Supreme Court issues contempt of court notice to NCLAT members, orders personal presence

The Supreme Court on Wednesday issued contempt of court notices to National Company Law Appellate Tribunal (NCLAT) judicial member Justice Rakesh Kumar and technical member Dr Alok Srivastava for defying its order in the case regarding the disclosure of results of Annual General Meeting (AGM) of Finolex Cables. .A bench of Chief Justice of India DY Chandrachud, Justices JB Pardiwala and Manoj Misra pointed out that there may be a larger problem within the NCLAT as well as National Company Law Tribunal (NCLT).."NCLAT members, not Justice Ashok Bhushan, but apart from him, there is a rot. NCLT and NCLAT have gone down to a rot. This case is an object illustration of the rot," the Court said.The Court also sounded a warning to corporates attempting to subvert court orders."Corporate India should know that if our orders are being subverted then they should know that there is a Supreme Court who is watching. That is all we wish to say now," the top court said..The controversy began on October 13 when the apex court passed an order directing NCLAT to defer the pronouncement of its order till the time the results of the AGM were submitted in the form of a report by the scrutinizer. However, NCLAT did not adhere to it and proceeded to pass its order. On the very same day, upon being informed that its order was not adhered to, the Supreme Court had directed NCLAT chairperson Justice Ashok Bhushan to inquire into the allegations..As per Justice Bhushan, he called for an explanation from both the members of the NCLAT bench. Dr Alok Srivastava stated that as per procedure, judgments are announced before mentions are heard. Hence, he was not aware of the Supreme Court's order. Justice Rakesh Kumar asserted that the supplementary list is uploaded a day before and as per procedure, the verdict was delivered..Senior Advocate Mukul Rohatgi argued that the Supreme Court's order had been issued at 12 pm, and had been uploaded 1:55 pm. He emphasized that the order was pointed out as soon as the NCLAT bench reconvened at 2 pm, but the bench did not take cognizance of it.Rohatgi also highlighted a potential conflict of interest, stating that VP Singh, a former member of the NCLAT, had previously heard the case and was now representing the respondent.As such, he sought setting aside of the NCLAT judgment and requested that the matter be placed before Justice Bhushan's bench..In response, the CJI discussed the NCLAT's conduct and expressed his dissatisfaction. He stated that if the scrutinizer had sought opinions from a former CJI in defiance of the Supreme Court's order, they would be held accountable and potentially sentenced to jail. "After they were told specifically, how can the scrutiniser take opinion from former CJI and not declare the results.. let them come to this court and we will send them marching off to Tihar jail. Then they will understand the power of this court. Which was this opinion he sought to defy order of the Supreme Court. You ask the scrutiniser to be personally present before this court and tell him that we will sentence him," he said.Further, the CJI insisted that individuals with significant resources and influence should not be allowed to manipulate the judicial system."These people with big resources and money they think they can take the court for a ride and this will not happen at all," he stated.Stating that the NCLT and NCLAT had gone down to a rot, the CJI asked those challenging the order to apply for vacating it..The Court further noted that the NCLAT passed an order on October 16 to suspend its previous order. It observed that the order created an impression that the bench was informed about the Supreme Court order only at 5:35 pm. This, the Court found, was prima facie false as it was informed by both parties that the NCLAT bench was apprised of the order at 2pm. Hence, it concluded that the members had failed to disclose correct facts to the tribunal's chairperson.The Court expressed its dissatisfaction with the actions of the NCLAT, emphasizing that their disregard for the Supreme Court's orders was "unbecoming of a judicial tribunal." It underscored the paramount duty of NCLAT to comply with the orders issued by the highest court of the land..Accordingly, the Court set aside the October 13 judgment of the NCLAT and directed that the appeal be heard again by a bench headed by Justice Ashok Bhushan. Further, it took the view that the members of the bench were liable to be proceeded against for contempt of court. Accordingly, the Court issued show cause notices to both and sought their presence in Court on October 30 at 10:30 am..Note: The image initially used for this story incorrectly carried the photograph of another judicial member of NCLAT in place of Justice Rakesh Kumar. The image has been corrected and the error is regretted.