TaxTMI 
TaxTMI 
2021 (10) TMI 996
X X X X Extracts X X X X
X X X X Extracts X X X X
.... said Bench on 31.08.2021 against the petitioner and other persons. 2. The brief facts leading to the filing of the present petition are that the respondent no.3 company, of which the petitioner is an erstwhile independent Non-Executive Director till 18.05.2018, is a part of a group of companies associated with the flagship company i.e. Videocon Industries Ltd. and was admitted under the IBC Framework and thereafter, made subject to the corporate insolvency resolution process (CIRP) before the NCLT, Mumbai Bench on 31.08.2018. The respondent no.3 company is, therefore, being represented in the present petition by the Resolution Professional ("RP") appointed by the NCLT, Mumbai Bench. 3. As 12 other companies of Videocon Industries Ltd. group were also undergoing CIRP, the NLCT, Mumbai vide its order dated 08.08.2019, consolidated the insolvency process of all the Videocon group companies, including the respondent no.3. On 08.06.2021, the resolution plan filed by Twin Star Technologies Ltd. for the consolidated CIRP of all the Videocon Group companies was approved by the NCLT, Mumbai Bench. Upon the said order being assailed by way of Company Appeal Nos. (AT) (Insolvency) 503 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of freezing and restrain on alienation of such assets; V. That the Indian Banks Association (IBA) is directed facilitate disclosure of the details of the bank accounts, lockers owned by the Respondents (except companies) and such bank accounts and lockers also be frozen with immediate effect; VI. That the Petitioner is permitted to write to the State Government(s) and the Union Territories to identify and disclose all details of immovable properties owned/held by the Respondents (except companies); VII. That all movable and immovable properties of Respondents (except companies) including bank accounts, lockers, demat accounts including jointly held properties be attached during the pendency of the company petition" (emphasis supplied) 6. Being aggrieved with this order passed by the NCLT, Mumbai whereby inter alia all his assets have been attached, the petitioner has approached this Court seeking quashing of order dated 08.07.2021 and letter dated 16.07.2021 issued by respondent no.1, and has also prayed that the proceedings initiated before the NCLT, Mumbai Bench, including order dated 31.08.2021, be declared as non-est. 7. The first and fore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to be maintainable, could this Court examine the merits of the impugned order and letter. Accordingly, this decision is confined only to the aspect of maintainability of the writ petition. 10. Mr. Nigam, learned senior counsel for the petitioner, in support of his plea that the proceedings initiated before the NCLT, Mumbai under Sections 241 and 242 of the Act are a nullity, states that from a plain reading of the proviso to Section 241(2), which came into effect from 15.08.2019, it is clear that the same is in the nature of an "ouster clause" as it categorically provides that only the Principal Bench of the NCLT at New Delhi would have the exclusive jurisdiction to entertain all petitions filed by the Central Government under Sections 241-242 of the Act. He submits that though prior to the amendment, Section 241(2) provided the Central Government with the right to file an application for oppression and mismanagement with the concerned NCLT if it was of the opinion that the affairs of the company have been conducted in a manner prejudicial to public interest; however, by way of a proviso added to Section 241(2), the Principal Bench of the NCLT has been vested with exclusive ju....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this Court. His plea, thus, being that when the present case was a clear case of absence of jurisdiction with the NCLT and not a case of mere error in exercise of jurisdiction, the writ petition would be maintainable and ought to be entertained by this Court. By placing reliance on the observations of the Apex Court in Paras 15-18 of Embassy Property (supra), he submits that the present case squarely falls within the well-recognised exception to the self-imposed restraint of the High Courts to entertain a writ petition once a statutory alternative remedy of appeal is available as there was lack of jurisdiction on the part of the NCLT, Mumbai Bench in entertaining the petition. The exercise of jurisdiction where none existed would certainly be amenable to the extraordinary jurisdiction of this Court under Article 226 of the Constitution and therefore, despite the availability of an appellate remedy, the impugned order and letter issued by the respondent no.1 at Delhi, from which proceedings before the NCLT, Mumbai Bench have emanated, are liable to be set aside by this Court. 14. In support of his plea that this Court, despite the existence of the statutory alternate remedy, oug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s under: "7. Since the functioning of NSEL remains suspended since the past over six years, there is no reason for the Central Government to have formed an opinion that its affairs are being conducted in a manner prejudicial to public interest. 10. Since the affairs of operation of NSEL have been suspended for almost over six years, prima facie, it would be difficult to accept that a petition under Section 241 (2) of the Companies Act, 2013 would be maintainable." 18. Mr. Nigam thus contends that not only do the impugned order and letter suffer from non-application of mind, but the same have been passed by also ignoring the relevant material - including the audit report prepared by N.V. Dand & Associates, Chartered Accountants, appointed by the RP, which did not point out any irregularities in the transaction audit conducted during the CIRP of the respondent no.3 and group companies, namely "avoidance transactions" as claimed by the respondent no.1, while issuing the impugned order and letter. 