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Bharti Televentures Limited v. Bell South International Asia Pacific Inc. U.S.A.

Delhi High Court
Aug 17, 2001
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Legal Opinion Summary

Factual and Procedural Background

This opinion concerns a Review application filed by the Defendant challenging an Order dated 28th August, 2000. The impugned Order had allowed the Plaintiff's application under Order XXXIX of the Code of Civil Procedure and had temporarily restrained the Defendant from selling or entering into any arrangement/agreement for the sale of its shareholding in SKYCELL with any party other than the Plaintiff. The Review was heard by Vikramajit Sen, J., and was ultimately dismissed by the Court.

The factual material discussed in the opinion includes a circular resolution dated 13.7.2000 (which the Defendant contended did not contain its signatures), draft transaction documents that were submitted by SKYCELL to the Department of Telecommunication, and a letter from the Department of Telecommunications dated 26.6.2000 which requested a circular resolution. The Defendant's conduct and prior silence or acquiescence during the relevant period were important factual considerations in the Court's conclusion.

Legal Issues Presented

  1. What is the proper scope of interference by a court on a Review petition under Section 115 of the Code of Civil Procedure, read with Order XLVII, Rule 1?
  2. Whether there is an "error apparent on the face of the record" in the impugned Order arising from the alleged omission of the Defendant's signature from the circular resolution relied upon when granting interim relief.
  3. Whether a Review is an appropriate forum to re-open matters not pressed or argued earlier (including alleged defects in the circular resolution or absence of a board resolution), or whether those matters should be raised on appeal.
  4. Whether the Defendant's conduct and surrounding circumstances (including submission of draft documents and absence of recorded dissent) rebut the claim that the circular resolution was incomplete or non-binding.

Arguments of the Parties

Defendant's Arguments (as summarized from the opinion)

  • There was an error apparent on the face of the record because the circular resolution dated 13.7.2000 did not contain the signatures of the Defendant, and the Plaintiff had handed over an incomplete copy during arguments.
  • The circular resolution, being unsigned by the Defendant, therefore could not be treated as written consent binding the Defendant.
  • A company must act through its Board, and no Board resolution binding the Defendant had been produced; accordingly, actions of directors or attorneys could not bind the Defendant.
  • No binding contract had come into effect, and the Defendant offered to file an undertaking not to sell its shareholding to any third party pending a fresh hearing — this was advanced as a reason to accept the Review.
  • The injunction ought not to have been granted because, it was contended, the Plaintiff had effected and taken benefit from a breach of the collaboration agreement among the original partners of SKYCELL.

Plaintiff's Arguments (as summarized from the opinion)

  • The Plaintiff relied on the circular resolution and conduct of the Defendant as demonstrating assent and acquiescence to the transaction; the Court records that draft documents were submitted by SKYCELL to the Department of Telecommunication at the instance and prompting of the Defendant's solicitors/legal advisors.
  • Learned Counsel for the Plaintiff, Mr. Sibal, relied on Supreme Court decisions including Indian Oil Corporation Ltd. v. Amritsar Gas Service and Others and V.B. Rangaraj v. V.B Gopalakrishnan and Others, though the Judge noted he could not recall whether these authorities had been relied upon at the time the injunction was originally deliberated and therefore refrained from making observations on them.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Thungabhadra Industries Ltd. (Appeals v. The Government of Andhra Pradesh, AIR 1964 SC 1372) Distinction between a mere erroneous decision and one vitiated by an "error apparent" — review lies only for patent error, not as an appeal in disguise. The Court relied on this authority to emphasize that a review is intended only for patent errors and not for rehearing an erroneous decision; review applicants must point to a clear, substantial point of law that admits of no two opinions.
Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi, AIR 1980 SC 674 Reinforces that review is not a rehearing; judgments are final except in circumstances of substantial and compelling character (examples provided in the judgment). The Court cited this case to support the proposition that departure from finality is permissible only in exceptional circumstances (glaring omission, patent mistake), and to underline the circumspection required in exercising review jurisdiction.
Sajjan Singh v. State of Rajasthan ((1965) 1 SCR 933) Referenced as an authority illustrating the principle that review is not ordinarily a rehearing. Referred to within the Northern India Caterers passage as part of the exposition on the limited grounds for review; used to underscore finality of judgments subject to narrow exceptions.
G.L. Gupta v. D.N. Mehta ((1971) 3 SCR 748) Example that the Court will revise its judgment if attention was not drawn to a material statutory provision during the original hearing. The Court cited this as an example of a circumstance where review may be entertained, but found no analogous failure here since the Defendant had opportunities to object earlier.
O.N. Mohindroo v. Dist. Judge, Delhi ((1971) 2 SCR 11) Reopening of judgment may be permissible if a manifest wrong has been done and it is necessary to do full and effective justice. The case was referenced as an illustration of the narrow category where review is appropriate; the Court did not find such a manifest wrong in the present facts.
Chandra Kanta v. Sheikh Habib (1975) 3 SCR 935 Affirms that finality of judgment will not be reconsidered except where a glaring omission, patent mistake or like grave error has occurred. Used to support the Court's insistence that review is not a forum for rehearing and that finality must be preserved absent compelling circumstances — which were not shown here.
Indian Oil Corporation Ltd. v. Amritsar Gas Service and Others ((1991) 1 SCC 533) Referenced (by Plaintiff's counsel) as an authority relied upon by the Plaintiff. The Judge noted reliance by Plaintiff's counsel but recorded that he could not recall whether it had been relied upon at the time of the original injunction hearing and therefore refrained from making observations on it.
V.B. Rangaraj v. V.B. Gopalakrishnan and Others, AIR 1992 SC 453 Referenced (by Plaintiff's counsel) as an authority relied upon by the Plaintiff. As with Indian Oil, the Court recorded counsel's reliance but abstained from commenting because the Court could not recall whether these authorities had been cited during the original injunction hearing.

