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TMI Blog2023 (1) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sr. Advocate with Mr. Ativ Patel, Mr. Anirban Bhattacharya, Mr. Sathvik Chandrasekharan, Mr. Rohan Naik, Mr. Harshad Vyas and Mr. Krishna S., Advocates for Applicant in I.A. No. 2623 of 2021. JUDGMENT ASHOK BHUSHAN , J. 1. Both Company Appeal (AT) Ins. No. 880 of 2021 as well as I.A. No. 2623 of 2021 has been heard together and are being decided by this common Judgment. 2. We need to first notice the facts giving rise to Company Appeal (AT) Ins. No. 880 of 2021 before we notice the details of I.A. No. 2623 of 2021 filed by SREI Equipment Finance Ltd. i. This Appeal has been filed by Indiabulls Housing Finance Limited challenging the Order dated 08.10.2021 passed by the National Company Law Tribunal, Mumbai Bench, Court No. I (the Adjudicating Authority) in I.A. No. 1921 of 2021. I.A. No. 1921 of 2021 was filed by Kalpataru Properties Pvt. Ltd. who has been arrayed as Respondent No. 1 in this Appeal. ii. On 28th June, 2004, a Memorandum of Understanding was executed between the Corporate Debtor, Shree Ram Urban Infrastructure Ltd. Vijay Infrastructure Technology Pvt. Ltd. ("VIT" in short) a sister concern of the Corporate Debtor and Respondent No. 1 for sale, transfer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tcy Code, 2016 (IBC in short) was filed by the Corporate Debtor-SREI Equipment Finance Ltd. before the NCLT Mumbai. On 06.11.2019, Section 7 Petition was admitted and Respondent No. 2 was appointed as Interim Resolution Professional. vi. On 08.10.2020, Hon'ble Supreme Court granted leave to the Respondent No. 2-IRP to bring on record in place of Provisional Liquidator in SLP No. 12495 of 2020. On 16.10.2020, the Hon'ble Supreme Court dismissed the said SLP filed by IRP on behalf of the Corporate Debtor-VIT and erstwhile director of the corporate debtor. vii. The Respondent No. 1 wrote to Respondent No. 2 -IRP about the right of the Respondent No. 1 in subject property requesting the Respondent No. 2 to perform its obligation. Respondent No. 2-RP addressed an email informing that subject property does not form part of the CIRP and it further acknowledged that amount of Rs. 75,30,00,000/- is entitlement of the Corporate Debtor. viii. I.A. No. 1921 of 2021 was filed by Kalpataru Properties Pvt. Ltd.- Respondent No. 1 before the adjudicating authority seeking a direction to Respondent No. 2 to do all such acts as may be necessary for executing the conveyance deed and other doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the Orders dated 28 November 2019, 23 January 2020 and 28 July 2021 and (ii) the balance sum to Respondent No 1; ......Prayer "c" This Tribunal hereby direct and authorize Respondent No. 1 jointly with the Applicant to apply to the Hon'ble Bombay High Court for orders and directions in the said I.A. No. 243 of 2021 or by fresh application, including to direct Respondent No. 2 to comply with the orders of the Hon'ble Bombay High Court by removal of construction materials, equipment, sheds, porta cabins etc. lying on the Decreed Property and directions to remove the obstruction on the Applicant's sight of way on one of the three 12 metre-wide accesses to the Decreed Property; Hence, this Order with the aforesaid directions. Accordingly, I.A.-1921/2021 is hereby disposed of" x. Aggrieved by the Order dated 08.10.2021, Company Appeal (AT) Ins. No. 880 of 2021 has been filed by the Indiabulls Housing Finance Ltd. praying to set aside the Order dated 08.10.2021. 3. This Tribunal passed an Interim Order in Company Appeal (AT) Ins. No. 880 of 2021 on 28.10.2021 staying the prayer "b" granted vide Order dated 08.10.2021 by the Adjudicating Authority. 4. Civil Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is what persuaded the appellant in the Civil Appeal before us to approach this Court. The counsel stated that the appellant before us being the appellant before the NCLAT seeks to withdraw the appeal on the deposit of certain amounts by respondent No.1. It is this what persuaded us to accept the request and dispose of even the Company Appeal pending before the NCLAT as nothing would survive in view of the withdrawal by the appellant itself. The present appellant before us is actually an intervener before the NCLAT. He seeks to make a grievance that the order passed by the NCLT which was in appeal before the NCLAT, he also had some grievances. On our query, he concedes that he did not file an appeal against the order of the NCLT. That being the position, his status as claimed before the NCLAT was of an intervener. Learned senior counsel submits that at least he should have been given liberty to be heard even as the status as an intervener before the NCLAT. We do believe that this controversy should be resolved by the NCLAT itself i.e. whether on the appellants seeking to withdraw the appeal, there can be any impediment in withdrawal of the appeal and is the NCLAT really r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 09.12.2022 as quoted above. 