CLB Chairman cannot transfer a case from one Regional Bench to another

PrintPDF

HIGH COURT OF BOMBAY

Arunachalam Muthu

v.

Nafan BV

S.J. KATHAWALLA, J.

CO. APPEAL (LODGING) NO. 28 OF 2012

CLB CO. APPLICATION NO. 275 OF 2012

CLB CO. PETITION NO. 62 OF 2009

NOVEMBER 30, 2012

 

A reading of Regulation 3 of the CLB Regulations makes it clear beyond any doubt that the Chairman of the CLB is empowered by the Board to constitute the Benches of the Board as per the composition of Benches prescribed under Section 10E (4B) of the Act. Regulation 3 (3) of the CLB Regulations empowers the Chairman to specify the Member of the Bench before whom every matter requiring decision by the Board shall be placed for orders and in the absence of such Member so specified every such matter shall be placed before any other member of the Bench who is present. Thus Regulation 3 (3) of the CLB Regulations delegates the power of intra Bench allocation of matters to the Chairman i.e. transfer of a matter from one Member of a Bench to another Member of a Bench but not inter Bench transfer i.e. from one Member of the Bench to a Member of another Bench. Regulation 4 empowers the Chairman to provide that matters falling under Sections 247, 250, 269 and 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practice Act, 1969 shall be dealt with by the Principal Bench consisting of one or more Members. Therefore matters arising out of the Sections set out in Regulation 4 may be dealt with only by the Principal Bench consisting of one or more members of the CLB which shall be at New Delhi as provided in Regulation 4 (2) of the CLB Regulations. Regulation 4 (3) of the CLB Regulations provides that matters falling under all other sections of the Act [i.e. matters falling under Sections other than those set out in Regulation 4 (1) ], shall be dealt with by Regional benches, namely, New Delhi Bench, Chennai Bench, Kolkata Bench and Mumbai Bench, consisting of one or more Members. Since Regulation 4 came to be substituted by the CLB Amendment Regulations vide GSR 185 (E) dated 17th March, 2008 w.e.f. 1st April, 2008, it was provided in proviso (1) to Regulation 4 (3) that the matters pending before the Principal Bench and Additional Principal Bench as on 1st day of April 2008 shall continue to be disposed of by the Principal Bench and Additional Principal Bench respectively. In other words, the matters not falling under the Sections set out in Regulation 4 (1) and which were required to be dealt with by the Regional Benches under Regulation 4 (3) were allowed by the first proviso to Regulation 4 (3) to be continued and disposed of by the Principal Bench and Additional Principal Bench, in the event of such matters being pending before the Principal Bench as on 1st April, 2008. By proviso (2) to Regulation 4 (3), it was provided that notwithstanding anything contained in Regulation (7), the Chairman could transfer any matter pending before the Regional benches to the Principal Bench either at the joint request of all the parties or for other reasons to be recorded in writing. Regulation 7 (1) of the CLB Regulations provides as follows:

7. Jurisdiction of the Bench – (1) All proceedings, other than the proceedings before the Principal bench under Regulation 4, shall be instituted before the Bench within whose jurisdiction the registered office of the Company is situated”

In view of this Regulation, none of the proceedings other than the proceedings under Regulation 4 (1) and Regulation 4 (3) of the CLB Regulations could have been dealt with by the Principal Bench. All other proceedings are required to be instituted before and consequently to be heard by the respective Benches within whose jurisdiction the registered offices of Companies are situated. To this rule, the only exception is carved out in the second proviso to Regulation 4 (3), which contains the non obstante clause i.e. “Notwithstanding anything contained in Regulation 7″. This exception empowers the Chairman to transfer any matter from the Regional Benches to the Principal Bench. Thus the power delegated to the Chairman is the power to transfer matters before the Regional Benches only to the Principal Bench since any other transfer inter se between Regional Benches would otherwise violate the mandate of Regulation 7 (1), and this is not the power that the Company Law Board has delegated to the Chairman.