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2023 (10) TMI 1456 - SC - Companies LawDismissal of application filed by the first respondent for the grant of interim relief by an order dated 31 December 2019 - HELD THAT - From the CCTV footage as well as from the transcript, it is evident beyond a shadow of doubt that though the NCLAT was duly apprised of the fact that this Court had in the morning session on 13 October 2023 passed an order to the effect that the judgment shall be pronounced only after the results by the Scrutiniser are declared, the Bench of the NCLAT declined to pay heed to the order of this Court. The order of this Court was brought to the attention of the Bench of the NCLAT. The correct course of action, if the Bench was of the view that the order should be produced in accordance with Rules, was to defer the pronouncement of the judgment so as to enable the parties to comply with the procedure. The order of this Court was uploaded at 1.55 PM on 13 October 2023. The gist of the order was intimated to the Court. It is evident from the CCTV footage that even copies of the order were with the respective counsel - The transcript, however, reveals that Bench went on to deliver the judgment ignoring the substantive direction which had been issued by this Court earlier on 13 October 2023. There are no manner of doubt that the Bench of the NCLAT has acted in willful defiance of the order despite the fact that its attention was drawn to the order of this Court. The Court is apprised of the fact that a limited window was made available on 29 September 2023 for those who wished to vote to do so. At 5.55 PM on 29 September 2023, an email was addressed by the Scrutiniser to the Company Secretary of Finolex Cables Limited seeking a legal opinion about the manner in which the votes which were cast at the AGM would have to be treated. By then, voting had concluded on 28 September 2023. The Scrutiniser states that a legal opinion was obtained by the company on the basis of which he took steps to withhold the result of the AGM. It is directed that Mr Deepak Kishan Chhabria shall pay a sum quantified at Rs One crore to the Prime Minister s Relief Fund within a period of four weeks from the date of the order. Mr VM Birajdar shall pay a sum quantified at Rs Ten lakhs to the Prime Minister s Relief Fund within a period of four weeks. The Contempt Proceedings are accordingly disposed of.
Issues Involved:
1. Validity of the interim order issued by the National Company Law Appellate Tribunal (NCLAT) on maintaining the status quo. 2. Compliance with the Supreme Court's order regarding the declaration of the AGM results. 3. Alleged defiance of the Supreme Court's order by the NCLAT. 4. Conduct of the Scrutiniser in withholding the AGM results. 5. Consequences for the parties involved in the defiance of the Supreme Court's order. Issue-wise Detailed Analysis: 1. Validity of the Interim Order by NCLAT: The Supreme Court examined the interim order issued by the NCLAT on 21 September 2023, which directed maintaining the status quo as it was before the Extraordinary General Meeting (EOGM) dated 3 May 2019. The Court noted that the NCLAT provided no reasons for issuing this interim order, especially since no interim relief had been granted since the dismissal of the application for interim relief on 31 December 2019. The Supreme Court vacated the interim order, emphasizing that any action taken on the proposed resolution regarding the appointment of the Executive Chairperson would be subject to the outcome of the pending appeal before the NCLAT. 2. Compliance with the Supreme Court's Order on AGM Results: The Supreme Court directed that the Scrutiniser should declare the results of the AGM held on 29 September 2023. The NCLAT was instructed to deliver its judgment in the pending appeal only after being informed that the AGM results had been declared. The Court observed that deferring the declaration of the AGM results until the NCLAT's judgment would defeat the mandate of its order. 3. Alleged Defiance of the Supreme Court's Order by NCLAT: The Supreme Court noted that the NCLAT proceeded to deliver its judgment despite being apprised of the Supreme Court's order. The Court found that the NCLAT's actions constituted a defiance of its order. The Court directed an inquiry by the Chairperson of the NCLAT to verify the circumstances under which the judgment was pronounced despite the Supreme Court's directions. The inquiry revealed that the NCLAT Bench was informed of the Supreme Court's order before pronouncing its judgment, but the Bench chose to proceed regardless. 4. Conduct of the Scrutiniser in Withholding AGM Results: The Supreme Court scrutinized the actions of the Scrutiniser, who withheld the AGM results following a legal opinion obtained by the company. The Court found that the Scrutiniser acted in concert with a party involved in the dispute, Mr. Deepak Kishan Chhabria, to delay the declaration of the AGM results, effectively breaching the Court's directions. The Court imposed a financial penalty on Mr. Chhabria and the Scrutiniser for their actions. 5. Consequences for the Parties Involved: The Supreme Court set aside the NCLAT's judgment dated 13 October 2023, directing that the appeal be heard afresh by a Bench presided over by the Chairperson of the NCLAT. The Court issued a notice to show cause to the NCLAT members involved in the defiance of its order, while accepting the unconditional apology of the Member (Technical). The Court censured the conduct of the Member (Judicial) and noted the resignation of the Member (Judicial) from office. The Court also accepted the apologies tendered by the Scrutiniser and Mr. Chhabria. The Supreme Court concluded by reiterating its directions for the fresh hearing of the appeal and disposed of the contempt proceedings, emphasizing the need to maintain the dignity of the Court and ensure compliance with its orders.
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