2025 (12) TMI 1621 - AT - Companies Law

Alleged lawyer misconduct over appeal filed on oral instructions; misconduct claim rejected, counsel may pursue criminal complaint

The dominant issue was whether counsel committed professional misconduct warranting directions to transfer 18% interest and impose litigation costs. The ... Professional misconduct - Direction to transfer interest at the rate of 18% to the Applicant, and to pass an order imposing costs of the litigation - non-rectification of defects u/r Rule 26(3) & (4) of the NCLAT Rules, 2016 - HELD THAT:- The records do not reveal any professional misconduct on the part of Mr. Sankar Varadharajan, who acted on the oral instructions of Mr. Fahad Khan, or on the part of Mr. Fahad Khan himself, who filed the instant Company Appeal on the instructions of the Appellant. Rather, the allegations made by the Appellant call for consideration of criminal proceedings against him for malicious prosecution of the counsels whose services he had availed, but against whom he has now raised false allegations. This conduct tarnishes the image of the legal profession and cannot be permitted. While rejecting the allegation and affirming the order of dismissal of the Appeal dated 25.02.2025, it is left open for the Counsel against whom the Appellant has raised frivolous allegations, to register a criminal prosecution against the present Appellant by registering an FIR against him for his ill intention to maliciously prosecute the professionals, who are acting under bonafide instructions and faith bestowed on behalf of the Appellant himself. Petition closed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the Appellant's allegation that he never instructed or engaged the advocates shown on record to file and present the Appeal was substantiated on the materials before the Court. (ii) Whether any professional misconduct was made out against the advocates involved in e-filing/presenting the Appeal, warranting adverse action by the Court. (iii) Whether the dismissal of the Appeal under Rule 26(3) & (4) for non-rectification of defects warranted interference, and what consequential directions were appropriate in light of the Appellant's conduct. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Truthfulness of the Appellant's denial of instructions/engagement to file the Appeal Legal framework: The Court applied Rule 26(3) & (4) of the NCLAT Rules, 2016 insofar as it governed consequences of non-removal of defects and dismissal. The Court also assessed the evidentiary value of affidavits, signatures on pleadings, and the vakalatnama placed on record. Interpretation and reasoning: The Court found that the Appeal papers, including the memorandum and affidavits, bore the Appellant's signatures, which he did not deny. A vakalatnama signed by the advocates whose names appeared in the appeal record was filed and accepted without objection at the filing stage. After dismissal, the Appellant asserted he had not engaged counsel and had not filed the appeal; the Court ordered an enquiry. The enquiry showed the e-filing/presentation was done by an advocate who stated on affidavit that he acted only on oral instructions of the counsel on record. The counsel on record, upon notice, filed an affidavit stating the Appellant had approached him for advice regarding the impugned order, shared details of the filing, and that his name appeared because the Appellant engaged him; the Appellant's rebuttal affidavit was found vague and did not specifically deny having instructed the counsel. The Court held that such vagueness could not rebut the contemporaneous record showing engagement and filing. Conclusions: The Court rejected the Appellant's allegation that he never instructed or engaged the counsel shown on record to file the Appeal, holding the allegation to be unsubstantiated and inconsistent with the record and the Appellant's own undisputed signatures. Issue (ii): Whether professional misconduct was established against the advocates involved in filing/presenting the Appeal Legal framework: The Court evaluated the allegations as a factual determination based on the record and affidavits, and considered whether the facts disclosed any 'professional misconduct' attributable to the advocates. Interpretation and reasoning: The Court found that the advocate who presented the Appeal acted as a facilitator on instructions of the counsel on record and had no independent authority beyond those instructions. The counsel on record explained the background of engagement and asserted he had not drafted/handled the pleadings but that the Appellant had engaged multiple advocates and shared filing details with him. The Court emphasized the danger of permitting litigants to engage counsel, allow proceedings to continue, and then disclaim instructions after adverse outcomes, thereby compelling counsel to defend themselves despite due engagement. The Court also noted the Appellant made no contemporaneous complaint to the Bar Council during the relevant period and considered his allegations to lack credibility. Conclusions: The Court concluded that the record did not disclose any professional misconduct by the advocates involved. Instead, the Appellant's allegations were treated as frivolous and false on the materials before the Court. Issue (iii): Whether interference with the dismissal under Rule 26(3) & (4) was warranted and what consequential orders should follow Legal framework: Rule 26(3) & (4) of the NCLAT Rules, 2016 was applied to uphold dismissal for failure to rectify defects within prescribed time, including failure to submit hard copy and cure registry objections. Interpretation and reasoning: The Court recorded that defects were raised at scrutiny, were not cured within time, and the Appeal was listed and dismissed under Rule 26(3) & (4). In addressing the Appellant's post-dismissal attempt to attribute filing to fraud and disclaim counsel instructions, the Court held the allegation was rejected and could not be used to unsettle the dismissal. The Court further held that the Appellant's conduct in making false allegations against advocates tarnished the image of the legal profession and could justify criminal action for maliciously prosecuting professionals who acted under bona fide instructions. Conclusions: The Court affirmed the order dismissing the Appeal and closed the matter. It granted liberty to the advocates against whom frivolous allegations were made to initiate criminal proceedings, including by lodging an FIR, against the Appellant for malicious prosecution/false implication, leaving such action open to them.