NCLAT Judicial Member Resigns Amid Supreme Court’s Contempt Notice, Court Criticizes Tribunal for Defying Orders


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Published on: October 30, 2023 at 13:07 IST

In response to a contempt notice issued by the Supreme Court, Mr. Rakesh Kumar, the judicial member of the National Company Law Appellate Tribunal (NCLAT), has tendered his resignation.

This decision came after the Supreme Court took issue with the NCLAT member for passing a judgment that went against an interim order from the Apex Court.

Senior Advocate PS Patwalia, representing Rakesh Kumar, conveyed this development during the hearing of the contempt case, prompting the bench led by Chief Justice of India DY Chandrachud to express disappointment with the NCLAT member’s conduct.

Patwalia explained that Mr. Kumar had resigned after the incident, describing it as an “error of judgment” and expressing his lack of intention to defy the court’s order. Patwalia also emphasized Kumar’s long, unblemished career as both an advocate and a High Court judge.

The Supreme Court had issued notices on October 18 to Mr. Rakesh Kumar and Dr. Alok Srivastava, the technical member of the NCLAT, to explain why they shouldn’t face contempt action for delivering a judgment on October 13 that defied an interim order issued by the Supreme Court.

During the hearing, Patwalia argued that the judgment was delivered on October 13 because the Supreme Court’s order, issued earlier that same day, was neither officially communicated nor brought on record.

Solicitor General of India Tushar Mehta, representing Technical Member Alok Srivastava, offered an unconditional apology and admitted that the judgment’s pronouncement should have been deferred when lawyers orally informed the bench about the Supreme Court’s order.

The Supreme Court, after reviewing CCTV footage of the NCLAT proceedings, noted that lawyers had orally informed the NCLAT members about the Supreme Court’s order and were holding print-outs of the order. The Court expressed its displeasure at the lack of deference to its orders and criticized the NCLAT members’ conduct.

The issue stemmed from events on October 13, when the Supreme Court issued an interim order directing the NCLAT to deliver its judgment only after the Annual General Meeting (AGM) results of Finolex cables were declared. However, the NCLAT proceeded to deliver the judgment at 2 PM the same day, despite being informed about the Supreme Court’s order.

Following this incident, the Supreme Court directed the NCLAT Chairperson, Justice Ashok Bhushan, to conduct an inquiry.

The inquiry report indicated that the NCLAT members claimed they were unaware of the Supreme Court’s order, a version disputed by lawyers from both sides who stated the order had been mentioned before the NCLAT bench.

In its order, the Supreme Court observed that the NCLAT had acted in willful defiance of its order, and it expressed disappointment with the conduct of the NCLAT’s judicial member.

It held the scrutinizer responsible for not declaring the AGM results, penalized Deepak Chhabria and the scrutinizer, and transferred the case to the bench led by the NCLAT Chairperson for reconsideration.

The Court’s order serves as a reminder to all tribunals and members to respect and adhere to the orders of the Supreme Court.

Case Title: Orbit Electricals Private Limited v. Deepak Kishan Chhabaria | Conmt. Pet (C) No.1195/2023 In C.A. No.6108/2023

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