Mr. Jitendra Virmani vs Mro-Tek Realty Ltd. & Ors

Mr. Jitendra Virmani .Appellant

Vs

MRO-TEK Realty Ltd. & Ors. .Respondents

Present: For Appellant: - Mr. Ajesh Kumar Shankar, Mr. Balaji Srinivasan, Ms. Divya Menon, Ms. Srishti Govil and Ms. Pratiksha Mishra, Advocates

For Respondents: - Mr. Uaamanyu Hazarika, Sr. Advocate with Mr. Shailesh Madiyal, Mr. Mahesh Thakur, Advocates for R- 11

ORDER

15.05.2017- The Interlocutory Application under Rule 11 of the National

Company Law Appellate Tribunal Rules, 2016 (hereinafter referred to as

'NCLAT Rules 2016' for short) has been preferred by applicant/ appellant for

review and recall of order dated 3rd May 2017 passed by Appellate Tribunal in

Company Appeal (AT) No. 138 of 2017 which reads as follows: -

"This appeal was filed with number of defects on 301h

March 2017. It was supposed to be re-filed within seven days

after removing the defect(s). However, the defect (s) were not 2

removed within seven days and filed as afresh case on 1st May

2017.

In this appeal, the appellant has challenged the order

dated 5th January 201 7 passed in T.P.No. 88/2016 in C.P. No.

22/2016 by National Company Law Tribunal, Bengaluru

Bench whereby certain interim order has been passed. A

petition for condonation of delay has been filed to condone

delay of 54 days. As we find that as the Appellate has no

jurisdiction to condone the delay for more than 45 days, we

dismiss the appeal on the ground of delay."

2. Learned counsel for the applicant submits that the Appellate Tribunal

has inherent powers to the review and recall the impugned order as the

Registrar of the NCLAT, after 7 days' period of removal of defects has not

recorded any order nor given any notice to the appellant.

3. It is contended that apart from procedural review there is inherent

power of Appellate Tribunal to set aside erroneous order passed under wrong

apprehension by it.

4. Reliance is placed on Hon'ble Supreme Court decision in "Indian Oil

Corporation Ltd. and Others Versus Union of India and Others, 1980

(Supp) SCC 426" wherein the Hon'ble Apex Court held as follows:-

"13. We are unable to appreciate the contention that

merely because the ex parte award was based on the

statement of the manager of the appellant, the order setting 3

aside the ex parte award, in fact, amounts to review. The

decision in Patel Narshi Thakershi v. Pradyumansinghji

Arjunsinghjif(1971) 3 SCC 844: AIR 1970 SC 12731 is

distinguishable. It is an authority for the proposition that the

power of review is not an inherent power, it must be conferred

either specifically or by necessary implication. Sub-sections (1)

and (3) of Section 11 of the Act themselves make a distinction

between procedure and powers of the Tribunal under the Act.

While the procedure is left to be devised by the Tribunal to suit

carrying out its functions under the Act, the powers of civil court

conferred upon it are clearly defined. The question whether a

party must be heard before it is proceeded against is one of

procedure and not of power in the sense in which the words

are used in Section 11. The answer to the question is, therefore,

to be found in sub-section (1) of Section 11 and not in sub-

section (3) of Section 11. Furthermore, different considerations

arise on review. The expression "review" is used in the two

distinct senses, namely (1) a procedural review which is either

inherent or implied in a court or Tribunal to set aside a palpably

erroneous order passed under a misapprehension bu it, and (2)

a review on merits when the error souqht to be corrected is one

of law and is apparent on the face of the record. It is in the

latter sense that the court in Patel Narshi Thakershi

case [(19 71) 3 SCC 844: AIR 1970 SC 12 731 held that no review

lies on merits unless a statute specificallu provides for it. 4

Obviously when a review is souqht due to a procedural defect,

the inadvertent error committed by the Tribunal must be

corrected ex debito justitiae to prevent the abuse of its process,

and such power inheres in every court or Tribunal."