11. Learned Sr. Counsel for the Appellant-Mr. Vikram Nankani has made a statement that Appellant may be permitted to withdraw the Appeal (C.A. (AT) Ins. No. 880 of 2021) which statement was also made before the Hon'ble Supreme Court as noted in its Order dated 14.11.2022. The prayer of the Appellant is opposed by Mr. Nakul Dewan, Sr. Advocate appearing for Applicant-SREI Equipment Finance Ltd. We thus need to notice the submission made by Learned Sr. Counsel for the Applicant in I.A. No. 2623 of 2021 as well as Learned Sr. Counsel appearing for the Appellant and Learned Counsel appearing for Respondent No. 1 on I.A. No. 2623 of 2021. 12. Learned Sr. Counsel appearing for the Intervener/Applicant submits that the SREI Equipment Finance Ltd. is a non-banking financial institution. The CIRP has already been initiated against the SREI Equipment Finance Ltd. pursuant to order dated 08.10.2021 passed by the NCLT, Kolkata Bench, Kolkata in CP(IB) No. 294/2021. Mr. Rajnish Sharma has been appointed administrator of the intervener who authorized officers and management of the Corporate Debtor to continue to undertake requisite action in pursuance of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant contends that Applicant has no right to oppose the withdrawal of Appeal filed by the Appellant. It is submitted that Applicant has not filed any Appeal challenging the Order dated 08.10.2021 hence no relief can be granted to the applicant in this Appeal. Applicant's status and right is only of intervener who cannot claim any relief for himself in the present proceedings. The arbitral award passed in favour of the Respondent No. 1 had become final upto the Hon'ble Supreme Court and Special Leave Petition in which the Resolution Professional of the Corporate Debtor was also brought on record, has been dismissed by Hon'ble Supreme Court. The Order passed by the Hon'ble Supreme Court dismissing the Appeal by Resolution Professional makes the arbitral award final between the parties and need to be implemented which cannot be objected by the Applicant. 14. Mr. Arun Kathpalia, Learned Sr. Counsel appearing for the Kalpataru Properties Pvt. Ltd. submits that the MoU between the Kalpataru Properties Pvt. Ltd. and Indiabulls Housing Finance Ltd. was executed on 28th June, 2004 and the arbitral award in favour of the Kalpataru was delivered on 29th August, 2016 which was affirmed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts on behalf of the Corporate Debtor by officer appointed by the Bombay High Court against the balance sale consideration of Rs. 75.30 crores. In the Application prayer 'b' and 'c' was allowed by the Adjudicating Authority which has already been extracted in foregoing paragraphs of this judgment. The Order dated 08.10.2021 has been challenged by the Indiabulls Housing Finance Ltd. by filing an Appeal on 25.10.2021 that is within limitation prescribed under Section 61 of the Code. The limitation for filing an Appeal under Section 61 is 30 days. Admittedly the Applicant-SREI Equipment Finance Ltd. has not filed any appeal. It has filed only an Intervention Application No. 2623 of 2021 as noticed above. 18. Following are the two questions for consideration in this Appeal: i. Whether Applicant who has not filed any Appeal against the Order dated 08.10.2021, can claim for setting aside the Order dated 08.10.2021 on the basis of Intervention Application? ii. Whether the withdrawal of Company Appeal (AT) Ins. No. 880 of 2021 can successfully be opposed by the Applicant? 19. Both the questions being inter-related are being considered together. The Order dated 08.10.2021 which has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imeline where limitation prescribed under the Act is for a purpose. The timeline which are prescribed in the IBC has to be given weight which principle has been reiterated by the Hon'ble Supreme Court in [2022 2 SCC 244] "V. Nagarajan Vs. SKS Ispat and Power Limited & Ors". Paragraph 28 of the Judgment, Hon'ble Supreme Court has laid down following: "In this background, when timelines are placed even on legal proceedings, reading in the requirement of an "order being made available" under a general enactment (Companies Act) would do violence to the special provisions enacted under IBC where timing is critical for the workability of the mechanism, health of the economy, recovery rate of lenders and valuation of the corporate debtor. IBC, as a prescriptive mechanism, affecting rights of stakeholders who are not necessarily parties to the proceedings, mandates diligence on the part of applicants who are aggrieved by the outcome of their litigation. An appeal, if considered necessary and expedient by an aggrieved party, is expected