TaxTMI 
TaxTMI 
2023 (10) TMI 1456
X X X X Extracts X X X X
X X X X Extracts X X X X
....an Kapoor and Deepak Khosla, Advs. ORDER 1 The order of this Court of 26 September 2023 sets out the background. Rather than replicate the background, we set it out below : "1 The National Company Law Tribunal "NCLT" dismissed the application filed by the first respondent for the grant of interim relief by an order dated 31 December 2019. The first respondent is in appeal before the National Company Law Appellate Tribunal "NCLT". Admittedly, no interim relief operated in favour of the first respondent during the pendency of the appeal. 2 The appeal has been heard and orders were reserved by the NCLAT on 21 September 2023. However, while reserving orders, the NCLAT has directed the parties "to maintain status quo as was available prior to EOGM dated 03.05.2019" till the judgement is delivered. No reasons have been indicated by the NCLAT even prima facie for issuing the interim order, particularly in the context of the fact that there was no interim relief operating since the dismissal of the application for interim relief on 31 December 2019. It is admitted that no relief was obtained by the first respondent in the proceedings before the Bombay High Court, as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed of the fact that the result of the Annual General Meeting has been declared." 6 The above directions of this Court were in two parts. The first part which applied to the Scrutiniser contained a specific direction to the effect that in compliance with the previous order, the Scrutiniser shall proceed to declare the result of the AGM which was held on 29 September 2023. The second part, which was a direction to the NCLAT, was specifically to the effect that the NCLAT shall proceed to declare its judgment in the pending appeal after it is duly apprised of the fact that the result of the AGM has been declared. 7 In the afternoon session on 13 October 2023, a grievance was made before this Court on behalf of the petitioners that though the NCLAT was apprised of the order of this Court with a request that the judgment should not be delivered until the report of the Scrutiniser is made available, the Bench of the NCLAT had proceeded to deliver the order. 8 Consequently, this Court took note of the submission and required the Chairperson of the NCLAT to duly verify the position and report back to the Court. Paragraphs 3 to 9 of the order are set out below : "3 Mr Neera....
X X X X Extracts X X X X
X X X X Extracts X X X X
....10.2023 which was received by me during lunch hours of 16.10.2023. In the response, the Member (Judicial) has stated "I may inform that on Friday in the Supplementary Cause List dated 13.10.2023 at 2 PM Company Appeal (AT) No 64/2020 (Deepak Chhabaria and Another) was listed under the caption "For Judgment" for its pronouncement. The said supplementary cause list was uploaded and published on one day earlier i.e. Thursday, 12.10.2023. My Lord is aware that normal procedure which is being followed in Bench of this Tribunal is that mentioning is entertained after the pronouncement of Judgment(s)/Order(s). I am not holding a constitutional post and as such I am required to follow the procedure. Accordingly as per procedure established here Judgment was pronounced on Friday i.e.13.10.2023." 8 The statement by Dr Alok Srivastava, Member (Technical) to the Chairperson is in the following terms: "On 13.10.2023, when the Presiding Judge and I entered the Court Room No II in the post-lunch session, it was jam-packed with lawyers and there was unusually high noise in the court room. A total 26 cases in the Supplementary Cause List and 18 cases in the Daily Cause Li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e following terms: "16.10.2023: In aforesaid appeal on 13.10.2023, Judgment was pronounced. In the evening, the Registry brought to the notice an e-mail dated 13.10.2023 issued at 05.35 PM addressed to Registrar NCLAT enclosing therewith an order dated 13.10.2023, passed by Hon'ble Supreme Court in Contempt Petition (C) No.1195/2023 in C.A. No.6108/2023. After the order was produced we perused the same and we noticed that Hon'ble Supreme Court in its order in paragraph 1 sub- paragraph 6 had directed that Judgment in pending appeal shall be delivered by the NCLAT after it is duly apprised of the fact that the result of Annual General Meeting has been declared. In view of the order of Hon'ble Supreme Court it is imperative for us to pass an order for Suspending the Judgment of this court dated 13.10.2023 till this appellate Tribunal is duly apprised of the fact that the result of the Annual General Meeting has been declared or subject to order/direction passed by the Hon'ble Supreme Court." 