New Delhi, October 18, 2023 – In an unprecedented development, the Supreme Court of India issued contempt notices to two members of the National Company Law Appellate Tribunal (NCLAT) for delivering a judgment in violation of a status quo order passed by the Supreme Court. The show-cause notices were directed to Mr. Rakesh Kumar (Judicial Member) and Dr. Alok Srivastava (Technical Member) of the NCLAT, and they are required to personally appear before the Supreme Court on October 30.

The Supreme Court bench, headed by Chief Justice of India DY Chandrachud, noted that the NCLAT bench had been informed of the status quo order issued by the Supreme Court. However, the NCLAT proceeded to pass the judgment on October 13, in apparent disregard of the Supreme Court’s order.

Chief Justice Chandrachud expressed strong disapproval of the NCLAT’s actions, stating that it was unbecoming of a tribunal. The Supreme Court set aside the judgment and transferred the appeal to a bench led by the Chairperson of the NCLAT for a fresh hearing.

The Supreme Court bench observed, “We are of the view that the members of the NCLAT bench are liable to be proceeded against in contempt proceedings. We issue a show-cause notice against the members, and they shall be present before this court on October 30.”

The Issue at the center of this controversy stems from events surrounding the Annual General Meeting (AGM) of FinolexCables. On October 13, the Supreme Court issued a status quo order in the morning. However, the NCLAT delivered the judgment in the afternoon despite being informed of the status quo order. Subsequently, the Supreme Court directed the NCLAT Chairperson, Justice Ashok Bhushan, to conduct an inquiry into the matter.

Today, the inquiry report from the NCLAT Chairperson was presented to the Supreme Court. The two judicial members from NCLAT claimed that they were not aware of the Supreme Court’s order. However, lawyers from both sides disputed this claim and stated that the order was indeed mentioned before the NCLAT bench before they proceeded to deliver the judgment at 2 PM on October 13.

The Chief Justice-led bench expressed doubts about the genuineness of the version provided by the NCLAT members and suggested that the subsequent order on October 16 was an attempt to create the impression that they became aware of the interim order only later.

The Supreme Court’s order emphasized, “We are prima facie of the view that the members of the NCLAT have failed to disclose correct facts and incorrectly created a record in the order dated October 16, creating the false impression that this court’s order was brought to their notice only at 5.35 pm on October 13.”

The Supreme Court expressed dissatisfaction with the NCLAT members’ explanation that oral mentions were allowed only after the pronouncement of a judgment according to NCLAT procedure. However, concerned lawyers filed affidavits affirming that the NCLAT bench had been informed of the Supreme Court’s order before the judgment was delivered.

During the proceedings, Chief Justice Chandrachud expressed his dismay at the situation, stating that it illustrated the deteriorating state of NCLT and NCLAT. He remarked, “This case is an illustration of that rot.”

This remarkable incident highlights the importance of respecting and adhering to court orders, particularly by those responsible for delivering justice at various levels of the judiciary.