
Bench where the Member, before whom hearing was part
heard, is posted it would cause inconvenience to the parties as
the parties would be required to travel distances to appear
before other Benches in which the Member before whom the
matter was part heard is posted. I have enquired from the
Benches and I am told that such part heard matters are
many. "
The Learned Senior Advocate appearing for the Appellant submitted that the
mere fact that a precedent could be created by allowing the said application
cannot be a legal, valid or just reason to deny the same. It is submitted that the
Learned Chairman committed an error by treating every part heard Company
petition on an equal footing in this regard with Company Petition No. 62 of
2009. It is submitted that substantial judicial time and effort of 23 days has
been spent in finally hearing Company Petition No. 62 of 2009 and substantial
legal costs have also been incurred by the parties thereto. There are clear and
compelling reasons why the reliefs sought in the application ought to be
granted. It is also submitted that the Learned Chairman has grossly erred in
KPP -68- Company Appeal (L) No. 28 of 2012
finding that inconvenience would be caused to the parties if Company Petition
No. 62 of 2009 were to be transferred from the Western Region Bench at
Mumbai to the Southern Region Bench at Chennai, inasmuch as they would be
required to travel distances to appear before the Southern Region Bench of the
CLB. It is submitted that the Respondents have even on earlier occasions
arranged for Senior Counsel to travel from New Delhi and Calcutta to appear in
Mumbai before the Western Region Bench of CLB. Therefore, no hardship would
be caused to the parties or their Counsel to travel to Chennai instead of Mumbai.
It is submitted that the learned Member has also erred in finding fault with the
Appellant qua the earlier prolonged hearings before the learned Member Shri
Kanthi Narahari then presiding over the Western Region Bench. It is submitted
that the Learned Chairman has grossly erred in the impugned order by holding
that the Appellant was responsible "to a great extent" for the delay in the
proceedings. It is therefore submitted that the Learned Chairman has abdicated
and fettered his jurisdiction and powers by not granting the reliefs as sought by
the Appellant, and the relief sought for in the said Application has been rejected
on the basis of perverse finding of fact and therefore the impugned order is liable
to be quashed and the Company Application be allowed.
56. It is submitted on behalf of the Appellant that the last sentence of the
fourth paragraph of the impugned order which reads "I have enquired from the
Benches and I am told that such part heard matters are many" is not an
KPP -69- Company Appeal (L) No. 28 of 2012
independent reason given in support of the rejection of the Company
Application. On a proper reading of the impugned order, it is clear that the
reasons in support of the impugned order are to be found in the preceding part
of the same (fourth) paragraph and in the subsequent paragraph. This sentence
is a mere general factual statement and even if read with any of the other
reasons in the impugned order, does not save the same from being unsustainable
and perverse. Further this sentence refers to part heard matters generally and
even if taken as an isolated reason for the refusal of the Company Application,
the same would not save the impugned order as the entire submission of the
Appellant is that the present matter was not just another part heard matter and
for the purpose of transfer of a matter all part heard matters cannot be treated
alike. It is submitted that if the Learned Chairman by the expression "such part
heard matters" was referring to matters similarly placed as the present one,
then a proper exercise of discretion would require that all such cases be
transferred, assuming any such application is made by the parties in those cases.
57. The Learned Senior Advocate appearing for the Appellant has relied
on the decision of the Hon'ble Supreme Court in the case of Ascu Arch Timber
Protection Ltd. vs. Commissioner of Central Excise, Calcutta1 and has submitted
that the impugned order ought not to be sustained even if it is based on some
relevant considerations since it is also based on several irrelevant considerations.
It is submitted that it would be legally impermissible to sustain the impugned
1 (2004) 10 SCC 653
KPP -70- Company Appeal (L) No. 28 of 2012
order even on the footing that the Learned Chairman has based his refusal to
grant the reliefs sought in the said application on some relevant considerations.
