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of <h1>NCLT contempt proceedings under Section 425 upheld as petitioners fail to prove jurisdictional violations or procedural irregularities</h1> <h3>Mcdonald’s India Private Limited & Anr. And Aysel Melbye And Anr. Versus Union Of India And Ors</h3> Mcdonald’s India Private Limited & Anr. And Aysel Melbye And Anr. Versus Union Of India And Ors - 2018:DHC:213 Issues Involved:1. Legality of NCLT's orders dated 05.09.2017 and 26.09.2017 on contempt application no.300 (PB)/2017.2. Whether NCLT acted in breach of principles of natural justice.3. Maintainability of writ petitions against NCLT's orders.4. Whether NCLT's proceedings were arbitrary or biased.5. Appropriateness of NCLT's actions in the context of pending appeals before NCLAT.Issue-wise Detailed Analysis:1. Legality of NCLT's Orders:The petitioners challenged the orders of NCLT dated 05.09.2017 and 26.09.2017, arguing that the action to initiate contempt proceedings was uncalled for, illegal, and arbitrary. They contended that the orders were in gross breach of the principles of natural justice. The court noted that the NCLT was still at the stage of threshold scrutiny and had not yet taken formal cognizance of contempt. The proceedings were in the nature of a preliminary inquiry, and the NCLT was gathering facts before deciding whether a prima facie case of contempt was made out.2. Breach of Principles of Natural Justice:The petitioners argued that NCLT did not issue formal notices through its Registry and acted on the affidavit of service of notices submitted by the counsel for the applicants. The court found that the procedure followed by NCLT was in accordance with the National Company Law Tribunal Rules, 2016, which allow service through counsel. The court emphasized that the stage for formal charge or notice of accusations had not yet arrived, and the NCLT was following a fair process by seeking replies from the parties.3. Maintainability of Writ Petitions:The respondents contended that the writ petitions were not maintainable and that the appropriate remedy was to approach the appellate court. However, the court held that judicial review was available and could not be denied, particularly as the impugned orders were at the threshold stage and did not constitute punishment for contempt. The court referred to established precedents affirming the maintainability of writ petitions in such circumstances.4. Arbitrariness or Bias in NCLT's Proceedings:The petitioners alleged bias and undue haste by NCLT in taking cognizance of the contempt application. The court rejected these allegations, noting that NCLT had acted neutrally by treating the application as one filed in the wake of its order dated 13.07.2017 and was yet to decide on the merits of the allegations. The court found no basis for the claim of arbitrariness or bias.5. NCLT's Actions Amidst Pending Appeals:The petitioners argued that NCLT should have awaited the decision of NCLAT on the pending appeals before proceeding with the contempt application. The court disagreed, stating that there was no stay from NCLAT, and NCLT was within its rights to scrutinize the alleged acts of contempt as long as its order dated 13.07.2017 was operative. The court found no inherent contradiction in NCLT's approach, as the contempt proceedings were distinct from the relief sought in the company application under Section 242 of the Companies Act, 2013.In conclusion, the court dismissed the writ petitions, finding that the grievances raised were based on unfounded apprehensions and did not warrant intervention. The interim orders were vacated, and pending applications were disposed of as infructuous.
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