The Supreme Court on Wednesday started contempt proceedings against the National Company Law Appellate Tribunal (NCLAT), issuing show cause notices to two members of an NCLAT bench for pronouncing a judgement in the Finolex Cables case despite directions from the SC to maintain status quo in it. A three-judge bench, headed by chief justice of India (CJI) DY Chandrachud, asked NCLAT judicial member Rakesh Kumar and technical member Alok Srivastava why “contempt proceedings should not be initiated against them”. The NCLAT members have been asked to be present before the SC bench on October 30. The apex court has also set aside NCLAT’s October 13 order, in which the tribunal had ruled in favour of Deepak Chhabria continuing as chairman of Finolex Cables.
The CJI observed that the manner in which the NCLAT passed the directions “was unbecoming of a tribunal”. Criticizing the NCLAT, the SC bench said “this case was an illustration of the rot in the NCLAT”.
The bench has transferred the case to a bench led by the chairperson of the NCLAT for being heard afresh. NCLAT chief Justice Ashok Bhushan will now hear the case.
Notably, the SC bench had directed the NCLAT to pronounce its judgment and declare the results of the Finolex Cables AGM only after getting the scrutinizer’s report. However, a two-member bench of the NCLAT, comprising Justice Kumar and technical member Srivastava, pronounced the order before the scrutinizer’s report was uploaded.
The SC had on Friday directed the NCLAT chairperson to conduct an enquiry and submit a report by Monday over an allegation that one of its benches had proceeded and delivered an order without following the top court’s directions.
The report said the members were “not aware of the SC order while passing the judgement”. The SC bench, dissatisfied with the explanation, set aside the order and issued a show cause notice.
The case pertains to the AGM of Finolex Cables and the voting results on the special resolution for the re-appointment of Deepak Chhabria as executive chairman of Finolex Cables. It is part of the ongoing dispute between cousins Deepak Chhabria and Prakash Chhabria over the control of Finolex Cables. Deepak Chhabria, who serves as Finolex Cables’ executive chairman, has been at loggerheads with his cousin, Prakash Chhabria, over gaining control of Finolex Cables. Orbit Electricals and Finolex Industries, controlled by Prakash Chhabria, had voted against the re-appointment of his cousin, Deepak Chhabria, as the executive chairman of Finolex Cables.
Case Timeline
Oct 13: NLCAT issues an order in favour of Deepak Chhabria continuing as chairman of Finolex Cables
Oct 20: SC asks the NCLAT chairperson to conduct an enquiry and submit a report on allegations that one of its benches had delivered an order against the top court’s directions
Oct 18: SC initiates contempt proceedings against NCLAT for pronouncing a judgement in the Finolex Cables case despite top court orders to maintain status quo in it
On the same day, the SC also set aside NCLAT’s October 13 order and asked NCLAT chairman Justice Ashok Bhushan to hear the case afresh