5. Reliance was also placed on decision of Hon'ble Supreme Court in

"Mannan Lal Versus MST Chhotaka Bibi", 1970 (1) SCC 769 to suggest that

for removal of defects limitation cannot be prescribed.

6. From the impugned order it is evident that the Appellate Tribunal

dismissed the appeal on the ground of delay as the Appellate Tribunal has no

jurisdiction to condone the delay of more than 45 days.

7. For the determination of the question whether the case in hand is fit

case for exercising inherent power under Rule 11 of the NCLAT Rules 2016,

it is necessary to notice the relevant facts and the provisions of law.

8. The appeal was preferred by applicant against Order dated 5th January

2017 passed by National Company Law Tribunal (hereinafter referred to as

the 'Tribunal' for short), Bengaluru Bench in T.P.No. 88/2016 (Mr. Jitendra

Virmani Versus M/s M.R.O.-TEK Limited and Others) whereby the Tribunal

rejected the prayer for interim relief. Certified copy of the (impugned) order

was served on the applicant on 7th January 2017.

9. Section 421 of the Companies Act 2013 relate to 'Appeal from orders of

Tribunal'. Any person aggrieved by an order of the Tribunal may prefer an

appeal to the Appellate Tribunal except the order passed with the consent of

the parties. Sub-section (3) of Section 421 prescribe 45 days from the date of 5

copy of the order of the Tribunal is made available to prefer the appeal. Under

proviso thereto the Appellate Tribunal has been empowered to entertain an

appeal after the expiry of the period of 45 days, but limited with the power as

it can condone delay of another 45 days, if it is satisfied that appellant was

prevented by sufficient cause from filing the appeal within that period, as

quoted below: -

"421. Appeal from orders of Tribunal. -- (1) Any

person aggrieved by an order of the Tribunal may prefer an

appeal to the Appellate Tribunal.

(2) No appeal shall lie to the Appellate Tribunal from an

order made by the Tribunal with the consent of parties.

(3) Every appeal under sub-section (1) shall be filed

within a period offorty-five days from the date on which a copy

of the order of the Tribunal is made available to the person

aggrieved and shall be in such jrm, and accompanied by such

fees, as may he prescribed:

Provided that the Appellate Tribunal may entertain an

appeal after the expiry of the said period offorty-five days from

the date aforesaid, but within a further period not exceeding

forty-five days, if it is satisfied that the appellant was

prevented by sufficient cause from filing the appeal within that

period.

6

(4) On the receipt of an appeal under sub-section (1), the

Appellate Tribunal shall, after giving the parties to the appeal

a reasonable opportunity of being heard, pass such orders

thereon as it thinks fit, confirming, modifying or setting aside

the order appealed against.

(5) The Appellate Tribunal shall send a copy of every

order made by it to the Tribunal and the parties to appeal."

10. Though the impugned order was passed on 5th January 2017 and copy

was served on applicant on 7th January 2017 but the applicant sat over the

matter till 31st March 2012, when the defective appeal was filed. One of the

defect was that the proof of service was not filed and other defect was non

filing of the declaration signed by the counsel. On the same date i.e. 31St

March 2017, the court pointed out the defects and the appellant noticed the

defect on 3rd April 2017, but did not chose to cure the defects within 7 days

as prescribed under NCLAT Rules.

11. Rule 26 of NCLAT Rules 2016 relate to filing and scrutiny of appeal etc.

Sub-Rule (2) of Rule 26 of NCLAT Rules 2016 deals with defective filing, which

reads as follows: -

"26. Endorsement and scrutiny of petition or

appeal or document.-(1) The person in charge of the

filing-counter shall immediately on receipt of appeal or

documents affix the date and stamp of the Appellate Tribunal

thereon and also on the additional copies of the index and

return the acknowledgement to the party and he shall also affix 7

his initials on the stamp affixed on the first page of the copies

and enter the particulars of all such documents in the register

after daily filing and assign a diary number which shall be

entered below the date stamp and thereafter cause it to be sent

for scrutiny.

