Writ petition dismissed for pending NCLT proceedings & re-litigation principle

The Court found the writ petition not maintainable due to pending proceedings before the NCLT on the same issues and the principle against re-litigation. The petition was rejected at the stage of SR, with no costs awarded.

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Issues Involved:
1. Maintainability of the Writ Petition under Article 226 of the Constitution of India.
2. Allegations of fraud and illegal transfer of shares.
3. Re-agitation of the same issue before different forums.
4. Jurisdiction of NCLT to adjudicate on the matter.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition under Article 226 of the Constitution of India:
The petitioner sought a Writ of Mandamus to direct the Registrar of Companies and other respondents to permit the induction of four more directors in the Board of Directors of the 2nd respondent company. The Registry questioned the maintainability of the Writ Petition under Article 226 of the Constitution, given the availability of a remedy before the National Company Law Tribunal (NCLT). The petitioner’s counsel cited a Supreme Court judgment (Civil Appeal No. 9170 of 2019) to argue the maintainability. However, the Court found the facts of the cited case distinguishable, noting that the Supreme Court had addressed whether High Courts should interfere with NCLT orders under Article 226/227, especially when statutory remedies are available.

2. Allegations of Fraud and Illegal Transfer of Shares:
The petitioner alleged that respondents 3 to 6 usurped the controlling interest of the 2nd respondent by transferring 4.5% of shares to the 3rd respondent without adhering to the agreement conditions. The petitioner claimed the transfer was illegal and undermined their interests. However, the Court noted that allegations of fraud could be addressed by the NCLT, as established by the Supreme Court, which held that NCLT and NCLAT have jurisdiction to inquire into questions of fraud.

3. Re-agitation of the Same Issue Before Different Forums:
The Court observed that the petitioner had already filed Company Petition No. 20 of 2018 before the NCLT, Chennai, seeking similar reliefs. The reliefs sought in the writ petition were practically identical to those in the pending NCLT petition, indicating re-agitation of the same issue. The Court cited the Supreme Court’s stance against re-litigation, emphasizing that it constitutes an abuse of the process of the court and is contrary to justice and public policy.

4. Jurisdiction of NCLT to Adjudicate on the Matter:
The Court referenced the Supreme Court’s decision in the Embassy Property Developments case, which clarified that NCLT did not have jurisdiction to entertain applications against government actions related to statutory or quasi-judicial decisions. However, the NCLT could inquire into fraud allegations. In the present case, the petitioner’s grievances, including the alleged fraud, were already under consideration by the NCLT. The Court held that the writ jurisdiction could not be exercised to grant relief when the matter was pending before the NCLT.

Conclusion:
The Court concluded that the writ petition was not maintainable, given the pending proceedings before the NCLT on the same issues and the principle against re-litigation. Consequently, the writ petition was rejected at the stage of SR, with no costs awarded.

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