58. Mr. De'vetre, Learned Senior Advocate appearing for Respondent No.
1, has submitted that the Chairman has exercised his discretion on rational,
relevant, reasonable and germane considerations. The Learned Chairman of the
CLB has given several reasons for declining to grant the reliefs prayed for. Each
of these reasons is independent and objective. It cannot be gainsaid that the
Chairman is concerned with the proper working of the Tribunal, in the interest of
the larger litigating public. Private/individual interest must yield to broader
considerations, namely interests of the litigating public and general efficient
functioning of the Tribunal and its Benches. Once the Chairman comes to the
conclusion that granting the transfer application as prayed for, would inevitably
result in disrupting the working of even one Bench, that by itself would be
sufficient justification for rejection of the application. It is submitted that the
Chairman has also noted objectively that he inquired from the Benches and
learnt that there are many "such" part heard matters. This is an additional and
independent reason for the exercise of his discretion to reject the application. In
addition, the Chairman has also taken into account the relevant circumstance
that the previous hearings of the matter have been considerably delayed and
spread over a great length of time i.e. over a period of two years. It is
submitted that delay of this length after the commencement of arguments must
KPP -71- Company Appeal (L) No. 28 of 2012
be viewed in the light of the Hon'ble Supreme Court's view in regard to an
analogous situation of delay in pronouncement of judgment after conclusion of
arguments. In the case of Anil Rai vs. State of Bihar1, the Hon'ble Supreme Court
has held that where judgment has not been pronounced for six months after it
was reserved, a party would be entitled to move an application before the Chief
Justice of the High Court with a prayer to withdraw the case and make it over to
any other Bench for fresh arguments. It is submitted that though the said
guidelines may not apply directly in a case like the present one, it cannot be lost
sight of that in the present case where admittedly the opening arguments of
Respondent No. 1 were concluded in August 2010 and the rejoinder arguments
of Respondent No.1 were concluded in November 2011, it would not be in the
interest of justice that the Respondent be put to the disadvantage of judgment
being delivered long after the close of their opening/rejoinder arguments. Mr.
De'vetre submitted that taking into consideration the aspect of delay in the
hearings, is hardly an irrelevant consideration. It cannot be said that the exercise
of the discretion is perverse. It is submitted that the Chairman has exercised
discretion reasonably and in a judicial manner . The view of the Chairman is
more than reasonably possible based on the material before him. There is no
question of the Chairman having fettered his discretion by general
considerations. The considerations and materials taken into account by the
Chairman are all germane and relevant.
1 (2001) 7 SCC 318
KPP -72- Company Appeal (L) No. 28 of 2012
59. Relying on the decision of the Hon'ble Supreme Court in Wander
Ltd.& another vs. Antox India P. Ltd.1, Mr. De'vetre submitted that the Hon'ble
Supreme Court has noted that the Appellate Court had fallen into error by
misdirecting itself in regard to the limitations on the powers of the Appellate
Court to substitute its own discretion in an appeal preferred against a
discretionary order. Mr. De'vetre has relied on the decision of a Constitution
Bench of the Hon'ble Supreme Court in State of Orissa & Ors. vs. Bidyabhushan
Mohapatra2 and has submitted that the Appellate Court in exercise of its
appellate powers is entitled to uphold and sustain an order on any ground
including a ground that may have been decided against the Respondent in
Appeal. If any one of the grounds set out for the exercise of discretion is valid
and proper, the Appellate Court will sustain the order. On the same proposition,
Mr. De'vetre has drawn support from the decision of the Hon'ble Supreme
Court in State of Maharashtra vs. B.K. Takkamore and others3 and in the case of
Zora Singh vs. J.M. Tandon and others4.
60. Mr. De'vetre has further submitted that no litigant is entitled to have
his matter adjudicated or heard by the Member of the Bench of his choice or
subject to his convenience. In M/s. Moonshine Films Pvt. Ltd. vs. Rajesh Patil and
6 in O.J. Appeal No. 51 of 2011 , a Division Bench of the Gujarat High Court, by
order dated 22nd July 2011, dismissed an appeal under Section 10F against an
1 1990 (Supp) SCC 727
2 AIR 1963 SC 779
3 AIR 1967 SC 1353
4 (1971) 3 SCC 834
KPP -73- Company Appeal (L) No. 28 of 2012
order of the Chairman of the CLB, which ordered that the matter be heard by the
Principal Bench. Mr. De'vetre therefore submitted that the learned Member of
the CLB has by refusing to grant any reliefs in favour of the Appellant, neither
abdicated/abandoned his discretionary powers nor has he given any findings
which can be treated as perverse. However, Mr. De'vetre has submitted that his
clients are willing to have the matter heard before any member of the Western
Region Bench (including the Chairman) where the matter is pending or before
the Principal Bench with an assurance to conclude its arguments in opening and
rejoinder within a maximum of such number of working days as this Court
deems reasonable.
