[Article 227] Will fail in our duty if we don't examine perverse orders of tribunals, courts: Delhi High Court

The Delhi High Court recently remarked that it would fail in its duty if it does not interfere with ‘perverse’ and ‘unsustainable’ orders of tribunals and courts functioning under its superintendence (Rajesh Jhunjhunwala and Ors v The Jammu and Kashmir Bank Limited and Ors).

. The remarks came from a Bench of Justices Vipin Sanghi and Jasmeet Singh as it set aside an order of the Debt Recovery Tribunal (DRT) which put the liability of paying the loan taken from bank by a private company on three people who had left its board and even sold all the shares they owned in 1995.

“This Court exercises the power of superintendence over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction under Article 227 of the Constitution of India. When an order of this kind, as passed by the DRT-I in the present cases is placed before us, and brought to our notice, in our view, we would be failing in our duty if we do not examine and deal with the same, particularly when it appears to us that the said order is completely perverse and unsustainable, and its continuation on the file seriously infringes the valuable rights of the petitioner,” the judges wrote in their order.

The court was hearing the petitions filed by three people, Rajesh Jhunjhunwala, Navin Jhunjhunwala and Sajjan Kumar Jhunjhunwala, who approached the Court arguing that tribunal had passed an order against them even though they had no relation with the company, did not stand guarantee for the loan or execute any documents.

. As the counsel appearing for the respondent bank informed the court that it is not in a position to claim any legal basis for fastening the responsibility for siphoning of funds on the three petitioners, the Court said it is shocked to read the final order of the tribunal with respect to the three petitioners.

“The same demonstrates complete lack of knowledge and understanding on the part of the Presiding Officer with regard to the concepts of limited liability of shareholders and Directors of a corporate entity, as codified in the Companies Act, 2013. Merely, because the three petitioners may have been promoter members of the aforesaid company i.e. REI Agro Limited, would not, in any event, make them liable in respect of loans advanced to the said company decades later, by when they had ceased to be not only directors, but even simple shareholders of the said company,” the Court said.

The Bench added that the order suffered from complete non-application of mind, lack of understanding and appreciation of the facts of the law there it should be quashed.

The Court, however, made it clear that its order is regarding the three petitioners who approached the High Court and does not relate to other defendants in the application before the tribunal.

. This is the second strong rebuke of the lower courts by the High Court where it was forced to use its powers under Article 227 of the Constitution to set aside their orders.

The High Court had earlier called an order perverse, unreasonable and passed by overlooking the relevant facts. The stern remarks were made by Justice Asha Menon against an order of trial court which had evicted a woman from her matrimonial home during the peak of second wave of COVID-19.

.Article 227 powers can be exercised to interfere with perverse, unreasonable orders of trial court: Delhi High Court. [Read Order]

[Article 227] Will fail in our duty if we don't examine perverse orders of tribunals, courts: Delhi High Court

Prashant Jha

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