2021 (3) TMI 139 - SCH - Insolvency and Bankruptcy

NCLAT sets aside NCLT order in oppression case, remands for fresh consideration

The National Company Law Appellate Tribunal (NCLAT) set aside the ex-parte order issued by the National Company Law Tribunal (NCLT) in a petition alleging ... Oppression and mismanagement - Ex-parte order passed - Instead of moving the NCLT for vacating the ad-interim order, the respondents moved the National Company Law Appellate Tribunal in appeal - violation of principles of natural justice - HELD THAT:- The NCLAT has remanded the proceedings back to the NCLT for fresh consideration on merits. The grievance of the appellants is that this would preclude them from applying for the grant of ad-interim relief during the pendency of the proceedings before the NCLT and the final hearing of the petition may take several years. The appellants should, in our view, be granted liberty to apply afresh before the NCLT for interim relief on the basis of the same application on which the NCLT passed its order. In order to enable the respondents to have an opportunity to controvert the application for interim relief, we direct that they may file their reply, if any, within a period of two weeks from today. The NCLT shall reconsider the application for interim relief in terms of the above directions after hearing the parties. The order of the NCLAT shall accordingly stand set aside and be substituted by the directions which have been issued - Appeal disposed off. Issues:Petition under sections 241 and 242 of the Companies' Act 2013 - oppression and mismanagement complaint, validity of ex-parte order by NCLT, NCLAT's order setting aside NCLT order on natural justice grounds, remand to NCLT for de novo consideration, grant of interim relief, liberty to apply afresh before NCLT, timelines for NCLT to decide on interim relief.Analysis:1. The appellants filed a petition under sections 241 and 242 of the Companies' Act 2013, alleging oppression and mismanagement. An ex-parte order was issued by the National Company Law Tribunal (NCLT) on 5 October 2020. The respondents chose to appeal to the National Company Law Appellate Tribunal (NCLAT) instead of seeking to vacate the ex-parte order from NCLT. The NCLAT set aside the NCLT order on grounds of natural justice violation and remanded the matter back to NCLT for de novo consideration after providing an opportunity to be heard to all parties involved.2. During the hearing, the counsels for both the appellants and respondents presented their arguments. The court noted that the respondents should have applied to NCLT for vacating or modifying the ex-parte order instead of directly approaching NCLAT. The essence of an ex-parte order is to address urgent situations where irretrievable harm may occur without a protective order. The NCLAT's decision to set aside the NCLT order solely on the grounds of lack of opportunity for the respondent to be heard was deemed incorrect and novel in civil jurisprudence.3. The NCLAT's decision to remand the proceedings to NCLT for fresh consideration raised concerns for the appellants regarding the delay in seeking interim relief. To address this, the court granted the appellants the liberty to apply afresh before NCLT for interim relief based on the original application. The respondents were directed to file their reply within two weeks to enable a fair hearing. The NCLT was instructed to decide on the application for interim relief within four weeks from the date of the court's order.4. The Civil Appeal was disposed of, and any pending applications were also resolved as per the court's directions. The judgment clarified that no opinion was expressed on the merits of the case, leaving the issues to be addressed before the NCLT during the fresh consideration of the matter.This detailed analysis of the Supreme Court judgment provides a comprehensive overview of the legal issues, arguments presented, and the court's directives in resolving the case involving oppression and mismanagement complaints under the Companies' Act 2013.