The Supreme Court on Wednesday issued showcause notice to the National Company Law Appellate Tribunal (NCLAT), asking it why contempt proceedings should against them over a verdict in violation of a status quo order passed by the Supreme Court.
The Bench of Chief Justice of India D.Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra issued showcause notices to Judicial Member Rakesh Kumar and Technical member Dr Alok Srivastava over NCLAT’s October 13 judgement, which ignored a status quo order passed by the Apex Court.
It further directed the NCLAT members to personally appear before the Supreme Court on October 30.
Noting that although the NCLAT Bench was informed about the Apex Court order, it proceeded to pass the judgement, the Bench said the manner in which the NCLAT passed the directions was ‘unbecoming’ of a tribunal and that the members of NCLAT Bench were liable to be proceeded against in contempt proceedings.
The top court of the country set aside the verdict passed by the NCLAT and transferred the case to a Bench led by the Chairperson of NCLAT for being heard afresh.
During the forenoon session on October 13, the Supreme Court had passed an order of status quo in the matter pertaining to the Annual General Meeting (AGM) of Finolex Cables.
The matter was again mentioned in the afternoon session, wherein the lawyers apprised the Apex Court that the NCLAT proceeded to deliver the verdict despite being told about the status quo order.
The Supreme Court then directed NCLAT Chairperson Justice Ashok Bhushan to conduct an inquiry. The inquiry report of the NCLAT Chairperson was today produced before the Supreme Court. The two judicial members reportedly told the NCLAT Chairperson that they were not aware of the Apex Court order.
However, lawyers from both the sides categorically stated that the order was mentioned before the NCLAT Bench before it proceeded to deliver the judgement at 2 pm on October 13.
The Apex Court today noted that on October 16, the NCLAT Bench suo motu suspended the judgement citing the Supreme Court order.
It expressed doubts about the genuineness of the version given by NCLAT members and went to the extent of saying that the subsequent order was passed on October 16 to create an impression that they became aware of the interim order only at a later point of time.
The Bench said this prima facie was a falsehood since it has clearly emerged before this court that the NCLAT bench was apprised of the order of this court.
The top court of the country recorded in its order that the members of NCLAT had failed to disclose the correct facts and incorrectly created a record in the order dated October 16 that this court’s order was drawn to their notice at 5:35 pm on October 13.
It further expressed dissatisfaction with the NCLAT members’ explanation that as per the procedure in NCLAT, oral mentionings were allowed only after the pronouncement of the verdict and hence, the lawyers were not allowed to mention the Supreme Court order before the pronouncement.
The concerned lawyers filed an affidavit before the Supreme Court affirming that the NCLAT bench was informed about the order.
During the course of hearing, the CJI orally expressed anguish at the developments by saying that he was not talking about Justice Ashok Bhushan (NCLAT Chairperson), who was one of the most dignified and disciplined judges. However, NCLT and NCLAT have got down to a rot now. This case was an illustration of that rot, he added.
Senior Advocate Mukul Rohatgi, after informing the Bench about the developments in the case, stated ‘all is not well’ in the Tribunal.
He said that one NCLT member, who had heard the case, after retirement started appearing as a counsel in the very same case. He added that the said counsel withdrew from the case only after a letter was written to him objecting to his appearance.
The CJI then expressed his disbelief over the development, saying that an NCLAT member who heard the matter was appearing in this case…he should have recused…this was extraordinary.
(Case title: Orbit Electricals Private Limited vs Deepak Kishan Chhabria)