"Willfully Defied...": Supreme Court Slams Tribunal Over Finolex Case Order

The Supreme Court on Monday slammed a National Company Law Appellate Tribunal bench (NCLAT) for having "willfully defied" its order in the Finolex Cables case and passing its own. The court directed the matter be heard afresh - this time by a bench led by NCLAT Chairperson Justice Ashok Bhushan.

The court also withdrew contempt notices against two members of the NCLAT bench - Technical Member Alok Srivastava and Judicial Member Rakesh Kumar. This was after the former issued an "unconditional apology" via Solicitor General Tushar Mehta, and the latter resigned his post.

Earlier, while issuing the contempt of court notices, Chief Justice DY Chandrachud said, "... first time in my life... in 24 years as judge... I am issuing contempt notice... for overruling order of Supreme Court."

Two weeks ago the court had issued notices asking why contempt proceedings should be not initiated against Mr Srivastava and Mr Kumar over the bench's October 13 judgement.

The court noted "rot (has set in)" the NCLAT and National Company Law Tribunal, or NCLT.

"We are of the view it is necessary to pass orders to ensure dignity of this court is restored. Parties cannot be allowed by recourse to devious means to obviate this court's orders," the Supreme Court bench, also consisting of Justice JB Pardiwala and Justice Manoj Misra, said.

The court also cautioned corporates from trying to subvert its orders and said, "... corporate India should know the Supreme Court is watching. That is all we wish to say now."

READ |"Has Got Down To A Rot": Supreme Court Notice To Company Tribunal Members

On October 13 the court - hearing an appeal against the tribunal's status quo order - vacated this and told the tribunal to go ahead and pass its order, but only after getting a specific report.

Minutes later the tribunal passed its own, but without waiting for the reports mentioned by the top court.

A report into this was submitted on October 16. It was after this that the court issued notices to Mr Srivastava and Mr Kumar, asking why contempt charges should not be issued.

The whole case is related to an annual general meeting of Finolex Cables - a listed entity with a market valuation of Rs 14,000 crore - and the Chhabria Vs Chhabria legal battle.

Specifically, it relates to voting results from the company's AGM in which a special resolution to re-appoint Deepak Chhabria as Executive Chairman was put to vote.

Entities controlled by Prakash Chhabria (a majority shareholder) voted against the re-appointment. Finolex Cables did not disclose results and Prakash Chhabria has sought disclosure of these results.

The NCLAT on September 21 passed an order directing status quo on conduct of the AGM, till the dispute between the cousins was settled. On this, an appeal was referred to the Supreme Court, which on September 26 vacated the status quo order and directed the tribunal to issue a final order.

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