19. He further submits that in any event, once the RP, who is sufficiently empowered under the mandate of the IBC to take sufficient steps against such "avoidance tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....herefore, the filing of the petition before the Mumbai Bench instead of the Principal Bench can, at best, be said to be a wrongful exercise of available jurisdiction and not of any inherent lack of jurisdiction. Thus, neither the order passed by the Mumbai Bench of the NCLT is a nullity, nor the impugned letter issued by the respondent no.1 seeking initiation of proceedings before the NCLT, Mumbai Bench is non-est. 22. Without prejudice to his submissions that the order passed by the NCLT cannot be said to be without jurisdiction, the learned ASG contends that even otherwise, once specialized bodies like the NCLT and NCLAT have been created to adjudicate upon the disputes arising under the Companies Act, this Court ought not to exercise its discretion and instead, the petitioner ought to avail of the readily available alternative statutory remedy provided for in the Companies Act, which is a complete Act in itself and does not envisage any room for challenging the orders of the NCLT, other than in a manner prescribed by the Act itself. He contends that once an efficacious alternative remedy is available and a statutory forum has been created for the redressal of the grievances s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een made out by the petitioner warranting exercise of its extraordinary jurisdiction instead of being relegated to avail the alternative statutory remedy available under the Companies Act. 27. At this stage, the learned ASG, without prejudice to his submissions that the writ petition is not maintainable, submits on instructions that if the petitioner moves an application seeking withdrawal of amounts from his accounts to meet his immediate needs, the respondent will consider the same favourably and permit the petitioner to withdraw the requisite amounts. 28. Having considered the submissions of the parties, I may at the outset note that they are ad idem that the existence of an alternative statutory remedy would not be an absolute bar for an aggrieved party to invoke writ jurisdiction of the High Court under Articles 226 & 227 of the Constitution of India. The petitioner has vehemently urged that in a case like this, where his plea is that the order passed by the Tribunal is wholly without jurisdiction and therefore a nullity, the Court ought not to relegate him to the alternative statutory remedy under the Companies Act. The respondent, on the other hand, has firstly urged t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....] that the real question was not whether an authority made a wrong decision but whether they enquired into and decided a matter which they had no right to consider. (emphasis supplied) 16. x x x 17. But Racal, In re [Racal Communications Ltd., In re, 1981 AC 374 : (1980) 3 WLR 181 (HL)] made a distinction between courts of law on the one hand and administrative tribunal/administrative authority on the other and held that insofar as (inferior) courts of law are concerned, the subtle distinction between errors of law that went to jurisdiction and errors of law that did not, would still survive, if the decisions of such courts are declared by the statute to be final and conclusive. Thus one distinction was gone with Anisminic [Anisminic Ltd. v. Foreign Compensation Commission, (1969) 2 AC 147 : (1969) 2 WLR 163 (HL)] , but another was born with Racal, In re [Racal Communications Ltd., In re, 1981 AC 374 : (1980) 3 WLR 181 (HL)]. This could be seen from the after-effects of Anisminic [Anisminic Ltd. v. Foreign Compensation Commission, (1969) 2 AC 147 : (1969) 2 WLR 163 (HL)] . [Anisminic, (1969) 2 AC 147 : (1969) 2 WLR 163 (HL) had its own quota of problems. Prof. Wad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jee, (1969) 3 SCR 92 : AIR 1969 SC 823] , AIR p. 828, para 15) "15. ... before a court can be held to have jurisdiction to decide a particular matter it must not only have jurisdiction to try the suit brought, but must also have the authority to pass the orders sought for". (emphasis supplied) This Court also pointed out that it is not sufficient that it has some jurisdiction in relation to the subject-matter of the suit, but its jurisdiction must include (1) the power to hear and decide the questions at issue, and (2) the power to grant the relief asked for. This decision in Official Trustee [Official Trustee v. Sachindra Nath Chatterjee, (1969) 3 SCR 92 : AIR 1969 SC 823] was followed in a recent decision in Iffco Ltd. v. Bhadra Products [Iffco Ltd. v. Bhadra Products, (2018) 2 SCC 534 : (2018) 2 SCC (Civ) 208], quite independent of Anisminic [Anisminic Ltd. v. Foreign Compensation Commission, (1969) 2 AC 147 : (1969) 2 WLR 163 (HL)] and its followers." (emphasis supplied) 31. Reference may also be made to a decision dated 29.01.2021 in Kolkata Municipal Corporation (supra), wherein the High Court of Calcutta observed as under: "38....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ized Tribunals created by the statute for dealing with issues arising under the Companies Act. The petitioner's primary plea before this Court is that in view of the proviso to Section 241(2) of the Companies Act, the NCLT, Mumbai did not have the jurisdiction to entertain the petition and therefore, the proceedings before it and all orders passed by the said Bench are a nullity. The respondents have vehemently denied this position and have contended that only the Mumbai Bench had the necessary jurisdiction. The conflicting stands taken by the parties will depend only on the interpretation of the proviso to Section 241(2) and thus, it is evident that the petitioner is ultimately seeking to urge that a provision of the Companies Act is required to be read in a particular manner. This aspect, in my view, can be and ought to be considered by the forums of NCLT/ NCLAT created under the Companies Act for dealing with issues arising under the said Act. Even otherwise, the petitioner has given absolutely no justification as to why he cannot approach these specialized forums created for dealing with the issues arising under the Companies Act. In this regard, reference may also be to the de....