61. Mr. Khambata, the Learned Senior Advocate appearing for
Respondent No.8 has adopted the arguments advanced on behalf of Respondent
No.1. In addition, he has submitted that it is well settled that an administrative
authority can always lay down certain guidelines which aid in the exercise of its
discretionary power in individual cases. Such norms or rules by which an
administrative authority regulates the exercise of its discretion are not fetters but
rather safeguards against the arbitrary exercise of discretion. He has submitted
that even in the judgment cited on behalf of the Appellant viz. U.P. State Road
Transport Corporation & another vs. Mohd. Ismail & Ors. (supra), the Hon'ble
Supreme Court has held that the conferment of discretionary power upon an
authority does not confer any vested right in any person for the exercise of such
KPP -74- Company Appeal (L) No. 28 of 2012
discretion (Para 11). The Hon'ble Supreme Court also held that whereas
statutory discretion could not be fettered by self-created rules or policy, it is open
to an authority to which discretion has been entrusted to lay down the norms or
rules to regulate exercise of such discretion (Para 13). The Hon'ble Supreme
Court itself noticed that there are two factors which are relevant. Firstly, that
discretion has to be exercised within the constraint of efficiency and
effectiveness. Secondly, that discretion must be exercised according to rules of
reason and justice and not according to private opinion (Para 15). These factors
in fact support the framing of norms or rules regulating the exercise of the
Chairman's discretion.
62. Referring to the decision of the Hon'ble Supreme Court in Dale &
Carrington Investment (P) Ltd. & Another vs. P.K. Prathapan and Ors1, relied upon
by the Learned Senior Advocate for the Appellant in support of his contention
that the impugned order is perverse and therefore the question of law arises, Mr.
Khambata submitted that the contention is misconceived since the Hon'ble
Supreme Court itself clarifies in paragraph 36 that perversity arises if a finding of
fact "is based on no evidence". It is only then that the perversity of such finding
itself becomes a question of law. This can hardly apply in the present case since
the impugned order is based on material to support it.
1 (2005) 1 SCC 212
KPP -75- Company Appeal (L) No. 28 of 2012
63. Mr. Khambata has further submitted that even one good ground out
of several is enough to sustain the order. He submitted that the judgment in Ascu
Arch Timber Protection Ltd. vs. Commissioner of Central Excise, Calcutta, (supra)
is that of two Judges of the Supreme Court and it can clearly not be said to have
overruled the principles laid down in State of Orissa & Ors. vs. Bidyabhushan
Mohapatra's case (Constitution Bench) or in State of Maharashtra vs. B.K.
Takkamore's case (3 Judges). He submitted that the judgment in Ascu Arch
Timber Protection Ltd. vs. Commissioner of Central Excise, Calcutta (supra) does
not concern the issue at hand before this Court but is on a totally different issue,
namely, that where a conclusion is reached in an order based on impermissible
evidence, it is not possible to dissect the evidence to determine whether the
order was influenced by impermissible evidence or not.
64. Lastly Mr. Khambata has submitted that the impugned order is a
reasonable and possible view. The Chairman's view is not an impossible one.
Some play in the joints has to be allowed to the Chairman. The Chairman is in a
unique position and has the advantage of knowing the problems faced by all the
Benches in their respective working and also the status of part heard matters. A
conclusion reached by him that granting the reliefs as prayed for will cause chaos
and disruption of work is one that is entitled to deference and cannot be called
perverse. There is no allegation of any lack of bona fides against the Chairman.
It is therefore submitted by Mr. Khambata that the Appeal filed by the Appellant
be dismissed.
