Writ Petition Under Article 226 Against NCLT Order Not Maintainable: Kerala HC [Read Judgment]

The High Court of Kerala has held that writ jurisdiction under Article 226 cannot be invoked to challenge an order passed by the National Company Law Tribunal.

Accordingly, a division bench comprising Chief Justice S Manikumar and Justice Shaji P Chaly set aside a judgment passed by a single bench, which granted a limited relief to a party in a challenge against an order passed by the NCLT, Kochi Bench.

The division bench, in the case Sulochana Gupta and another v. RBG Enterprises Pvt Ltd and others, stated on the basis of a catena of precedents that an order of a Tribunal cannot be challenged under Article 226.

The Court also noted that the dispute was essentially in the nature of a civil dispute, with no State or its instrumentalities or any public authority being involved. Also, there was an alternate remedy available in the form of appeal to the National Company Law Appellate Tribunal.

The issue emanated out of an order passed by the NCLT on July 9, restraining the Managing Director fo the company from convening any meeting or carrying out financial transactions. The order was passed in a complaint filed by a few shareholders alleging oppression and mismanagement.

Challenging the order, the MD and the company filed a writ petition. A single bench, observing that filing appeal before the NCLAT was practically impossible in view of the pandemic situation, permitted the petitioners to carry out financial transactions necessary for the day-to-day functioning of the company. This permission was made subject to any future order which the NCLT or NCLAT may pass.

This relief granted by the single bench was assailed before the division bench.

The division bench found fault with the single bench granting relief to the petitioners in a writ petition which was not maintainable at the first place.

"...in the case on hand, when none of the parties, State or authority or instrumentality of the State, or any private body, discharging public functions, have been arrayed as respondents, when the writ petition has been filed under Article 226 of the Constitution of India, having regard to the roster followed in listing the cases, writ court ought to have directed the respondents/writ petitioners to make necessary amendments, to the provisions under which the writ petition ought to have been filed, or in the alternative, directed that the writ petition be placed before the concerned court, dealing with the challenges made to the orders passed by Courts, or Tribunals, as the case may be. Admittedly, the order impugned in the writ petition (Exhibit-P1) is not an administrative order, passed by the National Company Law Tribunal.

Writ court, without drawing a distinction between a writ petition filed under Articles 226 and 227 of the Constitutions of India, has erroneously proceeded to entertain the writ petition under Article 226 against an interim order passed by the NCLT, Kochi Bench, in I.A. No.83/2020 in C.P.No.114/KOB/2019 dated 9.7.2020", the DB observed.

"Writ petition filed under Article 226 of the Constitution of India, can be for the enforcement of fundamental rights or for any other purpose, as envisaged under Article 226 of the Constitution. There is no pleadings or materials to substantiate that the appellants are discharging public duties or public functions, and thus, amenable to writ jurisdiction under Article 226 of the Constitution of India", the division bench added. 

The writ-appellants were represented by Advocates Sukumar Ninan Oommen and Sherry Samuel Oommen.

Click here to download judgment

Read Judgment