Avinash
Hansraj Gajbhiye Vs. Official Liquidator,M/S. V. Pharma. P. Ltd [2006] Insc 84 (17 February 2006)
S.B.
Sinha & P.K. Balasubramanyan
( @
SPECIAL LEAVE PETITION (CIVIL) NO. 23706 OF 2003) P.K. BALASUBRAMANYAN, J.
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Leave granted.
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This appeal, as
can be seen from paragraph 1 of the Petition for Special Leave to Appeal,
challenges the order of the High Court of Bombay, Nagpur Bench dated 18.7.2003
whereby the Division Bench of the High Court refused to review its judgment in
Company Appeal No. 3 of 2002 dated 19.9.2002 dismissing the appeal. Company
Appeal No. 3 of 2002 was filed by the appellant, the legal representative of an
ex-Director of M/s Vidarbha Pharmaceuticals Private Limited, a company that
went into liquidation and which was ordered to be wound up in Company Petition
No. 7 of 1985 by order dated 9.11.1998.
Though
that appeal was against the order dated 16.8.2002 in Company Application No. 56
of 2001, the appellant attempted to challenge the earlier orders dated 7.9.2001
and 22.7.1999, passed during the winding up proceedings. By the order dated
7.9.2001, the Company Judge had dismissed the application No. 40 of 1999 filed
by the appellant for setting aside the order dated 22.7.1999 passed by him in a
misfeasance application, holding that all the ex-Directors of the Company were
jointly and severally liable under Section 543 (1)(a) of the Companies Act to
pay to the Company an amount of Rs.6,29,220/- with interest thereon at the rate
of 18% per annum with effect from 6.10.1996 along with the costs of the
proceedings. The order dated 22.7.1999 that was sought to be challenged was the
order on the misfeasance application. The order dated 16.8.2002 was one by
which the Company Judge rejected an application for review filed by the
petitioner seeking a review of the order passed on 7.9.2001. The appeal was in
time only as regards the order dated 16.8.2002 refusing to review the earlier
orders in misfeasance proceedings passed by the Company Judge. The appeal was
not accompanied by even an application for condoning the delay in filing the
appeal as against the orders dated 7.9.2001 and 22.7.1999even though the
challenges to them were clearly barred by limitation. The Division Bench of the
High Court, therefore, ordered on 19.9.2002 that the orders passed by the
Company Judge on 7.9.2001 and 22.7.1999 were not amenable to scrutiny for their
sustainability in the appeal filed and the appeal had to be confined to one
from the order dated 16.8.2002. Thereafter, the appeal was dismissed holding
that the Company Judge was justified in refusing to review the orders passed in
the Misfeasance Application. The appellant then filed a petition to review the
judgment in Company Appeal No. 3 of 2002. By order dated 18.7.2003, the
application for review was dismissed. It is that order that is challenged in
this appeal.
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For the purpose
of this case, we do not think it necessary to consider the question whether the
appeal filed before the Division Bench under Section 483 of the Companies Act
against an order refusing to review the orders on the Misfeasance Application
was maintainable, the wide words of Section 483 notwithstanding (an order
rejecting an application for review is not appealable even under the Code of
Civil Procedure either under Order XLIII Rule 1(w) or Order XLVII Rule 7). We
proceed on the assumption that the appeal was maintainable.
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Learned counsel
for the appellant submitted that the order of the Division Bench sought to be
reviewed, proceeded on the basis that it was an appeal challenging the order dated
16.8.2002 passed by the Company Judge dismissing an application for review
preferred by the appellant and the order dated 16.8.2002 passed by the Company
Judge and the challenge thereto, included a challenge to the prior orders dated
7.9.2001 and 22.7.1999. This argument cannot be accepted. The order dated
16.8.2002 was that the Petition for review filed by the appellant seeking a
review of the order dated 7.9.2001 passed in Company Application No. 40 of
1999, which was one for recalling the order dated 22.7.1999 was liable to be
dismissed. The Company Judge after referring to the facts leading to that
application and considering the merits of that application held that there was
no error apparent on the face of the record which justified a review of the
order dated 7.9.2001. The application for review was thus dismissed on
16.8.2002. It was this order that was dealt with in Company Appeal No. 3 of
2002 by the Division Bench in its order which was sought to be reviewed. The
order specified that the appeal was against the order dated 16.8.2002.
Therefore, the application for review filed by the appellant before the
Division Bench could be treated only as an application for review of the order
dated 19.9.2002 refusing to interfere with the order dated 16.8.2002. It is not
possible to accept the argument of learned counsel for the appellant that the
Division Bench while exercising its review jurisdiction or when called upon to
exercise its review jurisdiction was bound to consider the reviewability or
correctness of all the prior orders including the order on the review petition.
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While dismissing
the Petition for review of the order dated 7.9.2001, on 16.8.2002, the Company
Judge found on the basis of the material on record of Company Application No.
40 of 1999 and the contentions sought to be raised by the appellant that there
was no error apparent on the face of the record in the order dated 7.9.2001.
Therefore, what was involved in Company Appeal No. 3 of 2002 was only the
correctness of that order of the Company Judge and the Division Bench by its
judgment dated 19.9.2002, found no reason to interfere.
The
review was sought by the appellant on the basis of certain additional material
which according to him had relevance and the Company Judge had found that no
ground based on discovery of new and important matter which after the exercise
of due diligence was not within the knowledge of the appellant or could not be
produced by him at the time when the original order was passed, was made out.
This finding by the Company Judge was affirmed by the Division Bench in its
order dated 19.9.2002. When the appellant sought a review of that order, as
indicated earlier, the Division Bench considered the conduct of the appellant
right through the proceedings and found that the appellant was indulging in
dilatory tactics just to thwart the order passed by the Company Judge on the
misfeasance application. The court also found that there was no ground made out
for reviewing its order dated 19.9.2002. On a consideration of the relevant
aspects, we find that the Division Bench and the learned single Judge were both
justified in not acceding to the prayer for review made by the appellant.
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Learned counsel
for the appellant submitted that the order on the misfeasance application was
made without the appellant, who was only a legal representative of one of the
Directors, really getting an opportunity to put forward his contentions. But on
the materials, it was found that he had such an opportunity, a notice in that
behalf having been taken out to him and served on him.
His
plea that he had no notice was found to be unacceptable. It is also seen that
instead of taking appropriate steps at appropriate times, the appellant had
indulged in initiating proceedings one after another which were all found to be
untenable and without merit. In the circumstances, one can only say that the
appellant has to thank himself for the situation he finds himself in, even if
there is any merit in his claims. The High Court cannot be faulted for refusing
to review its order dismissing the Company Appeal, or in dismissing the Company
Appeal itself.
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Thus, we are
satisfied that no ground is made out for interference with the order of the
High Court challenged in this appeal. The order of the High Court is confirmed
and this appeal is dismissed.
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