11 There are two affidavits before the Court at the present stage: (i) A "limited affidavit" which has been filed on behalf of the first respondent; and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CLAT shall proceed to declare its judgment in the pending appeal after it is duly apprised of the fact that the result of the AGM has been declared. The directions as dictated in open court by this Hon'ble Court in the First Order were communicated to Respondent No.1 through his Advocates at around 12.30 pm. Respondent No.1 immediately called the Company Secretary of FCL, to convey the directions to Respondent No.2." 16 The affidavit further states that on 13 October 2023, the report of the scrutinizer was prepared and was sought to be uploaded on the website of the Stock Exchanges in compliance of the order of this Court, but as the official servers of BSE Limited and National Stock Exchange of India Limited took time to respond, the report was uploaded at 2.41 pm and 2.44 pm respectively. The first respondent has disclosed what transpired before the NCLAT after the order of this Court dated 13 October in the following terms: "At around 02.15 pm, when the NCLAT Appeal was called out 'for judgment', the Ld. Senior Counsel representing me informed the Learned NCLAT about the First Order and the directions contained therein. It was also informed to NCLAT that petiti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t for judgment, the senior counsel representing him informed the Bench of the NCLAT of the order which was passed by this Court earlier and the directions which were contained therein. Neither the statement of the Member (Judicial) nor the statement of the Member (Technical) reveals this to the Chairperson of the NCLAT. In fact, the statement of the Member (Judicial) would seem to indicate that no mentioning is permitted at all before the declaration of judgment as a consequence of which the judgment was delivered without hearing any counsel on the order passed by this Court. Likewise, the statement of the Member (Technical) indicates that while some lawyers had attempted to intervene, the Presiding Officer had not permitted such an intervention and had proceeded to pass the judgment. The matter does not rest there. 20 On 16 October 2023, the Bench of the NCLAT passed an order recording that the Registry of the Tribunal had brought to its notice an email dated 13 October 2023 issued at 5.35 pm enclosing a copy of the order dated 13 October 2023 passed by this Court. The NCLAT has stated that after the order was produced, it had perused it and noticed that this Court had is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that it is common ground between the parties, who are seriously contesting a dispute before NCLAT, that the Bench was dully apprised of the order of this Court when it assembled at around 2.15 pm before the judgment was pronounced. Moreover, the passing of the further order on 16 October 2023 compounds the situation. If indeed the judgment had been declared after the NCLAT was duly apprised of the result of the AGM, there was no occasion for it to suspend the operation of its judgment. The Members forming part of the Bench have not purported to say so. 25 In this view of the matter, insofar as the lis is concerned, we are of the view that it is necessary for this Court to ensure that the dignity of the Court is maintained. A party cannot be allowed by recourse to devious means to obviate compliance with a solemn order passed by this Court. 26 We accordingly, in exercise of the jurisdiction under Article 142 of the Constitution, direct that the judgment of the NCLAT dated 13 October 2023 shall stand set aside without this Court expressing any opinion on the merits. We consequently direct that the appeal shall be heard afresh by a Bench presided over by the Chairpe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. Once the mentioning process was over, the Member (Judicial) asked him to pronounce the judgment which he thereafter proceeded to pronounce. It has been stated that none of the advocates from any of the parties made any effort to bring on record and place before the Bench on 13 October 2023 the actual order which was passed by this Court in the pre-lunch session and that it was much after the pronouncement of the judgment in the post-lunch session at around 6.27 p.m. that the NCLAT Registry received an email containing a copy of the order after the proceedings for the Tribunal had been concluded for the day. The Member (Technical) has referred to the CCTV footage of the proceedings of the NCLAT and to a pen drive which has been received. 