Court's Reasoning and Analysis

The Court began by clarifying the limited scope of review jurisdiction. Section 115 of the Code of Civil Procedure was noted, but the Court observed that the concrete parameters for review are supplied by Order XLVII, Rule 1 of the Code, which permits rehearing only "on account of some mistake or error apparent on the face of the records or for any other sufficient reason." The Court emphasized that these grounds do not permit rehearing merely because a party could have argued matters more forcefully or cited binding precedents; the Explanation to Rule 1 excludes subsequent conflicting decisions of superior Courts as a ground for review.

The Court relied on the principles articulated in the cited Supreme Court authorities (notably Thungabhadra Industries Ltd. and Northern India Caterers) to hold that review is not an appeal and that the power to review must be exercised with great circumspection, only in cases of patent error or glaring omission.

Applying those principles to the facts, the Judge addressed the Defendant's principal complaint that the circular resolution did not contain the Defendant's signature and that an incomplete copy had been handed over. The Court recorded that the copy provided during the hearing had been passed to Counsel for the Defendant, who did not raise any contemporaneous objection that it was incomplete or missing a voting memorandum. The Court treated the current objection as an after-thought and observed that it was implausible that Counsel would have failed to stress such a point forcefully during the original injunction hearing if the Defendant had truly dissented.

The Court also examined the surrounding conduct: the Defendant had neither recorded reservations earlier nor indicated dissent in words or actions over several months; draft documents were submitted to the Department of Telecommunication at the instance and prompting of the Defendant's solicitors; and the circular resolution was passed at the instance of the Defendant because the Department of Telecommunications had demanded it. The Court found these facts pointed to assent or acquiescence by the Defendant.

Legally, the Court held that a resolution does not have to be interpreted by reference to extraneous factors not contained in it unless the resolution itself so specifies, and no legal provision was shown to the Court that mandates disclosure of the voting pattern as an integral part of a resolution. The Judge further noted that the circular resolution did not record any dissent or disapproval by any person, and therefore no material suppression was shown even if an "entire" resolution had not been produced.

The Court declined to entertain new arguments that a company must act only through a Board resolution when those arguments had not been raised earlier in the original proceeding, reiterating that a Review is not the forum for rehearing such contentions. Similarly, the Defendant's offer to file an undertaking not to sell during a rehearing was not considered a ground to admit the Review. Finally, the Court observed that if the impugned Order was incorrect, the Defendant had the remedy of appeal and that corrections could not be effected through the device of a Review.

Holding and Implications

REVIEW IS DISMISSED

Direct effect on the parties:

  • The Review filed by the Defendant was dismissed, leaving the Order dated 28th August, 2000 (which had allowed the Plaintiff's application under Order XXXIX and temporarily restrained the Defendant from selling its SKYCELL shareholding to any party other than the Plaintiff) intact.
  • The Court made clear that challenges to the correctness of the impugned Order, if any, are properly to be pursued by way of appeal rather than by Review.