KPP -76- Company Appeal (L) No. 28 of 2012
65. Before I consider the merits of the controversy in this regard, at the
outset it may be noted that so far as the alternative prayer, i.e. prayer (b), is
concerned the power of the Chairman invoked therefor is essentially an
administrative power and the correctness or otherwise of its exercise must be
tested having regard to the administrative considerations applied by the
Chairman for the order thereon. The following discussion shows that the order is
just and proper having regard to the considerations so applied. Even as regards
prayer (a), though I have already held that the power to grant the same does not
vest in the Chairman, even assuming that such power vests in the Chairman, the
decision or order of the Chairman on prayer (a) also can be sustained on the
basis indicated in the following discussion.
66. The order impugned in this Appeal is reproduced in paragraph 51
above. A perusal of the said order shows that though the Respondent No.1 has in
its affidavit filed before the CLB in Company Application No. 275 of 2012
submitted that the Chairman of the CLB does not possess powers/jurisdiction to
decide the reliefs sought by the said Application, the said Respondent has not
pressed the said argument before the Chairman of the CLB and the Chairman of
the CLB has therefore proceeded to decide the prayer sought by the Appellant in
Company Application No. 275 of 2012 on merits. From the impugned order it is
clear that the Chairman of the CLB has in his order, after setting out the reliefs
sought by the Appellant, at the outset recorded that by his Administrative Order
KPP -77- Company Appeal (L) No. 28 of 2012
dated 4th May 2012 he has directed that "matter in which upon conclusion of
final hearing orders have been reserved by the Members under transfer vide
office order of even number dated 30th April 2012, such Members would pass
orders in such matters at their new place of posting after due notice to the
parties". Therefore, by the said order the Chairman of the CLB has allowed the
Members of the Bench to pass orders in matters where the hearing has been
concluded prior to the transfer of such Member, at their new place of posting,
after due notice to the parties. The Learned Chairman has thereafter observed
that merely because Company Petition No. 62 of 2009 is part-heard and hearing
is at the closing stage, an exception ought not to be carved out for this matter
alone as it would be creating a precedent and similar applications in all such
matters would start pouring in from all Benches causing disruption in the
working of the Benches, as the Member would be required to visit other Benches
to complete hearing in part-heard matters, and if part-heard matters are
transferred to a Bench where the Member before whom hearing was part-heard
is posted, it would cause inconvenience to the parties as the parties would be
required to travel distances to appear before other Benches in which the Member
before whom the matter was part-heard is posted.
67. The Learned Chairman of CLB has also recorded that he has enquired
from the Benches and he is told that "such part-heard matters are many". The
Learned Chairman of the CLB has therefore applied his mind to the reliefs sought
KPP -78- Company Appeal (L) No. 28 of 2012
by the parties, as also made enquiries with the Benches about the pending part-
heard matters and noted that such part-heard matters are many. The Learned
Chairman has thereafter taken a decision that the reliefs sought by the Appellant
should not be allowed because such applications, if allowed, would disrupt the
work of the Benches where the Member is presently posted. Without considering
whether he has the power to transfer a matter from one Regional Bench to
another, the Learned Chairman of the CLB has also taken a view that asking a
Member to hear matters which have been partly heard by him at the Bench
where he was earlier posted would cause inconvenience to the parties.
68. Having considered the aforestated order of the Learned Chairman of
the CLB, I do not find the reasoning given by the Learned Chairman of the CLB
perverse as alleged, nor am I of the view that the Chairman has fettered the
discretion granted to him under the Act or the CLB Regulations to decide such
an application. As submitted by the contesting Respondents, it cannot be
gainsaid that the Chairman is concerned with the proper functioning of the
Tribunal, in the interests of the larger litigating public. Private/individual
interests must yield to broader considerations of interests of the litigating public
and general efficient functioning of the Tribunal and its Benches. In fact the
power of formation of Benches and assigning matters to them is essentially an
administrative exercise and whilst carrying it out, these are the most important
considerations, which the Chairman is bound to take into account. The
KPP -79- Company Appeal (L) No. 28 of 2012
Chairman has in his observations, as recorded hereinabove, considered the effect
of permitting transfers of "such" part heard matters and has concluded that the
effect would be to disrupt the working of the Benches. In addition to the above
considerations, the Chairman has noted objectively that he enquired from the
Benches and learnt that there are many such part heard matters. There is no
reason to doubt the correctness or bona fides of Chairman's statement in the said
order. The Chairman having taken a decision based on objective facts
ascertained by him cannot be told that he should allow all such part heard
matters to be transferred and heard by the transferred members at their new
place of posting, as suggested by the Appellant.
