2021 (10) TMI 996 - HC - Companies Law

Freezing of the assets and properties - Directions to Serious Fraud Investigation Office (SFIO) to conduct an investigation into the affairs of Videocon Industries Ltd. and its group companies - whether in the light of the petitioner s plea that the proceedings before the NCLT, Mumbai Bench are without jurisdiction having been filed before a Bench whose jurisdiction has been specifically ousted by the proviso to Section 241(2), the writ petition ought to be entertained or the petitioner ought to be relegated to the NCLT/ NCLAT? HELD THAT - The power of judicial review with which the High Court is vested under Article 226 of the Constitution cannot be taken away merely because an alternative statutory remedy of appeal is available. However, it cannot be denied that the power of the High Court to entertain a writ petition under Article 226 even when an alternative statutory remedy is available, is ultimately only discretionary and therefore, it is for the High Court to consider whether, in the facts of the case, a party must be relegated to the available statutory remedy. There can be no dispute with the proposition urged by the petitioner that one of the factors which the High Court will consider while exercising its discretion to entertain a writ petition would be whether the order passed by the Tribunal was without jurisdiction or was merely a case of an error of jurisdiction. In the present case, the only basis for the petitioner to approach this Court is that under the proviso to Section 241(2), it is only the Principal Bench of NCLT at Delhi which could entertain the petition preferred by the Central Government and therefore, the very filing of the petition before the NCLT, Mumbai Bench and the passing of any order by the said Bench being coram non judice, was a nullity - there is also no denial that the Companies Act is a complete code in itself, as also that the NCLT and NCLAT are specialized Tribunals created by the statute for dealing with issues arising under the Companies Act. The petitioner s primary plea before this Court is that in view of the proviso to Section 241(2) of the Companies Act, the NCLT, Mumbai did not have the jurisdiction to entertain the petition and therefore, the proceedings before it and all orders passed by the said Bench are a nullity. The respondents have vehemently denied this position and have contended that only the Mumbai Bench had the necessary jurisdiction. It is deemed appropriate to examine the petitioner s plea that the issuance of the impugned order and letter by the respondent no.1 are, even otherwise, vitiated by non-application of mind or that the condition precedent for invocation of Section 241(2) of the Act, which requires the Central Government to come to an opinion that the affairs of the company are being conducted in a manner prejudicial to public interest was not satisfied. In view of my conclusion that the present petition is not maintainable on account of the alternative statutory remedies available to the petitioner and not for want of territorial jurisdiction, I do not deem it necessary to delve into this aspect. Petition dismissed.

Summary

Issues Involved:
1. Jurisdiction of NCLT, Mumbai Bench under Section 241(2) of the Companies Act, 2013.
2. Maintainability of the writ petition under Article 226 of the Constitution of India.
3. Validity of the impugned order and letter issued by respondent no.1.

Detailed Analysis:

1. Jurisdiction of NCLT, Mumbai Bench under Section 241(2) of the Companies Act, 2013:
The petitioner contended that the NCLT, Mumbai Bench lacked jurisdiction to entertain the petition filed by the Central Government under Section 241(2) of the Companies Act, 2013, as per the proviso to Section 241(2), which confers exclusive jurisdiction on the Principal Bench of NCLT at New Delhi. The petitioner argued that the impugned order and letter were non-est due to this lack of jurisdiction. The respondents, however, argued that no rules have been prescribed to lay down the class of companies for which the Principal Bench would have jurisdiction, and therefore, the petition was rightly filed before the NCLT, Mumbai Bench. The court noted that the interpretation of the proviso to Section 241(2) is crucial and should be considered by the specialized forums of NCLT/NCLAT created under the Companies Act.

2. Maintainability of the writ petition under Article 226 of the Constitution of India:
The petitioner argued that the writ petition is maintainable despite the availability of an alternative statutory remedy, as the order passed by the NCLT, Mumbai Bench was without jurisdiction and thus a nullity. The respondents contended that the petitioner should have approached the NCLT or NCLAT, as these are the specialized forums created under the Companies Act to deal with such issues. The court observed that while the existence of an alternative remedy does not bar the High Court from exercising its writ jurisdiction, it is ultimately discretionary. The court found that the petitioner should be relegated to the statutory remedies available under the Companies Act, especially since some aggrieved parties had already approached the NCLAT.

3. Validity of the impugned order and letter issued by respondent no.1:
The petitioner argued that the impugned order and letter were vitiated by non-application of mind and were issued without forming the necessary opinion that the affairs of the company "are being" conducted in a manner prejudicial to public interest, as required under Section 241(2). The respondents countered that the petitioner's interpretation of Section 241 was incorrect and that the NCLT, Mumbai Bench had the jurisdiction to entertain the petition. The court refrained from expressing any opinion on the validity of the impugned order and letter, as it deemed that these issues should be examined by the NCLT and NCLAT.

Conclusion:
The court dismissed the writ petition, concluding that the petitioner should avail the alternative statutory remedies available under the Companies Act. The court did not delve into the merits of the petitioner's challenge to the impugned orders and letter, leaving it open for the petitioner to raise these grounds before the appropriate forums of NCLT or NCLAT.