In a significant legal development, Mr. Rakesh Kumar, a judicial member of the National Company Law Appellate Tribunal (NCLAT), has tendered his resignation. This decision comes in the wake of the Supreme Court issuing a contempt notice against him for passing a judgment that seemingly defied an interim order of the Apex Court. The developments of this case were discussed during a hearing where Senior Advocate PS Patwalia, representing Mr. Rakesh Kumar, informed the bench led by Chief Justice of India DY Chandrachud about Kumar’s resignation.

The background of this case involves a judgment delivered by the NCLAT on October 13 that appeared to contradict an interim order issued by the Supreme Court. On October 18, the Supreme Court issued notices to Mr. Rakesh Kumar (Judicial Member) and Dr. Alok Srivastava (Technical Member) of the NCLAT, summoning them to show cause for not initiating contempt action against them. The judgment in question had been pronounced on October 13, as the order of the Supreme Court, issued earlier on the same day, had neither been officially communicated nor brought on record.

Solicitor General of India Tushar Mehta, who appeared for Technical Member Alok Srivastava, offered an unconditional apology, acknowledging that the judgment’s pronouncement should have been deferred when the lawyers orally informed the bench about the Supreme Court’s order. This episode raises questions about the interplay between judicial and technical members within the NCLAT, as technical members typically follow the lead of judicial members, many of whom have previously served as judges.

During the hearing, the bench, comprising CJI DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra, examined CCTV footage of the NCLAT proceedings. They noted that lawyers had orally apprised the NCLAT members about the Supreme Court’s order and even carried print-outs of the order in their hands. The frustration of the bench was palpable as they questioned the NCLAT’s response to being informed of the Supreme Court’s order. They stressed that the order was right there in the hands of the lawyers, and that if they were judges, they would have deferred the pronouncement of the judgment upon being informed of the Supreme Court’s order.

This controversy revolves around events that transpired on October 13 in a matter related to the Annual General Meeting (AGM) of Finolex Cables. In the morning session of that day, the Supreme Court issued an interim order, directing the NCLAT to deliver the judgment only after the results of the AGM were declared. However, in the afternoon session, lawyers approached the Supreme Court to inform them that the NCLAT had proceeded to deliver the judgment at 2 PM, despite being informed of the Supreme Court’s order. Following this, the Supreme Court ordered NCLAT Chairperson Justice Ashok Bhushan to conduct an inquiry.

The inquiry report indicated that the two NCLAT members claimed they were unaware of the Supreme Court’s order, but this assertion was contradicted by lawyers from both sides, who affirmed that the order had been mentioned before the NCLAT bench before it proceeded to deliver the judgment at 2 PM on October 13.

In the order passed by the Supreme Court after the hearing, it is unequivocally observed that the NCLAT had been duly informed of the Supreme Court’s order from the morning session, and yet it chose to ignore this order. The Court expressed disappointment with the NCLAT’s conduct and stressed the importance of a judicial body respecting orders issued by the Supreme Court, which bind all courts and tribunals.

The explanation provided by the NCLAT Judicial Member, Mr. Rakesh Kumar, was deemed insufficient and compounded the contempt, with the Court suggesting there was an attempt to defy the Supreme Court’s order. However, the Court chose to let the matter rest at this point.

Regarding the NCLAT Technical Member, Dr. Alok Srivastava, the Court accepted his unconditional apology and did not pass any further orders against him.

The Court held the scrutinizer responsible for not declaring the AGM results, implicating Deepak Chhabria, the former FinolexChairman, as the beneficiary of this delay. As a result, the Court penalized Deepak Chhabria and the scrutinizer by directing them to pay Rs. One Crore and Rs. 10 lakh, respectively, to the PM Relief Fund. Additionally, the case was transferred to the bench led by NCLAT Chairperson for a fresh review.

The order passed by the Supreme Court serves as a reminder to members of the NCLAT, NCLT, and all tribunals to adhere to Supreme Court orders. The bench concluded by stating that the issue would be considered settled.

In the aftermath of the order being dictated, another lawyer mentioned an intervention application that raised allegations of irregularities in the functioning of the NCLAT. However, the bench declined to entertain this application, as it was not related to the specific case before them. This case underscores the significance of adherence to the orders of the Supreme Court and the need for accountability in the functioning of tribunals and judicial bodies.