69. The Learned Chairman of the CLB has in the subsequent paragraph
of his order recorded that a perusal of paragraph 10 of Company Application No.
275 of 2012 shows that while the arguments for the Petitioners side were
concluded in four hearings, the Respondent (i.e. the Appellant herein) took 11
hearings to complete his arguments. Again, after completion of the arguments of
the Petitioner in-rejoinder which took another four hearings, the Respondent
(the Appellant herein) again took three more hearings for arguments in sur-
rejoinder. The Learned Chairman of the CLB has further recorded that what is
even more surprising is that the matter has been listed on 16th, 17th and 25th July
2012 for arguments in sur-sur-rejoinder. The Chairman of the CLB has therefore
recorded that this kind of procedure is unknown and he is unable to understand
KPP -80- Company Appeal (L) No. 28 of 2012
why after hearing arguments in sur-rejoinder, more opportunity for arguments
in sur-sur-rejoinder should have been granted by the Member. The Learned
Chairman of the CLB has recorded that "be that as it may,
Applicant/Respondents are also to a great extent responsible for the delay caused
in conclusion of hearing in Company Petition No. 62 of 2009". I see no
perversity in what the Learned Chairman has recorded. The Learned Chairman
has lamented qua the method in which the matter which was expedited by the
High Court and directed to be heard and decided by July 2010 has proceeded
before Shri Kanthi Narahari, Member Western Region Bench for a period of two
years. The Learned Chairman of the CLB has therefore dismissed the Company
Application filed by the Appellant by recording that granting any of the reliefs as
prayed for would militate against the administrative order dated 4th May 2012
i.e. the order allowing a Member under transfer to pass orders in matters finally
concluded whilst sitting at the earlier Bench, at their new place of posting after
due notice to the parties, and would create a precedent whereby a chaotic
situation would arise in all Benches, if in all such matters on the basis of such a
precedent applications start pouring in. The Learned Chairman of the CLB has
therefore taken a view that it is not possible for him to allow an application
seeking directions against a Member to leave his new place of posting for some
time and to go to his old place of posting and hear part-heard matters or to sit at
his new place of posting and hear matters which were partly heard by him at his
earlier place of posting as such an order would create a precedent where a
KPP -81- Company Appeal (L) No. 28 of 2012
chaotic situation would arise in all the Benches. In my view, such reasoning of
the learned Chairman of the CLB again can neither be treated as perverse nor
can it be held that the Chairman has fettered his discretion. The Learned
Chairman has, in my view, exercised his discretion reasonably and in a proper
manner. The view of the Chairman is more than reasonably possible based on
the material before him. There is no question of the Chairman having fettered
his discretion by general considerations. The considerations and material taken
into account by the Chairman are all germane and relevant. The discretion
exercised by the Chairman cannot be interfered with, even if the Appellate Court
comes to the conclusion that it would have arrived at a different conclusion from
that of the Chairman.
70. The Hon'ble Supreme Court in Wander Ltd. and another vs. Antox
India P. Ltd. (supra) noted that the appellate court had fallen into error by
misdirecting itself in regard to the limitations on the powers of the appellate
court to substitute its own discretion in an appeal preferred against a
discretionary order. In paragraph 14 of the said decision, the Hon'ble Apex Court
held thus:
"The Appeals before the Division Bench were against the
exercise of discretion by the Single Judge. In such appeals, the
appellate court will not interfere with the exercise of discretion
of the court of first instance and substitute its own discretion
except where the discretion has been shown to have been
KPP -82- Company Appeal (L) No. 28 of 2012
exercised arbitrarily, or capriciously or perversely or where the
court had ignored the settled principles of law regulating
grant or refusal of interlocutory injunctions. An appeal
against exercise of discretion is said to be an appeal on
principle. Appellate Court will not reassess the material and
seek to reach a conclusion different from the one reached by
the court below if the one reached by that court was
reasonably possible on the material. The appellate court
would normally not be justified in interfering with the exercise
of discretion under appeal solely on the ground that if it had
considered the matter at the trial stage on the ground that if
it had considered the matter at the trial stage it would have
come to a contrary conclusion. If the discretion has been
exercised by the trial Court reasonably and in a judicial
manner, the fact that the appellate court would have taken a
different view may not justify interference with the trial
court's exercise of discretion.".
