National Company Law Appellate Tribunal (NCLAT) judicial member Justice Rakesh Kumar resigned from his post after the Supreme Court on Monday took strong exception to his conduct for defying the top court's order in a case regarding the disclosure of results of Annual General Meeting (AGM) of Finolex Cables.
Justice Kumar's counsel Senior Advocate PS Patwalia informed the top court on Monday that the judicial member had no intention to violate the top court's order but the episode has shattered his reputation and therefore, he has no intention to continue in his post.
"After this episode the judicial member says that he cannot continue in this post. He says he had no intention to violate the SC order or cling onto any assignment etc. I request you to take a considerate view and close this. In the fodder scam also he was the only public prosecutor and he was always of integrity. He feels his whole reputation has gone," Patwalia said.
A bench of Chief Justice of India (CJI) DY Chandrachud and Justices JB Pardiwala and Manoj Misra noted Patwalia's submission in order
"We have taken note of the statement of Mr PS Patwalia that the judicial member has tendered resignation to the chairperson of NCLAT and the law secretary of the finance ministry," the order said.
The Court, however, closed the matter against Justice Kumar and NCLAT technical member Dr. Alok Srivastava both of whom drew the ire of the Court for acting in violation of the apex court's order.
"We are of the view that there was an attempt to defy the orders of this court and censure the member. However, we would be resting the matter here," the Court said.
The apex court said on Monday that the video footage of the hearing of the matter before NCLAT on October 13 clearly showed that the NCLAT bench refused to defer pronouncement of its order despite clear directions to that effect by the Supreme Court.
While the NCLAT bench maintained that the apex court order was not communicated to them, the Court refused to accept the same in view of the CCTV footage to the contrary.
Technical member Dr. Srivastava meanwhile tendered an unconditional apology and the Court closed the matter as against him.
However, as regards the judicial member, the Court said that his affidavit only compounded his offence because it said the order copy was not handed over to him or filed with the NCLAT registry.
"It says no order was filed with NCLAT registry and that order was not handed over to him. It does not say that he was not informed of Supreme Court order. Is this how a judge behaves? Now he is teaching us the procedure of our court and any other court," the Court remarked.
In view of the same, the Court proceeded to censure Justice Kumar.
Background
The case pertained to the Annual General Meeting (AGM) of Finolex cables. The NCLAT had earlier passed an order directing status quo on the results of the AGM till they adjudicate on the dispute between cousins Prakash Chabria and Deepak Chabria.
However, the Supreme Court on September 20 set aside this status quo order but also said that important decisions such as appointment of executive chairperson will be subject to the outcome of the litigation at NCLAT.
Subsequently, when the matter came up for hearing on October 13, the Supreme Court in the morning session passed an order directing NCLAT to defer the pronouncement of its order till the time the results of the AGM is submitted in the form of a report by the scrutinizer.
However, it was alleged that despite such a directive from the Supreme Court, the NCLAT bench of Rakesh Kumar and Dr Alok Srivastava proceeded to deliver 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.
Pursuant to that Justice Bhushan told the top court that 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.
When the matter came up for hearing on October 18, 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.
The benchpointed out that there may be a larger problem within the NCLAT as well as National Company Law Tribunal (NCLT).
"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.
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.
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.