13 The Member (Judicial), on the other hand, has filed an affidavit in which the following averments appear in Paragraph 10 : "10 ... The bench presided by the deponent and the Technical Member Shri Alok Shrivastava assembled a few minutes after 2 PM, at about 2.05 PM, on 13.10.2023, when some counsel tried to mention the matter. However, neither any order of this Hon'ble Court was filed with the Registry or Court Maste3r nor was any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Note: (1) Clock of CCTV is about 27 minutes ahead of the actual time. Times given below are actual times. (2) There were approximately 85-90 persons inside the Court Room-II at the beginning of post lunch session at 02:07 PM (actual time) on 13.10.2023. (3) Mr Ramji Srinivasan, Sr. Advocate entered the Court Room at 13:51 hrs and Mr. Krishnendu Dutta, Sr. Advocate entered at 13:53 hrs. (4) The proceedings in Court-II began at 14:06:50 hrs with the entry of bench members in the court room and concluded in the matter at 14:30 hrs. Mr Ramji Srinivasan May I mention, with your Lordships permission, before Your Lordship proceeds to pronounce the judgment My Lords in the Orbit matter, I must apprise your Lordships of a further development that has happened. My Lords the matter was heard by the Supreme Court My Lords in a contempt petition filed by the other side. Your Lordships recollect Your Lordships had reserved the order. Justice Rakesh Kumar Not clear Mr. Ramji Srinivasan My Lords I am bound by the order, the order of the Supreme Court My Lords. All that it says is this just so that Your Lordships My Lords. This has nothin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. Hon'ble Supreme Court has passed an order this morning, it is my duty to place it before you (he does not tender copy of the order) Justice Rakesh Kumar Whatever you want to bring on record, do so through affidavit. Court Master Calls out Item 1, For Judgment - Company Appeal (AT) No. 64 of 2020. Dr Alok Srivastava (pronounces the judgment in CA (AT) 64 of 2020) Senior Lawyers Mr So deeply obliged...." 17 The above transcript of the proceedings together with the video recording which has been produced before the Court leaves no manner of doubt that : 18 (i) The Bench of the NCLAT was duly apprised of the fact that an order had been passed by this Court in the morning session on 13 October 2023; (ii) The Scrutiniser had withheld the result of the AGM; and (iii) The purport of the order of this Court dated 13 October 2023 was that the NCLAT shall pronounce judgment in the pending appeal after the results of the AGM were declared. 18 The transcript indicates that both Mr Krishnendu Dutta (senior counsel) and Mr Ramji Srinivasan (senior counsel) appearing on behalf of the contesting parties had apprised the Bench of the NCLAT ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of action, if the Bench was of the view that the order should be produced in accordance with Rules, was to defer the pronouncement of the judgment so as to enable the parties to comply with the procedure. The order of this Court was uploaded at 1.55 PM on 13 October 2023. The gist of the order was intimated to the Court. It is evident from the CCTV footage that even copies of the order were with the respective counsel. Hence, it is only to be expected from a judicial body that the order should have been allowed to be tendered or, in the alternative, if the Bench felt that it should be produced in a proper format on affidavit, sufficient time ought to be given to do so. The transcript, however, reveals that Bench went on to deliver the judgment ignoring the substantive direction which had been issued by this Court earlier on 13 October 2023. 21 We have, therefore, no manner of doubt that the Bench of the NCLAT has acted in willful defiance of the order despite the fact that its attention was drawn to the order of this Court. 22 The Member (Technical) has tendered an unconditional apology stating that control over the procedure of the Court, particularly on matters which are me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n email was addressed by the Scrutiniser to the Company Secretary of Finolex Cables Limited seeking a legal opinion about the manner in which the votes which were cast at the AGM would have to be treated. By then, voting had concluded on 28 September 2023. The Scrutiniser states that a legal opinion was obtained by the company on the basis of which he took steps to withhold the result of the AGM. 26 The beneficiary of this action was Mr Deepak Kishan Chhabria, who was then acting as Chairman-cum-Managing Director. Mr Deepak Kishan Chhabria has been represented by Mr Shyam Divan and Mr Maninder Singh, senior counsel. The Scrutiniser, Mr VM Birajdar has been represented in these proceedings by Mr Darius Khambata, senior counsel. We have no manner of doubt that the Scrutiniser has acted in concert with Deepak Kishan Chhabria to delay the declaration of the result of the AGM, effectively in breach of the directions that were issued by this Court on 26 September 2023. 27 We are of the view that such action by commercial interests must be dealt with firmly so as to serve a clear reminder that the process of this Court cannot be allowed to be misused for partisan purposes in commerc....