71. The Learned Senior Advocate appearing for the Appellant has submitted
that the impugned order ought not to be sustained even if it is based on some
relevant considerations since it is also based on several irrelevant considerations.
In support of this contention, the Appellant has relied on the decision of the
Hon'ble Supreme Court in Ascu Arch Timber Protection ltd. vs. Commissioner of
Central Excise (supra) wherein the Hon'ble Supreme Court has relied upon its
earlier decision in Dhirajlal Girdharilal vs. Commissioner of Income-tax, Bombay1
(supra), and held as follows:
"The learned Attorney-General frankly conceded that it could
not be denied that to a certain extent the Tribunal had
drawn upon its own imagination and had made use of a
number of surmises and conjectures in reaching its result.
He, however, contended that eliminating the irrelevant
1 AIR 1955 SC 271
KPP -83- Company Appeal (L) No. 28 of 2012
material employed by the Tribunal in arriving at its
conclusion, there was sufficient material on which the
finding of fact could be supported. In our opinion, this
contention is not well founded. It is well established that
when a court of fact acts on material, partly relevant and
partly irrelevant, it is impossible to say to what extent the
mind of the court was affected by the irrelevant material
used by it in arriving at its finding. Such a finding is
vitiated because of the use of inadmissible material and
thereby as issue of law arises."
72. In the case of Dhirajlal Girdharilal vs, the Commissioner of Income-tax,
Bombay (supra), the question before the ITAT was whether on the facts and
circumstances of the case, the assessee was doing business in shares in the
Accounting Year or whether there is any material on record on the basis of which
it could be held that the assessee was doing business in shares in the Accounting
Year. The Tribunal answered the aforestated questions in the affirmative. The
Learned Attorney General appearing before the Hon'ble Supreme Court conceded
that it could not be denied that to a certain extent the Tribunal had drawn upon
its own imagination and had made use of a number of surmises and conjectures
in reaching its result. He however contended that eliminating the irrelevant
material employed by the Tribunal in arriving at its conclusion, there was
sufficient material on which the finding of fact could be supported. In view of
such gross facts, the Hon'ble Supreme Court opined that the contention of the
Attorney General was not well founded and when a Court of fact acts on material
partly relevant and partly irrelevant, it is impossible to say to what extent the
KPP -84- Company Appeal (L) No. 28 of 2012
mind of the Court was affected by the irrelevant material used by it in arriving at
its finding and therefore such a finding was vitiated because of the use of
inadmissible material and thereby an issue of law arises.
73. The above decision of the Hon'ble Supreme Court was followed in Ascu
Arch Timber Protection Ltd. vs. Commissioner of Central Excise, Calcutta (supra).
In that case, the question which arose before the Collector was whether wood
when passed through a process by Ascu and then impregnated with their own
preservatives brings into existence "densified wood ". The Collector held in
favour of the assessee and held that densified wood had not come into existence.
The Collector also held in favour of two other parties who were Respondent Nos.
2 and 3 in the Civil Appeals filed before him. The Department filed three
Appeals before the Tribunal. The Tribunal took up all the Appeals together and
passed a common order. In passing a common order, the Tribunal also relied on
two test reports which pertained to samples taken from the other two parties
and came to the conclusion that densified wood had been manufactured. Ascu
filed a Civil Appeal challenging the order of the Tribunal and also filed a
Rectification Application before the Tribunal on the basis that there was an error
apparent on the face of the record. By a majority it was held by the Tribunal that
as the test reports pertaining to the other two parties were also relied upon for
arriving at a finding against Ascu, there was an error apparent on the face of the
KPP -85- Company Appeal (L) No. 28 of 2012
record. As the Tribunal had set aside its earlier order, the Appeal stood disposed
of as infructuous. Against that order, an Appeal was filed before the Hon'ble
Supreme Court. The Hon'ble Supreme Court by judgment in the case of CCE vs.
