2021 (10) TMI 646 - HC - Companies Law

High Court emphasizes fair hearing, remands case to Tribunal for rehearing, stresses natural justice principles.

Major General Sudhir Chintamani Milkanth Jatar and Ors. and Chandrashekhar Ashok Nagarkar Versus Union of India & Ors.

The High Court remanded the case back to the National Company Law Tribunal due to the lack of a fair hearing for the Petitioners, emphasizing the ... Maintainability of petition - availability of alternative remedy of appeal - Principles of natural justice - due service of notice to all Respondents present in India and overseas - HELD THAT:- It may not be necessary to delve into detail the submissions made by learned Counsel for the rival parties. Suffice it to say that while learned Counsel for the Petitioners submitted that the impugned order was passed without providing due opportunity of hearing to the Petitioners and thus violative of the principles of natural justice, learned Addl. Solicitor General of India pointed out that Petitioners have got efficacious alternative remedy by way of appeal and therefore Petitioners should be relegated to the appellate forum. Union of India had made all possible efforts to serve copies of the Petitions to the Respondents either by email or by delivering physical copies or by post. Tribunal recorded that some of the Respondents had received copies and some had not received entire paper book. Therefore they had stated that they were not in a position to defend the matter in any manner. Though on this count adjournment was not sought for, the same was denied - there is no finding recorded by the Tribunal as to which of the Respondents were served and as to which of the Respondents did not receive entire paperbook. It is fundamental to the judicial system which we follow that before adverse order is passed against a party it is required to be duly served and a reasonable opportunity of hearing should be granted to it. Failure to do so will strike at the very root of the justice delivery system - the Tribunal is directed to hear the Petitioners afresh and thereafter pass appropriate order(s) in accordance with law - petition disposed off. Issues:Challenge to the order passed by the National Company Law Tribunal on 31/08/2021 under sections 241 and 242 of the Companies Act, 2013.Analysis:1. Petitioners' Challenge to Tribunal's Order:The Writ Petitions challenged the order dated 31/08/2021 passed by the National Company Law Tribunal. The Petitioners contended that the order was issued without providing them with a fair opportunity to be heard, thus violating the principles of natural justice. They argued that the Tribunal's order was interim in nature and should be reconsidered based on a fair hearing.2. Reliefs Sought by Union of India:The Union of India filed petitions before the Tribunal seeking various reliefs, including serving the Respondents through different means, disclosure of assets, freezing of securities and bank accounts, and attachment of properties. The Tribunal, in its order, directed the Respondents to disclose their assets and froze securities and bank accounts. The Tribunal's order also included additional directions and observations.3. Judicial Function of the Tribunal:The High Court emphasized the importance of fair proceedings and adherence to the principles of natural justice by the adjudicating authority, which in this case was the Tribunal. The Court highlighted that notice and hearing are essential components of a fair judicial process. It referenced Section 424 of the Companies Act, 2013, which mandates adherence to the principles of natural justice.4. Remand and Fair Hearing:Considering the lack of a fair hearing for the Petitioners, the High Court concluded that the case warranted a remand. It underscored that passing an adverse order without providing a fair opportunity of hearing would undermine the justice delivery system. The Court directed the Tribunal to rehear the Petitioners and make a fresh decision within four weeks, emphasizing the importance of a fair hearing.5. Disposal of Writ Petitions:The High Court disposed of both Writ Petitions, refraining from expressing any opinion on the merits of the case. It clarified that the Petitioners deserved a fair hearing, and relegating them to the appellate forum would not be just. The Court directed the Tribunal to reconsider the matter and make appropriate decisions after affording the Petitioners a fair opportunity to present their case.In conclusion, the High Court's judgment focused on upholding the principles of natural justice, ensuring a fair hearing for the Petitioners, and directing the Tribunal to reconsider the matter in light of these principles.