to be filed forthwith without awaiting a free copy which may be received at an indefinite stage. Hence, the omission of the words "from the date on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of the withdrawal by the plaintiff, but it may add another person as a party in substitution of the plaintiff or transpose a defendant as plaintiff and direct the continuance of the suit. The case reported in 34 L.W. 548 is one of such cases. Such substitution was made in appeal. In a suit where a compromise was set up by which certain rights were alleged to have been acquired by the defendants with the consent of the plaintiff and the defendants produced the agreement in Court and applied for a decree in terms of the compromise, the Court declined to dismiss the suit by reason of the subsequent withdrawal of the suit by the plaintiff vide Tukaram Mahadu V. Ramchandra Madahu (1). The terms of O. 23 R. 3, Civil Procedure Code, are equally imperative. The Court if satisfied that the suit has been compromised, is bound to pass a decree in accordance with the terms thereof. That being so, it has been held that the special procedure therein laid down is not affected by the general provisions of O. 23 R. 1. The principle to be kept in view in a matter like this has been stated by Jenkins C.J. in Satyabhama Bai V. Ganesh Balkrishna (2) at page 18; .........." 23. The High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the above case, the Division Bench of the High Court was hearing an Appeal against the Order of Learned Single Judge. The appellant who had filed the Appeal before the Division Bench had filed an Application for impleadment in the writ petition which was dismissed. High Court considered the provisions of Order 23 of the CPC and made following observations in the Judgment: "It is also evident that the right of withdrawal is not a matter of course and it is absolutely Court's discretion and this can only be exercised when the Court records its satisfaction on two eventualities viz the suit (here writ petition) must fail by reason of some formal defect or that there are sufficient grounds for allowing the plaintiff to institute the fresh suit for the subject matter of the suit or part of the claim. There is no other eventuality or situation provided in the said rules for withdrawal of any action. The Legislature in its wisdom has provided the aforesaid restricted provision for withdrawal for the simple reason, in our opinion is that a party cannot go out from the Court after filing a lis, at their own whims, for once a lis is filed it has to be dealt with in appropriate manner by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which the High Court rejected the claim of the appellant to maintain the company petition filed under Sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as "the 1956 Act"). 2. The facts and circumstances giving rise to these appeals are that: Shri S.K. Roy (Respondent 2) issued and allotted 30,000 shares of Respondent 1 Company to himself and his relatives, and being the majority shareholder therein, hence acquired control over the respondent company. 3. Shri Ajit Kumar Cahtterjee (3.66% shares) and Shri Arghya Kusum Chatterjee (1.01% shares) filed Company Petition No. 222 of 1991 under Sections 37 and 398 of the 1956 Act, before the High Court of Calcutta with the consent of M/s. Bhagwati Developers Pvt. Ltd. (4.78% shares) (hereinafter referred to as "the appellant") and shri R.L. Gaggar(7.61% shares), alleging mismanagement and oppression. 4. Respondent 2 contested the said company petition by raising the preliminary issue of maintainability, stating that the valid shares held by the petitioners and consenting parties therein, were valued at less than 10% of the total shareholding, and thus, the petition itself was not maintainable. The Company C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in paragraph 27 of the Judgment: "27. In our humble opinion, the Division Bench has gravely erred in taking the aforesaid view, as the same renders the order of this Court dated 26.04.1996 a nullity. This Court had passed the order after hearing the present respondents on the basis of suggestions made and concessions offered by them. It was in fact suggested by the Learned Counsel appearing on behalf of the respondents, that if the appellant prefers such appeals in the High Court even now, the respondents shall not raise any objection on the ground of limitation, and that they would not also object on the ground of the locus standi of the consenting shareholders. Thus, the same makes it clear the right of maintenance of an appeal against the judgment of the learned Single Judge dated 2-2-1995 was in fact an offer made by the respondents themselves, with a further undertaking being provided by them with respect to the question of limitation and locus standi of the appellant, stating that the