Ascu Ltd.1 has held that in effect the Tribunal had reviewed its own order. It was
held that the Tribunal had no power to review. The Hon'ble Supreme Court thus
set aside the order reviewing the earlier order and the Appeals were revived by
the Hon'ble Supreme Court. After hearing the parties, the Hon'ble Supreme
Court was of the view that the Tribunal has, in considering the three Appeals,
used materials which pertain to one party to arrive at a finding against another
party which the Tribunal could not have done. It was submitted before the
Hon'ble Supreme Court that even if the test reports pertaining to the other
parties, which were included in the order of the Tribunal, discloses that there is
sufficient material to arrive at the conclusion that Ascu is manufacturing
densified wood. This argument was not accepted by the Hon'ble Supreme Court
on the ground that the Tribunal had itself set aside its order, inter alia on the
ground that they strongly relied on material which they could not have relied
upon. It is in these facts and circumstances that the Hon'ble Supreme Court
relying on the observations of its decision in Dhirajlal Girdharilal vs.
Commissioner of Income-tax, Bombay (supra) proceeded to set aside the order of
the Tribunal and remitted the matter back to the Tribunal. The facts and
circumstances in which the Hon'ble Supreme Court made the aforestated
observations in Dhirajlal Girdharilal vs. Commissioner of Income-tax, Bombay
1 (2003) 9 SCC 23
KPP -86- Company Appeal (L) No. 28 of 2012
(supra) and which was followed in the case of Ascu Arch Timber Protection Ltd.
vs. Commissioner of Central Excise, Calcutta (supra) are uncomparable with facts
of the present case and the observations/reasoning of the Learned Chairman of
the CLB. Firstly, I am of the view that none of the reasons given by the Learned
Chairman of the CLB can be treated as irrelevant and assuming that some of the
reasons given in the impugned order by the Chairman of the CLB are not
relevant or are irrelevant, the decision of the Hon'ble Supreme Court in Dhirajlal
Girdharilal vs. Commissioner of Income-tax, Bombay (supra) and Ascu Arch
Timber Protection Ltd. vs. Commissioner of Central Excise, Calcutta (supra) would
not be applicable.
74. The Learned Senior Advocates appearing for the contesting Respondents
have correctly relied on the decisions of the Hon'ble Supreme Court in the case
of State of Orissa and others vs. Bidyabhusan Mohapatra (supra), State of
Maharashtra vs. B.K. Takkamore (supra) and Zora Singh vs. J.M. Tandon & Ors.
(supra). In State of Orissa & Ors. vs. Bidyabhushan Mohapatra (supra), a
Constitution Bench of the Hon'ble Supreme Court in the context of an order
passed in disciplinary proceedings on various grounds sustained it, although
some of the grounds were found to be unsustainable. In that case, the High
Court had set aside the order of dismissal and remanded the matter to the
Governor for re-consideration on the question of punishment. The Hon'ble
KPP -87- Company Appeal (L) No. 28 of 2012
Supreme Court set aside this order of the High Court explaining the position
thus:
"9.....The High court was of the opinion that the findings on
two of the heads under charge (1) could not be sustained,
because in arriving at the findings, the Tribunal had
violated rules of natural justice..... If the order of dismissal
was based on the findings on charges 1 (a) and 1 (e) alone,
the Court would have jurisdiction to declare the order of
dismissal illegal but when the findings of the Tribunal
relating to the two out of five heads of the first charge and
the second charge was found not liable to be interfered with
by the High Court and those findings established that the
respondent was prima facie guilty of grave delinquency, in
our view the High Court had no power to direct the
Governor of Orissa to reconsider the order of dismissal...If
the High Court is satisfied that if some but not all of the
findings of the Tribunal were "unassailable", the order of the
Governor... was final..... Therefore, if the order may be
supported on any finding as to substantial misdemeanor for
which the punishment can lawfully be imposed, it is not for
the Court to consider whether that ground alone would
have weighed with the authority in dismissing the public
servant. The Court has no jurisdiction...to direct the
authority to reconsider that order because in respect of some
of the findings but not all it appears that there had been
violation of the rules of natural justice...."