(2) If, on scrutiny, the appeal or document is found to

be defective, such document shall, after notice to the party, be

returned for compliance and if there is a failure to comply

within seven days from the date of return, the same shall be

placed before the Registrar who may pass appropriate orders.

(3) The Registrar may for sufficient cause return the

said document for rectification or amendment to the party filing

the same, and for this purpose may allow to the party

concerned such reasonable time as he may consider necessary

or extend the time for compliance.

(4) Where the party fails to take any step for the

removal of the defect within the time fixed for the same, the

Registrar may, for reasons to be recorded in writing, decline to

register the appeal or pleading or document."

12. As noticed, the appellant did not chose to remove the defects within 7

days though the defects were general in nature. After removal of defects and

after more than one month the appeal was filed on 1st May 2017. 8

13. Section 422 of the Companies Act 2013 deals with expeditious disposal

of petitions by Tribunal and Appeals by Appellate Tribunal. Therein it is

stipulated that the appeal should be disposed of expeditiously and endeavour

should be made to dispose of the appeal within 3 months from the date of

filing of the appeal. For proper appreciation it is desirable to quote Section

422, quoted below: -

"422. Expeditious disposal by Tribunal and

Appellate Tribunal.--(1) Everti application or petition

presented before the Tribunal and everu appeal filed

before the Appellate Tribunal shall be dealt with and

disposed of by it as expeditiouslt,' as possible and every

endeavour shall be made by the Tribunal or the

Appellate Tribunal, as the case may be, for the disposal

of such application or petition or appeal within three

months from the date of its presentation before the

Tribunal or the filing of the appeal before the Appellate

Tribunal.

(2) Where any application or petition or appeal

is not disposed of within the period specified in sub-

section (1), the Tribunal or, as the case may be, the

Appellate Tribunal, shall record the reasons for not

disposing of the application or petition or the appeal, as

the case may be, within the period so specified; and the

President or the Chairperson, as the case may be, may, 9

after taking into account the reasons so recorded, extend

the period referred to in sub-section (1) by such period

not exceeding ninety days as he may consider

necessary."

14. If Section 422 is read along with Rule 26 of the NCLLAT Rules, it will be

clear that out of 90 days (3 months) for disposal in case of a defective appeal,

the party takes 7 days to cure the defects, and thereby, the Tribunal gets only

2 months 3 weeks' time to dispose of the appeals. In this background,

normally the Appellate Tribunal list the case either on the same date, if the

party so desire or on the next day or at best the date next to that i.e. third day

from the date of filing and not beyond the said period.

15. In the present case the grievance of the appellant is that Registrar of

the NCLAT has not made any endeavour to decline to register the appeal on

failure to remove the defects within 7 days as prescribed under sub-clause (4)

of Rule 26.

16. The aforesaid submissions in no manner will be advantageous to the

appellant for the following.

17. If the Registrar General would have rejected to register the appeal, then

also the appellant could not have got any relief till a fresh appeal is filed

against the same very impugned order.

17. As per the provisions of the NCLAT Rules 2016 read with Section 422

of the Companies Act 2013, if defects are not removed within 7 days and the

defects are removed after 7 days i.e. beyond the period prescribed under the 10

rules, the appeal is treated to be a fresh appeal. Such procedure is followed

so that the appellants may get advantage of 'court fee' prescribed under the

NCLAT Rules and may use the same 'paper book' which are generally

voluminous. If the Registrar General would have refused to register the

appeal after 7 days, as per clause (4) of Rule 26, the appellant would have

filed a fresh appeal with fresh court fee with separate sets of paper book,

separate affidavit, separate vakalatnama which would be disadvantages to the

appellants.