Broader implications:

  • The opinion reinforces the settled principle that review jurisdiction is narrow — limited to patent errors or glaring omissions — and is not a substitute for appeal or a rehearing of matters that could have been, but were not, pressed earlier.
  • The Court did not purport to lay down any new legal precedent beyond reiterating established Supreme Court authorities; where counsel relied on additional authorities (Indian Oil; V.B. Rangaraj), the Judge refrained from opining because he could not recall whether those authorities had been relied on at the original hearing.

Judge: Vikramajit Sen, J. — The Review was dismissed in the concluding paragraph: "The Review is dismissed."

Show all summary ...

Vikramajit Sen, J.— The Defendant has filed this Review in respect of an Order dated 28th August, 2000 whereby the Plaintiff's application under Order XXXIX was allowed; the Defendant was temporarily restrained from selling or entering into any arrangement/agreement for the sale of its shareholding in SKYCELL with any party other than the Plaintiff.

2. In order to appreciate the scope of a Review, Section 115 of the Code of Civil Procedure 1908 has to be read, but this Section does not even adumbrate the ambit of interference expected to the Court since it merely states that it “may make such order thereon as it thinks fit”. The parameters are prescribed in Order XLVII of the C.P.C and for the purposes of this lis, permit the Defendant to press for a rehearing “on account of some mistake or error apparent on the face of the records or for any other sufficient reason.” The former part of the Rule deals with a situation attributable to the applicant, and the latter to a jural action which is manifestly incorrect or on which two conclusions are not possible. Neither of them postulate a rehearing of the dispute because a party had not highlighted all the aspects of the case or could perhaps have argued them more forcefully and/or cited binding precedents to the Court and thereby enjoyed a favourable verdict. This is amply evident from the Explanation in Rule 1 of the Order XLVII which states that the fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment. Where the Order in question is appealable the aggrieved party has adequate and efficacious remedy and the Court should exercise the power to Review its order with the greatest circumspection. This is what was clarified by the Hon'ble Supreme Court in Thungabhadra Industries Ltd. (in all the Appeals v. The Government of Andhra Pradesh represented by the Deputy Commissioner of Commercial Taxes, Anantapur, AIR 1964 SC 1372 in this extract:

“There is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterised as vitiated by “error apparent.”. A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. Where without any elaborate argument one could point to the error and say here is a substantial point of law which states one in the face, and there could reasonably be no two opinions entertained about it, a clear case of error apparent on the face of the record would be made out.”

3. Fifteen years later a coordinate Bench voiced the same opinion in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi, AIR 1980 SC 674 without any reference to its earlier decision in the case of Thungabhadra Industries Ltd. (supra) in these words:

“It is well settled that a party is not entitled to seek a review of a judgment delivered by this Court merely for the purpose of a rehearing and a fresh decision of the case. The normal principal is that a judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so. Sajjan Singh v. State of Rajasthan, (1965) 1 SCR 933 at p. 948. For instance, if the attention of the Court is not drawn to a material statutory provision during the original hearing, the Court will revise its judgment, G.L Gupta v. D.N Mehta, (1971) 3 SCR 748 at p. 760. The Court may also reopen its judgment if a manifest wrong has been done and it is necessary to pass an order to do full and effective justice. O.N Mohindroo v. Dist. Judge, Delhi, (1971) 2 SCR 11 at p. 27. Power to review its judgments has been conferred on the Supreme Court by Art. 137 of the Constitution, and that power is subject to the provisions of any law made by Parliament or the rules made under Art. 145. In a civil proceeding, an application for review is entertained only on a ground mentioned in Order XIVII, Rule 1 of the Code of Civil Procedure and in a criminal proceeding on the ground of an error apparent on the face of the record. (Order XL, Rule 1, Supreme Court Rules, 1966). But whatever the nature of the proceeding, it is beyond dispute that a review proceeding cannot be equated with the original hearing of the case, and the finality of the judgment delivered by the Court will not be reconsidered except ‘where a glaring omission or patent mistake or like grave error has crept in earlier by judicial fallibility’. Chandra Kanta v. Sheikh Habib, (1975) 3 SCR 935.”