75. In State of Maharashtra vs. B.K. Takkamore (supra), the Hon'ble Supreme
Court has upheld the order of suspension of a Municipality, holding that even if
one of the two grounds was valid, the order in its entirety could not be set aside.
After considering the judgments in Dhirajlal Girdharilal vs. Commissioner of
Income-tax, Bombay (supra), which is the basis of the judgment cited by the
Appellant in Ascu Arch Timber Protection Ltd. vs. Commissioner of Central Excise,
KPP -88- Company Appeal (L) No. 28 of 2012
Calcutta (supra) and State of Orissa & Ors. vs. Bidyabhushan Mohapatra (supra),
in paragraph 15, the Hon'ble Supreme Court held thus:
" 15. ...... The principle underlying these decisions appears to
be this. An administrative or quasi judicial order based on
several grounds, all taken together, cannot be sustained if it
be found that some of the grounds are non-existent or
irrelevant, and there is nothing to show that the authority
would have passed the order on the basis of the other relevant
and existing grounds. On the other hand, an order based on
several grounds some of which are found to be non-existent or
irrelevant, can be sustained if the Court is satisfied that the
authority would have passed the order on the basis of the
other relevant and existing grounds, and the exclusion of the
irrelevant or non-existent grounds could not have affected the
ultimate opinion or decision."
76. In Zora Singh vs. J.M. Tandon and others (supra), the Hon'ble Supreme
Court held in para 10 as under:
"...The second contention also was rejected, and in our view
rightly. The High Court was right in holding that even if
there were, amongst the reasons given by the Commissioner,
some which were extraneous, if the rest were relevant and
could be considered sufficient, the Commissioner's conclusions
would not be vitiated. The principle that if some of the
reasons relied on by a Tribunal for its conclusion turn out to
be extraneous or otherwise unsustainable, its decision would
be vitiated, applies to cases in which the conclusion is arrived
at not on assessment of objective facts or evidence, but on
subjective satisfaction. The reason is that whereas in cases
where the decision is based on subjective satisfaction if some
of the reasons turn out to be irrelevant or invalid, it would be
impossible for a superior Court to find out which of the
reasons, relevant or irrelevant, valid or invalid, had brought
about such satisfaction. But in a case where the conclusion is
based on objective facts and evidence, such a difficulty would
not arise. If it is found that there was legal evidence before
KPP -89- Company Appeal (L) No. 28 of 2012
the Tribunal, even if some of it was irrelevant, a superior
Court would not interfere if the finding can be sustained on
the rest of the evidence..."
77. The Learned Senior Advocate appearing for the Appellant has tried
to distinguish the above decisions of the Hon'ble Supreme Court by alleging that
the Chairman's decision is based on subjective satisfaction and if some of the
reasons relied on turn out to be extraneous or otherwise unsustainable, the
decision would be vitiated as it would be impossible for a superior Court to find
out which of the reasons, relevant or irrelevant, valid or invalid, had brought
about such satisfaction. In my view, the Chairman's decision is certainly not
based on subjective satisfaction or on reasons which are otherwise
unsustainable. In any event, even assuming that some reasons given by the
Learned Chairman are not relevant whilst exercising his discretion in the matter,
only one reason of the Learned Chairman namely that he has made enquiries
with the Benches and has been informed that there are many such pending part
heard matters and that in such circumstances if orders as sought are passed, it
would create a chaotic situation at Benches, is enough for this Court to come to
the conclusion that the Chairman could have passed the same order, that is
dismissal of the Company Application on that ground alone. In view thereof,
both question Nos. 3 and 4 are answered in the negative.
KPP -90- Company Appeal (L) No. 28 of 2012
78. The Company Appeal and the Company Application are, therefore,
dismissed. The Company Law Board, Mumbai Bench, shall commence hearing
of Company Petition No.62 of 2009 and pass a final order on or before 31st
March 2013.
(S.J. KATHAWALLA, J.)
