'Unbecoming Of A Judicial Tribunal' : Supreme Court Issues Contempt Notice To NCLAT Members For Passing Judgment Defying SC Order

In an unprecedented development, the Supreme Court on Wednesday (October 18) issued notices to two members of the National Company Law Appellate Tribunal (NCLAT) to show cause for not initiating contempt proceedings against them for delivering a judgment in violation of a status quo order passed by the Supreme Court.

A bench led by Chief Justice of India DY Chandrachud and comprising Justice JB Pardiwala and Justice Manoj Misra issued show-cause notices to Mr Rakesh Kumar (Judicial Member) and Dr Alok Srivastava (Technical Member) of the NCLAT for delivering a judgment on October 13 ignoring a status quo order passed by the Supreme Court. The bench directed that the said members should personally appear before the Supreme Court on October 30.

The bench prima facie noted that although the NCLAT bench was informed of the Supreme Court's order, it proceeded to pass the judgment.

"The manner in which the NCLAT has passed the directions is unbecoming of a tribunal," observed the bench led by Chief Justice of India DY Chandrachud while setting aside the judgment passed by the NCLAT. The bench further transferred the appeal to a bench led by the Chairperson of the NCLAT for being heard afresh.

"We are of the view that the members of NCLAT bench are liable to be proceeded against in contempt proceedings. We issue notice of show-cause against the members...they shall be present before this court on 30 Oct," the bench observed in the order.

The issue relates to the events which took place on October 13 in a matter pertaining to the Annual General Meeting (AGM) of Finolex cables. On that day, the Supreme Court in the forenoon session passed an order of status quo. However, in the afternoon session, the lawyers mentioned the matter again before the Supreme Court to state that the NCLAT proceeded to deliver the judgment despite being told about the status quo order. Following that, the Supreme Court directed the NCLAT Chairperson Justice Ashok Bhushan to conduct an inquiry.

Today, the inquiry report of NCLAT Chairperson was produced before the Supreme Court. The two NCLAT members reportedly told the NCLAT Chairperson that they were not aware of the Supreme Court's order. However, this version was disputed by the lawyers from both the sides, who categorically stated that the order was mentioned before the NCLAT bench before it proceeded to deliver the judgment at 2 PM on October 13.

The bench led by CJI further noted that on October 16, the NCLAT bench suo motu suspended the judgment citing the Supreme Court's order. The CJI-led bench expressed doubts about the genuineness of the version given by the 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.

"This order(October 16) creates an impression that the bench of the NCLAT was apprised of the order for the first time. This prima facie is a falsehood since it has clearly emerged before this court that the NCLAT bench was apprised of the order of this court," the CJI observed in the order.

The Supreme Court further observed :

"We are prima facie of the view that the members of the NCLAT have-

1. Failed to disclose correct facts;

2. Incorrectly created a record in the order dated 16 Oct that this court's order was drawn to their notice on 5.35 pm on 13 Oct"

The bench also expressed dissatisfaction with the NCLAT members' explanation that as per the procedure in NCLAT, oral mentionings are allowed only after the pronouncement of the judgment and hence, the lawyers were not allowed to mention the Supreme Court's 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 hearing, CJI orally expressed anguish at the developments by saying :

"I am not talking about Justice Ashok Bhushan (NCLAT Chairperson). He is one of the most dignified and disciplined judges I know...but NCLT and NCLAT has got down to a rot now. This case is an illustration of that rot."

During the hearing, Senior Advocate Mukul Rohatgi, after informing the bench about the developments in the case, stated that "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. Rohatgi added that the said counsel withdrew from the case only after a letter was written to him objecting to his appearance.

"An NCLAT member who heard the matter was appearing in this case...he should have recused...It's extraordinary...," CJI expressed disbelief.

Case Title: Orbit Electricals Private Limited v. Deepak Kishan Chhabaria | Conmt. Pet (C) No.1195/2023 In C.A. No.6108/2023

Click here to read the order