4. Mr. Shanti Bhushan, and Mr. P. Chidambram before him, Learned Senior Counsel for the applicant/Defendant have argued that there is an error apparent on the face of the record in that it had been observed in the impugned Order dated August 28, 2000 that “the circular Resolution dated 13.7.2000, prima facie, represents written consent. I cannot conceive of a greater and more compelling writing than a Resolution of all the erstwhile shareholders acting in unison. The speciousness and unreasonableness of the stance of the Defendant propels me towards granting equitable relief.” It is their contentions that the Circular Resolution did not contain the signatures of the Defendant to signify its assent, and a vital mistake had occurred in this regard because the Plaintiff had during arguments handed over an incomplete copy of this Resolution. It is necessary to record that a copy of the paper handed over in the course of hearing was also passed on to Counsel for the Defendant/Applicant who did not raise any objection that it was incomplete and should have contained the voting memorandum also. This aspect sufficiently demonstrates that this demurrer now raised by the Defendant is actually an after-thought. It is inconceivable that if the Defendant had recorded its dissent to the Circular Resolution, its Learned Counsel wold have failed to vociferously and vehemently stress this point when the application for injunction was being argued. In my view the Review seeks to plug a hole in the defence and cannot be countenanced. The impugned Order, if incorrect, is amenable to change by the Appellate Court. Such a correction cannot be effected through the device of a Review.

5. However, even after having perused the ‘entire’ Resolution I find no reason to alter my opinion. In all the previous months, the Defendant had neither in words nor in action, recorded any reservations or riders in the grant of approvals; to the contrary the only impression that is discernable is that the delay in completing the transactions was because of inchoate formalities. The ‘Draft Documents’ were in fact submitted by SKYCELL to the Department of Telecommunication at the instance and prompting of the Defendant's Solicitors/Legal Advisors. The Defendant's conduct all through, contains its consent. A Resolution does not necessarily have to be understood in the light of factors not contained in it, unless it specifically mentions such factors. Learned Counsel for the Defendant have not shown any legal provision that mandates the disclosure of the voting pattern or makes the latter an integral part of the Resolution. Even in the instance of a Special Resolution, all that is required by the Companies Act is that the prescribed support (and not just a simple majority as in the case of an Ordinary Resolution) should have been obtained. A Board Resolution, once passed in accordance with law, binds all sections of the Board. In the present case it must also be borne in mind that the circular Resolution did not have the dissent or disapproval of any person and accordingly, there is no material suppression even if the ‘entire’ Resolution had been failed. The Defendant and any other party should have unequivocally recorded its demurrer and objection at the time of its circulation, and most definitely at the threshold of the hearing. This would perhaps been difficult in the wake of several representations and requests made at the Defendant's instance to the Authorities and Institutions who had to approve of the transaction. I can see no significance in the fact that the documentation was styled as a “Draft”. If all these documents contain any message, it is that the transaction had the approval and consent of the Defendant. The fact that the circular Resolution was passed at the instance of the Defendant because it was so demanded by the Department of Telecommunications in its letter dated 26.6.2000, cannot be lost sight of.

6. Mr. Shanti Bhushan has also argued that a Company must act through its Board and the latter's decision can be found out only through its Resolutions. It is contended that in the Defendant's case no such Resolution has been produced and thus the action of the Defendant's Directors or Attorneys cannot bind the Defendant. These arguments were not raised earlier and I decline from considering them in Review proceedings. It is indeed significant however that Mr. John Hartman still represents the Defendant.

7. Mr. Bhushan also contended that a binding contract had not come into effect, but this argument has already been considered at the time when the injunction was granted. If the view taken by this Court is erroneous, the Defendant has its remedy by way of an Appeal. Mr. Shanti Bhushan also submitted that if the Review is accepted the Defendant would be forthwith ready to file an undertaking not to sell its shareholding to any third party till the Single Judge passes a fresh order after hearing arguments again. This is also not a ground that should be entertained in Review. It has also been argued that the injunction ought not to have been granted since it is the Plaintiff which has effected and taken benefit from the breach of the collaboration Agreement between the four original partners of SKYCELL. This question has been duly considered in the Order sought to be revived, inasmuch as equitable relief was granted because the Plaintiff had contracted to purchase the stock of Crompton Greaves Ltd. in SKYCELL without any remonstration by the Defendant; infact it was with the Defendant's acquiescence if not its explicit consent. Although Mr. Sibal Learned Counsel for the Plaintiff has relied on the Hon'ble Supreme Court's decision in Indian Oil Corporation Ltd. v. Amritsar Gas Service and Others, (1991) 1 SCC 533 and V.B, Rangaraj v. V.B Gopalakrishnan and Others, AIR 1992 SC 453, since I cannot recall that it had been relied on at the time when the injunction application was being deliberated upon. I refrain from making any observation.

8. The Review is dismissed.