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2019 Supreme(NCLAT) 519
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
A.I.S. Cheema, Member (Judicial), Balvinder Singh, Member (Technical)
IN THE MATTER OF:
Mrs. Mallina Bharathi Rao - Appellant
Versus
Gowthami Solvent Oils Limited & Ors. - Respondent
Company Appeal (AT) No.387 of 2018
Decided On : 28-02-2019
For the Appellant :Shri Nikhil Nayyar and Shri Divyanshu Rai, Advocates.
For the Respondent:Shri C.V. Narasimham and Shri Savar Mahajan, Advocates.
The NCLT's power to rectify any mistake apparent from the record is limited by the proviso in Section 420(2) of the Companies Act, 2013, and the principle of res judicata applies.
Headnote:
Rectification Application - Company Law - Section 154 of the National Company Law Tribunal Rules, 2016 - Summary: The court discussed the implications of the National Company Law Tribunal's power to rectify any mistake apparent from the record, the limitations on this power, and the principle of res judicata. The court found that the Appellant's failure to appeal against the Primary Order and to raise grievances regarding the consequential relief in the subsequent Appeal barred the NCLT from rectifying the alleged error in the Impugned Order.
Fact of the Case:
The Appellant sought rectification of an order to include the grant of dividends and interest on dividends, which the NCLT had allegedly omitted. The NCLT dismissed the application, stating that it had no powers of review.
Finding of the Court:
The court found that the NCLT did not commit any error in dismissing the application, as the Appellant had not appealed against the Primary Order and had not raised grievances regarding the alleged omission in the subsequent Appeal.
Issues: The main issue was whether the NCLT erred in rejecting the rectification application due to an alleged omission in the Primary Order.
Ratio Decidendi: The court held that the NCLT's power to rectify any mistake apparent from the record is limited by the proviso in Section 420(2) of the Companies Act, 2013, which prohibits such amendment in respect of any order against which an appeal has been preferred. The court also applied the principle of res judicata, finding that the relief sought but not expressly granted in the Primary Order was deemed to have been refused.
Final Decision: The Appeal was rejected, and no orders as to costs were made.
JUDGMENT :
A.I.S. Cheema, J.
1. Counsel for Appellants have been heard. This Appeal is arising out of Impugned Order dated 31.07.2018 passed in IA No.151 of 2013 in CP No.13/241/HDB/2013 (TP No.97/HDB/206) whereby the IA has been dismissed by the National Company Law Tribunal, Hyderabad Bench, Hyderabad (‘NCLT’, in short) and the NCLT held that there was no clerical or arithmetical error in the Order.
2. It appears that earlier the Appellant – Petitioner had filed CP 13/2013 before Company Law Board which was disposed by Judgment and Order dated 14th March, 2017 (hereafter referred as – Primary Order) by NCLT. The said Order referred to the prayers which had been made by the Appellant in the Company Petition in para – 2 of its Judgment. Prayer - A and B related to direction to Respondents to allot or transfer such number of shares so as to entitle the Petitioner to maintain her percentage shareholding which she held at the time of deletion of her name as shareholder of the Company illegally in the year 1999. Prayer – A and B of the petition which were reproduced, are as under:-
“(a) Direct the Respondents to, either allot or transfer, such number of shares so as to entitle the Petitioner to maintain her percentage shareholding at 2.12% (which was percentage shareholding she held at the time of deletion of her name as a shareholder of the company illegally in the year 1999), upon the receipt of the amount of Rs.13,65,000/- from the petitioner, being the consideration payable in respect of said shares as per the terms of the respective rights issues made by the company in the years 1991-92, 95-96 and 2004-05;
(b) Direct the Respondents to pay the Petitioner all dividends that would have accrued in respect of shares, that forms subject matter of the rights issues during the period 1991-92, 95-96 and 2004-05 till date, to which the Petitioner would be entitled had the Petitioner been offered the rights issue in accordance with law and had her name not been deleted from the Register of members in the year 1999, together with interest for such dividends at the rate of 12% compounded annually from the date of payment of the dividend to the other shareholders till the date of effecting actual payment to the Petitioner;”
In the Primary Order which was passed, direction – “i” read as under:-
“i. We direct the Respondents to allot all the three rights issues shares comprising a total of 5250 shares i.e. 350 in 1991-1992, 2100 shares in 1995-1996 and 2800 shares in 2004-2005.”
The further directions in the Order related to the Petitioner to pay the amount as mentioned in period specified and direction to the Respondents to allot the shares accrued through three rights issues to the Petitioner and to rectify the members register. The third direction related to payment of costs.
3. The Appellant admittedly did not appeal against this Primary Order. The Respondents filed CA 95/2017 in National Company Law Appellate Tribunal (NCLAT – in short) which came to be disposed on 31st May, 2017. The Respondents had challenged the said Primary Order of NCLT on the ground of delay and this Tribunal heard the Respondent in that Appeal, i.e. the present Appellant with regard to that Appeal and dismissed the Appeal.
4. It appears that after the said Appeal was disposed by this Tribunal, the Appellant paid Rs.13,65,000/- as was directed in the Primary Order and the Respondents issued the shares, but by communication dated 9th November, 2017 (Page - 102) they declined payment of dividend claiming that the Appellant had paid the amount in pursuance to the direction of NCLT and there was no direction from NCLT to pay any dividend except to allot the rights shares which she was entitled to. The Counsel for Appellant is submitting that after such refusal by the Respondents, the Appellant filed Rectification Application IA 151/2018 (Page – 108) on 22nd February, 2018 invoking Section 154 of the National Company Law Tribunal Rules, 2016 (Rules - in short) and in the ap