18. As noticed, the re-filing/fresh filing of the appeal was made on 1St May

2017.

19. As per the provisions of the Act and Rules framed there under, the

appellant having received the copy of the order on 7th January 2017 was

required to file within 45 days i.e. by 21st February 2017. For the purpose of

condonation of delay under proviso to sub-section (2) of Section 421, the

Appellate Tribunal could have condoned the delay if it would have been filed

within another 45 days i.e. by 7th of April 2017. After 7th April 2017, the

Appellate Tribunal has no jurisdiction to condone the delay or to entertain the

appeal.

20. Appeal was filed on 31St March 2017, and the defect was to be removed

within 7 days i.e. by 7th April 2017. Therefore, no extension of time could

have been granted even by the Registrar to remove the defects particularly

when the Appellate court has no power to condone delay after 90 days of

receipt of judgement which expired on 7th April 2017 in the present case. 11

21. Learned counsel for the appellant submitted that the Appellate Tribunal

has inherent power to condone the delay and thereby to do substantive

justice. We do not subscribe to such submissions in view of the specific

provision made under sub-section (2) of Section 421 and the decision of

Hon'ble Supreme Court in "Union of India Vs. Popular Construction

Company", (2001) 8 SCC 470, wherein the Hon'ble Apex Court held that when

the legislature prescribed a special limitation for the purpose of appeal, the

court cannot entertain an appeal beyond the extended period, if prescribed

therein, Relevant portion of which reads as under: -

"11. Thus, where the legislature prescribed a special

limitation for the purpose of the appeal and the period of

limitation of 60 days was to be computed after taking the aid

of Sections 4, 5 and 12 of the Limitation Act, the specific

inclusion of these sections meant that to that extent only the

provisions of the Limitation Act stood extended and the

applicability of the other provisions, by necessary implication

stood excluded [Patel Naranbhai Marghabhai v. Dhulabhai

Galbabhai, (1992) 4 SCC 264].

12. As far as the language of Section 34 of the 1996

Act is concerned, the crucial words are "but not thereafter"

used in the proviso to sub-section (3). In our opinion, this phrase

would amount to an express exclusion within the meaning of

Section 29(2) of the Limitation Act, and would therefore bar the

application of Section 5 of that Act. Parliament did not need to 12

go further. To hold that the court could entertain an application

to set aside the award beyond the extended period under the

proviso, would render the phrase "but not thereafter" wholly

otiose. No principle of interpretation would justify such a

result."

22. In the present case, curiously the applicant has not explained the delay

and laches on his part. It has not explained that why the appeal was not filed

within 45 days of receipt of the certified copy of the judgement i.e. by 21St

February 2017. They have also not explained the delay for preferring the

appeal for another 38 days i.e. till 31st March 2017 when it was filed.

23. Curiously, even when defects were pointed out by the registry on 31St

March 2017, why they sat tight over the matter for 31 days in removing the

defects.

24. Though it was open to the applicant to file a petition before Appellate

Tribunal with prayer to ignore the minor defects, no such application was filed

by appellant. The appeal was taken back on 3rd April 2017 and they re-filed

on 1St May 2017 i.e. beyond the period of 90 days from the date of receipt of

judgement passed by Tribunal, when Appellate Tribunal had no jurisdiction

to entertain the appeal.

25. The aforesaid unexplained delay on the part of the applicant and laches

on his part show that applicant does not deserve exercise of inherent power.

26. We find no merit in this application. The Interlocutory Application is

dismissed with cost of Rs. 50,000/- to be paid by applicant for the Library of

Appellate Tribunal. Demand draft in the name of Pay and Accounts Officer, 13

Ministry of Corporate Affairs, New Delhi be deposited within 30 days with the

Registrar of the Appellate Tribunal.

(Justice S .J. Mukhopadhaya) Chairperson

(Mr. Balvinder Singh) Member (Technical