2021 (11) TMI 800 - HC - Companies Law

Dismissal of Writ Petition Challenging NCLAT Member Appointment

The court dismissed the writ petition challenging the appointment of Respondent No.2 as Technical Member of NCLAT. The appointment was found to be valid ... Seeking issuance of a writ of quo warranto directing Respondent No.2 to set out the Authority under which the said Respondent is holding office as Technical Member of National Company Law Appellate Tribunal - HELD THAT:- It is a settled law that in matters of appointments, it is the Selection Committee, which is the expert body to decide the merits and demerits of a candidate and it is not in the domain or jurisdiction of the Courts in a judicial review to substitute the wisdom, expertise and decision of the Selection Committees. There is no allegation of bias or malafides against the Selection Committee. It is a settled law that it is the domain of the Selection Committees to make selections and the Courts, while sitting in a judicial review, cannot substitute the decision of the Selection Committees, which are expert bodies unless there are allegations of bias or malafides or there is a challenge to the composition of the Committee, which is admittedly not the case here. Petitioner has itself averred in the writ petition that Respondent No.2 has been serving as a Judicial Member of the District and State Consumer Forums and has been a Judicial Member of the NCRDC since 2015 - It needs no emphasis that the recommendations of the Search-cum-Selection Committee were duly approved by none other than the Appointments Committee of Cabinet and needless to state, there are no allegations of bias or malafides against any Member of the ACC. In our view, therefore, no grounds have been made out by the Petitioner to interfere in the selection and appointment of Respondent No.2. The order passed by Regional Director (Southern Region), Ministry of Corporate Affairs, on 17.08.2018 clearly reveals that the license of the Petitioner Company as a Section 8 Company has been cancelled and the Petitioner is legally debarred from using the name ‘India Awake for Transparency’, by which name the present petition has been filed - the Petitioner not only lacks the locus to file the present petition, but has also deliberately concealed and suppressed the aforementioned crucial facts, which have been brought to our knowledge by Respondent No.1 and the intervener. This writ petition along with all the pending applications is accordingly dismissed, with costs of ₹ 25,000/- to be deposited by the Petitioner with the Delhi State Legal Services Authority within four weeks from today. Issues Involved:1. Validity of the appointment of Respondent No.2 as Technical Member of NCLAT.2. Compliance with the amended Section 411(3) of the Companies Act, 2013.3. Petitioner's locus standi and credibility.Issue-wise Detailed Analysis:1. Validity of the appointment of Respondent No.2 as Technical Member of NCLAT:The petitioner sought a writ of quo warranto questioning the authority under which Respondent No.2 held the office as Technical Member of NCLAT. The petition argued that the appointment was ultra vires the amended Section 411(3) of the Companies Act, 2013, and not in accordance with the Supreme Court's judgment in Madras Bar Association vs. Union of India (2015) 8 SCC 583. The petitioner contended that Respondent No.2 did not meet the eligibility criteria post the amendment effective from 09.02.2018.2. Compliance with the amended Section 411(3) of the Companies Act, 2013:The petitioner argued that the eligibility criteria for the appointment of Technical Members were not in consonance with the amended Section 411(3), which excluded experience 'in law'. The learned Additional Solicitor General, representing the respondents, countered that the appointment was in line with the law and the Supreme Court's directives. The process included a Search-cum-Selection Committee chaired by the Chief Justice of India, and the Appointments Committee of the Cabinet (ACC) approved the appointments. It was emphasized that Respondent No.2 had the requisite experience and qualifications, having served as a Judicial Member in various forums since 2015.3. Petitioner's locus standi and credibility:The respondents questioned the petitioner's locus standi, highlighting that the petitioner's status as a company was 'inactive' and its license under Section 8 of the Act had been cancelled. The petitioner was legally debarred from using its name, 'India Awake for Transparency', and was involved in investigations by the Serious Fraud Investigation Office (SFIO). The court found merit in these contentions, noting that the petitioner had concealed crucial facts and lacked the standing to file the petition.Judgment:The court dismissed the writ petition and all pending applications, stating that the petitioner failed to establish a case against the appointment of Respondent No.2. It was held that the selection and appointment process was conducted in accordance with the law, and there were no allegations of bias or malafides against the Selection Committee or the ACC. The court also imposed costs of Rs. 25,000 on the petitioner for suppression of facts and lack of locus standi, to be deposited with the Delhi State Legal Services Authority.Conclusion:The judgment upheld the validity of Respondent No.2's appointment as Technical Member of NCLAT, confirmed compliance with the amended Section 411(3) of the Companies Act, 2013, and dismissed the petition due to the petitioner's lack of credibility and locus standi.