NCLAT Suspends Its Judgement In Finolex Matter After Supreme Court's Order For Inquiry

The National Company Law Appellate Tribunal (NCLAT) on Monday suspended its order passed last Friday, pertaining to disclosure of the results of AGM of Finolex Cable, after it faced an enquiry by the Supreme Court in the matter. A two-member NCLT bench said, in view of the order of the Supreme Court, it is passing an "order for suspension" of its judgment passed on October 13, 2023.

The order was related to the annual general meeting (AGM) of Finolex Cables and Prakash Chhabria and Deepak Chhabria's legal tussle over the management control of the company. In this matter, the Supreme Court on Friday directed the NCLAT chairperson to conduct an enquiry and submit a report by Monday, over an allegation that one of its benches delivered an order without following the top court's directions.

A three-member apex court bench headed by Chief Justice DY Chandrachud on October 13, directed the NCLAT to proceed to its judgment and declare the results of the meeting only after getting the scrutiniser's report. On October 13, the Supreme Court order was uploaded at 1.55 pm and the counsel also informed the development to the NCLAT bench, which was scheduled to deliver the judgment at 2 pm.

However, a two-member bench of the NCLAT comprising Justice Rakesh Kumar, Member Judicial, and Alok Srivastava, Member Technical, went ahead and pronounced the order, while the scrutiniser's report was uploaded at 2:40 pm on October 13. The apex court was apprised about the development through an urgent mentioning by lawyers and the bench led by the chief justice said, "If what is stated is correct, this will clearly constitute the defiance of the order of this court by the NCLAT.

" However, it also said that at this stage, it is not commenting on the merits of the submissions which have been made. "We direct that an enquiry shall be conducted on the above allegations by the Chairperson of the NCLAT. A report shall be submitted before this court by 5 pm on 16 October 2023 after specifically verifying the facts from the judges who constituted the bench of the NCLAT," the Supreme Court had said. The apex court had said that in its report, the NCLAT chairperson shall specifically verify "that the order of this court dated 13 October 2023 passed in the morning session was drawn to the attention of the two judges".

"If that is so, the circumstances in which the judges proceeded to pronounce the judgment despite the clear mandate of the order of this court which was passed in the morning session," it said. Directing to list the matter on October 17, the Supreme Court said, "We are passing this order in extraordinary circumstances, upon an urgent mentioning being made in that regard.

" The court's order came over a petition filed by Prakash Chhabria led Orbit Electricals which is a promoter entity in Finolex Cables. He had sought disclosure of the outcome of voting in the annual general meeting (AGM) of the company on the agenda item pertaining to the reappointment of Deepak Chhabria as executive chairman. He challenged the non-disclosure of the outcome of voting by shareholders pertaining to the resolution related to the reappointment of Deepak Chhabria as a "Whole-Time Director" designated as an "Executive Chairman" in its AGM held on September 29.

Earlier in this matter, the NCLAT on September 21, passed an order directing the status quo on the conduct of the AGM, till they adjudicate on the dispute between cousins Prakash Chhabria and Deepak Chhabria. On this, an appeal was referred to the Supreme Court, which on September 26, vacated this status quo order and said all action which may be taken would abide by the final result of the proceedings before NCLAT. "The NCLAT shall proceed to declare its judgment in the pending appeal after it is duly apprised of the fact that the result of the annual general meeting has been declared," the apex court had said.

(PTI)