Gujarat High Court
Gujarat High Court
Litigation News

Gujarat HC directs NCLT Ahmedabad to frame SOP for virtual hearings [Read Order]

The appellant argued that virtual proceedings at NCLT, Ahmedabad were unstable and full of technical snags.

Lydia Suzanne Thomas

The Gujarat High Court on Tuesday directed the National Company Law Tribunal (NCLT) at Ahmedabad to frame a Standard Operating Procedure for virtual hearings (Sonu Cargo Movers (I) Pvt. Ltd v. Wind World (India) Limited Through Its Resolution Professional).

The appellant company had argued that virtual proceedings in the NCLT, Ahmedabad were unstable and full of technical snags.

In support of its case, a representation made to the NCLT by Senior Advocate and President of the NCLT Practitioners Association Mihir Thakore was brought on record. The communication recorded the Association's grievances with the mode of functioning.

Partially allowing the appeal, the Bench of Chief Justice Vikram Nath and Justice JB Pardiwala directed:

  1. Guidelines for virtual hearings be framed by the NCLT in a Standard Operating Procedure, to resolve the grievances raised by the appellant in the application.

  2. If physical hearings are adopted in a case, the same should be done with the consent of all the counsel appearing.

A company had approached the High Court praying that its cases pending in the Tribunal be heard once the COVID-19 situation stabilises and physical hearings are possible. Physical hearings were sought on account of the complexity of the litigation. The hearings conducted online by the Tribunal were prone to technical glitches and snags, the applicant had urged.

The Single Judge who initially heard the application refused to accept the appellant’s submissions. Instead, it was held that the applicant's fundamental rights were not infringed by reason of the Tribunal’s adoption of a certain mode of hearing.

The Court had opined that it was up to the Tribunal to decide upon a mode of hearing. Parting with this observation, the Single Judge imposed costs of Rs. 10,000 on the applicant. This prompted an appeal before the Division Bench.

In proceedings before the Division Bench counsel for the appellant argued that the proceedings in courts are inconsistent. While one courtroom [Court 2] always adopted virtual hearings, the other [Court 1] fluctuated between different modes, depending on whether the lawyers appeared in court. If a party's lawyers appeared in court, a physical hearing would be afforded, even if the other party's lawyer was not present in court, it was submitted.

The respondents, on the other hand, argued that the application was appealed in order to delay the proceedings pending in the NCLT.

Partly agreeing with the Single Bench, the Division Bench stated that determining the mode of hearing was ultimately the decision of the Tribunal. However, the views of the counsel representing the parties had to be considered, it was clarified.

"We are of the firm view that if the Tribunal wants to go for physical hearing of any particular matter, it may go for it, but, at the same time, it must seek the consent of all the learned counsel appearing in the litigation and only thereafter, it may proceed."
Division Bench of Gujarat High Court

Cautioning against adopting physical hearings for the present, the Court observed that allowing physical, in court hearings in the Tribunal would be 'dangerous'.

In parting, the appellant was asked to extend full cooperation to the NCLT in the disposal of the matter pending.

The Bench also reprimanded the Single Judge for failing to consider the appellant's grievance with virtual hearings at the Tribunal. The application ought to have been disposed of with proper directions to the Tribunal and not rejected outright with costs, the Division Bench stated.

"We hope and trust that the entire controversy is resolved by the NCLT and none of the parties has to come back to this Court. It is very unfortunate that a litigation of the present nature has travelled all the way upto the High Court."
Gujarat High Court

On these terms, the appeal was disposed of.

Senior Advocates Anshin Desai, Navin Pahwa, Alok Dhir and Advocates Jaimin Dave, Dhruvil Merchant, Parth Shah, Masoom Shah, and Maulik Nanavati appeared for the parties in the case.

[Read the order]

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