same would not be raised. What was granted to them was only permission to raise the contention that as on the date of actual filing of the company petition before the Company Court Judge, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the ex parte decree was set aside and the suit was restored to the original number. However, in the interregnum, the respondent No. 1 A. N. Umakanth, the power of attorney holder of all the legal representatives of the original plaintiff, sold the suit property to three persons, namely Ramasamy, Dhanam Ramasamy and Venkatasubramanian (respondent Nos. 2 to 4 herein) through a registered sale deed dated 04.07.1995. In view of this transaction, upon restoration of the suit, the said purchasers moved an application (IA No. 135 of 2002) for being impleaded as plaintiffs. This application was allowed on 21.06.2002 and thereby, the said purchasers were allowed to join the suit as plaintiffs Nos. 9 to 11. (2.5) However, the other plaintiffs (Nos. 2 to 4 and 6 to 8) took exception to the aforesaid transaction of sale by the plaintiff No. 5; they revoked his power of attorney and moved an application (IA No. 468 of 2003) for transposition of the plaintiff No. 5 and his purchasers (plaintiff Nos. 9 to 11) as defendants. This application was allowed on 25.06.2003 and, accordingly, the plaintiff No. 5 and plaintiff Nos. 9 to 11 were transposed as defendants 3 to 6 in this suit. (2.6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the parties to a civil suit is essentially contained in Order I of the Code of Civil Procedure, dealing with various aspects concerning joinder, non-joinder and mis-joinder of parties. Rule 10 of Order I specifically provides for addition, deletion and substitution of parties; and the proposition for transposition of a party from one status to another, by its very nature, inheres in subrule (2) of Rule 10 of Order I CPC that reads as under:- "10(2) Court may strike out or add parties. - The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appeared to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who or to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit be added." 9. On the other hand, the law of procedure in relation to withdrawal and adjustment of suits is contained in Order XXIII of Code of Civil Procedure. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking transposition is having an interest in the subject-matter of the suit and thereby, a substantial question to be adjudicated against the other defendant. In such a situation, the pro forma defendant is to be allowed to continue with the same suit as plaintiff, thereby averting the likelihood of his right being defeated and also obviating the unnecessary multiplicity of proceedings." 33. The above case does not help the applicant in the facts of the present case. In the above case also Defendant No. 3 to 6 were transposed as plaintiff as per provision of order 23 rule 1-A of the CPC. 34. The conditions for transposition being satisfied, the Hon'ble Supreme Court upheld the Order of the transposition. Present is not a case where there is any case for any transposition nor principles applicable in Order 23 Rule 1-A are attracted which permits the transposition of defendant as plaintiffs, the above judgment in the present case, does not help the applicant in any manner. 35. Learned Counsel for the Appellant has relied on Judgment of the Hon'ble Supreme Court in Civil Appeal No. 5909 of 2021 "Acharya Tejendraprasadji Devendraprasadji & Anr. Vs. The Charity Commissioner & Ors.". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage of passing of the final decree approving a Scheme, even 3rd Parties are entitled to intervene and object to the whole or part of the Scheme. But once the final decree approving the Scheme is passed, any person objecting to the final decree should independently file an appeal and cannot ride piggyback on the appellants' shoulders. If they choose to do so they have to fall once the appellants withdraw the appeals; (iv). In any case it was the appellants before the High Court who have given an undertaking to this Court at the time of hearing of SLP(c) No. 27929 of 2012 that they shall not move the Charity Commissioner for modification or variation of the Scheme. Such an undertaking is not binding on third parties. Therefore, it is not as though the rights of 3rd party intervenors are completely obliterated. They always have their own remedies in Law and they cannot insist upon their grievance being addressed to in the appeals filed by the appellants herein." 36. Hon'ble Supreme Court in the above case has observed that any person objecting the final decree had to independently file an Appeal. In the present case, Order dated 08.10.2021 has not been challenged by the SREI E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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