Sonia Khosla Through L.R And Anr vs Montreaux Resorts Pvt. Ltd. And Ors

Sonia Khosla & Anr. ....Appellants Vs. Montreaux Resorts (P) Ltd. & Ors. ...Respondents For Appellant: Mr. Deepak Khosla, Advocate For Respondent: Mr. Jay Salva, Senior Advocate with Mr. Anand M Mishra, Advocate for R2-4. Mr. Rishi Sood, Advocate for R5.

Comp. App. (AT) No. 119 of 2021

In the matter of:

Montreaux Resorts (P) Ltd. ....Appellant Vs. Ascot Hotels & Resorts Ltd. & Ors. ...Respondents For Appellant: Mr. Deepak Khosla, Advocate For Respondent: Mr. Jay Salva, Senior Advocate with Mr. Anand M Mishra, Advocate for R2-4. Mr. Rishi Sood, Advocate for R5.

JUDGMENT

(04th July, 2022)

Ashok Bhushan, J.

1. These two Appeals have been filed against common order dated

02.09.2021 passed in CP- 54/ND/2021 and CP- 144/ND/2016. The Applicant

of both the Company Petitions aggrieved by the order dated 02.09.2021 has

come up in these Appeals. We need to notice only few facts for deciding these

two Appeals. Company Petition No. 114 of 2007 was filed by Mrs. Sonia Khosla 2

under Sections 397, 398, 402 and 403 of the Companies Act, 1956 before the

erstwhile Company Law Board, New Delhi. CA No. 47 of 2016 being an

application for amendment of pleadings was allowed by the NCLT with liberty

to withdraw the CP No. 114 of 2007 and re-file the same with incorporation of

the amended and updated facts. After withdrawal of CP No. 114 of 2007 and

re-filing after incorporating amendment, Company Petition was numbered as

CP No. 54/ND/2021 in which CP order dated 02.09.2021 was passed, giving

rise to Company Appeal (AT) No. 118 of 2021. Company Petition No. 144/2016

filed by M/s. Montreaux Resorts Pvt. Ltd. & Ors. was also proceeded with the

NCLT. There has been an order dated 08.05.2014 passed by the Hon'ble

Supreme Court in Special Leave Petition (Criminal) No. 6873 of 2010 with SLP

(C) No. 23796-23798/2010 wherein the Hon'ble Supreme Court vide its

judgment dated 08.05.2014 directed the Company Law Board to decide

Company Petition No. 114 of 2007 within a period of six months from the date

of receiving a copy of this order. Other directions were also issued. In the

Appeal, reference has also been made to the order dated 02.07.2019 passed

by this Tribunal where this Tribunal had directed the NCLT to dispose of the

CP No. 114/2007 on merit on an early date or preferably within three months.

As notice above, CA No. 47/C-III/ND/2016 was filed in Company Petition No.

114 of 2007 seeking liberty to withdraw the Company Petition and file it afresh

after correcting the same within three days of the withdrawal. The NCLT had

allowed the prayer (1) in CA No. 47/C-III/ND/2016. CP No. 54/ND/2021 was

filed under Sections 241-242 of the Companies Act, 2013 after they were

allowed to withdraw the Company Petition filed in the year 2007. Both

Company Petitions CP No. 54/ND/2021 and CP No. 144/ND/2016 along with

Company Appeal (AT) Nos. 118 and 119 of 2021 3

CA No. 60/ND/2021 and CA No. 18/ND/2019 came before Special Bench

consisting of Sh. Bhaskara Pantula Mohan, Acting President and Shri

Narender Kumar Bhola, Member (Technical) on 02.09.2021 and on which

date, following order was passed:-

"As both the members of this Bench have recused to take up these matters. These matters have to be posted before any other Bench at Delhi but most of the Judicial Members at Delhi are not inclined to take up these matters. For want of time, we have no other option but to post the same before Chandigarh Bench, which is relatively nearer to the petitioner in the matter.

We transfer the files to Chandigarh Bench at the earliest possible time. Chandigarh Bench according to its own convenience will fix the date of hearing."

2. Aggrieved by the order dated 02.09.2021, these two Appeals have been

filed.

3. Shri Deepak Khosla, Learned Counsel appearing for the Appellants

submits that the order dated 02.09.2021 passed by the Special Bench of the

NCLT, New Delhi is nullity. It is submitted that the order is discriminatory and

arbitrary to the extent that orders transfer the petition to a different Bench

outside Delhi whereas both the Appellants and the Respondents are based at

Delhi. It is submitted that the reason for transfer of the Company Petitions is

want of time whereas fresh Applications are being entertained by the Principal

Bench and other Benches at New Delhi. It is further submitted that the power

to transfer a matter by virtue of Section 16(d) of the NCLT Rules, 2016 is vested

Company Appeal (AT) Nos. 118 and 119 of 2021 4

with the President. It is further submitted that there has been order of this

Appellate Tribunal dated 02.07.2019 by which direction was issued to decide

the Company Petition within three months and by transfer of the matter to

Chandigarh Bench expeditious disposal is defeated.

4. Shri Jay Salva, Learned Senior Counsel appearing for the Respondent

Nos. 2 to 4 submits that due to the order dated 31.05.2021 passed in CA No.

553/2020 in CP No. 144/2016, CP No. 144/2016 is not pending, hence, no

useful purpose shall be served for issuing any direction in these Appeals.

Learned Senior Counsel for the Respondent Nos. 2 to 4 has relied on the

judgment dated 31.05.2021 in CA No. 553/2020 in CP No. 144/2016 as well

as order passed by this Tribunal dated 28.02.2022 in Company Appeal (AT)

No. 31 of 2022, 32 of 2022 and 33 of 2022.

5. Before proceeding further, we may notice that this Tribunal by its order

dated 05.10.2021 passed in these two Appeals has stayed the operation of the

order dated 02.09.2021. Paragraph 4 of the order dated 05.10.2021 is as

follows:-

"4. In the meanwhile, the operation of the Impugned order dated 02.09.2021 passed by National Company Law Tribunal, Special Bench, New Delhi in CP- 54/ND/2021 and also the operation of the Impugned Order dated 02.09.2021 passed by National Company Law Tribunal, Special Bench, New Delhi in CP- 144/ND/2016 shall remain stayed till the next date of hearing."

6. The above interim order is in operation.

7. We have considered the submissions of the Learned Counsel for the

parties and perused the record. The impugned order dated 02.09.2021 as

Company Appeal (AT) Nos. 118 and 119 of 2021 5

extracted above notices in the very first line of the order "As both the members

of this Bench have recused to take up these matters". Thus, both the Members

have recorded that they have recused to take up these matters. Further reason

mentioned is that the matters have to be posted before any other Bench at

Delhi but since most of the Judicial Members at Delhi are not inclined to take

up these matters, the matter was directed to be posted before Chandigarh

Bench.

8. We have carefully perused the order dated 02.09.2021. When both the

Members have recused to take up these matters, both the Company Petitions

ought to have been placed before the Hon'ble Acting President/ President on

administrative side for posting the CPs before the appropriate Bench. Rule 16

of the NCLT Rules, 2016 deals with "Functions of the President". Rule 16 is as

follows:-

"16. Functions of the President.- In addition to the general powers provided in the Act and in these rules the President shall exercise the following powers, namely:-

(a) preside over the consideration of cases by the Tribunal;

(b) direct the Registry in the performance of its functions;

(c) prepare an annual report on the activities of the Tribunal;

(d) transfer any case from one Bench to other Bench when the circumstances so warrant;

(e) to withdraw the work or case from the court of a member.

(f) perform the functions entrusted to the President under these rules and such other powers as may be

Company Appeal (AT) Nos. 118 and 119 of 2021 6

relevant to carry out his duties as head of the Tribunal while exercising the general superintendence and control over the administrative functions of the Members, Registrar, Secretary and other staff of the Tribunal."

9. The order dated 02.09.2021 has been passed on a judicial side for

transferring the matter to the Chandigarh Bench. In an appropriate case there

may be valid reason to pass a judicial order by a Bench for posting any matter

before another Bench but in the facts of the present case, when both the

members of the Bench have recused themselves from taking the matter, they

ought not to have passed an order of transferring the Company Petitions to

Chandigarh Bench. The correct course open for the Bench was to direct the

matter to be placed before Acting President or President for passing an

appropriate order. The word 'recused' has been defined in P Ramanatha Aiyar,

Advanced Law Lex icon, 6th Edition in following manner:-

"Recuse. To disqualify oneself from participating in a case because of some real or apparent bias or conflict of interest that might reasonably lead someone to question a judge's impartiality and detachment."

10. When members have recused themselves from dealing with the matters,

they ought to have directed only for placing the matter before the Acting

President or President for passing appropriate order for assignment or

transfer. After recusing themselves from the matter, the order for transferring

the matters to the Chandigarh Bench ought not to have been passed. We, thus

are of the view that the order dated 02.09.2021 transferring both the CP-

54/ND/2021 and CP- 144/ND/2016 cannot be sustained and are hereby set

aside. We further direct that CP- 54/ND/2021 and CP- 144/ND/2016 be

placed before the President for exercising its jurisdiction as conferred under

Company Appeal (AT) Nos. 118 and 119 of 2021 7

Rule 16(d) of the NCLT Rules, 2016 for passing an appropriate order for

hearing of both the CPs.

11. A question may be asked as to when Acting President who was Member

of the Bench has recused himself in the above two Company Petitions, whether

on the administrative side the Acting President can pass an order exercising

its jurisdiction under Rule 16(d). The power given to the President under Rule

16 is statutory power which as rule of necessity has to be exercised by the

President, even though on judicial side the President/ Acting President has

recused himself. Further the Acting President who has recused in order dated

02.09.2021 is not the President as on date.

12. We are not expressing any opinion as to whether both the CPs are to be

heard at the Principal Bench or any other Bench at New Delhi or to be

transferred at any other Bench. It is for the President to consider all aspects

of the matter and take appropriate decision.

13. We may at this stage also notice the submission of the Counsel for the

Respondent Nos. 2 to 4 that in view of the order dated 31.05.2021 passed in

CA No. 553/2020 in CP No. 144/2016, the CP no longer survive to be

adjudicated. We have noticed that against the order dated 31.05.2021,

Appeals have already been filed before this Tribunal which is pending

consideration. Further the Appellants have brought on record copy of CA

297/2021 filed before the NCLT in CP 144 of 2016 which is said to be pending

consideration. We do not accept the above submission of Shri Jay Salva,

Learned Senior Counsel for Respondent Nos. 2 to 4.

Company Appeal (AT) Nos. 118 and 119 of 2021 8

14. In result, we partly allow these Appeals, set aside the impugned order

dated 02.09.2021 and remit the matter to the Hon'ble President of the NCLT

to pass appropriate orders in exercise of its jurisdiction under Rule 16(d) of

the NCLT Rules, 2016 for hearing, in accordance with law. It goes without

saying that President shall be fully entitled to take into consideration any

subsequent order passed by NCLT or NCLAT which may have bearing on CP

54/ND/2021 and CP 144/ND/2016. As observed above, we have not

expressed any opinion on merits and Hon'ble President of the NCLT shall pass

appropriate orders in accordance with law.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

[Shreesha Merla] Member (Technical)

Anjali/nn

Company Appeal (AT) Nos. 118 and 119 of 2021