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2021 (1) TMI 240 - HC - Companies LawWrit appeal against writ petition entertained by the Ld. Single Judge - private parties - mismanagement and oppression of majority shareholders - whether writ petition is maintainable under Article 226 of the Constitution of India, when a party pursues multiple remedies? - company petitions nine in number were pending before the NCLT - Holding AGM and filing of financial documents without without following the prescribed procedure - Appellants apprehended that the 2nd respondent has either forged or has caused to be forged the signatures of the majority shareholders with the intention to suggest that the financial statements have been approved by the shareholders at the Annual General Meeting, in the respective years. - HELD THAT - the writ court ought not to have entertained W.P.(C) No. 14341 of 2020, when the dispute is purely civil in nature. Suppression of material facts in the writ petition - HELD THAT - Applying the principles of law laid down by the Hon'ble Supreme court in ARUNIMA BARUAH VERSUS UNION OF INDIA ORS 2007 (4) TMI 695 - SUPREME COURT , as regards suppression, equitable remedy and clean hands under Article 226 of the Constitution of India, to the case on hand, we are of the view that there is suppression of material facts in the writ petition. Whether, the Tribunal should be made a party in a petition filed under Article 226 of the Constitution of India? - HELD THAT - Though the Larger Bench of the Hon'ble Supreme Court in UDIT NARAIN SINGH MALPAHARIA VERSUS ADDITIONAL MEMBER BOARD OF REVENUE BIHAR 1962 (10) TMI 55 - SUPREME COURT held that the Tribunal has to be added as a party, in the latter decisions, the Hon'ble Apex Court clarified that the Tribunal not being required to defend the proceedings under Article 226 or 227 of the Constitution of India, and hence, writ petition is maintainable, without the Tribunal being impleaded. In view of the subsequent decisions of the Hon'ble Apex Court, we are not inclined to accept the contention of the learned counsel for the appellants. Conclusion Material on record discloses that the dispute between the first respondent company and its shareholders, under challenge, is purely a civil dispute. The remedy under Article 226 of the Constitution of India is available against a State or authority or instrumentality of the State, falling within the ambit of the definition State under Article 12 of the Constitution of India - Writ petition filed under Article 226 of the Constitution of India, can be for the enforcement of fundamental rights or for any other purpose, as envisaged under Article 226 of the Constitution. There is no pleadings or materials to substantiate that the appellants are discharging public duties or public functions, and thus, amenable to writ jurisdiction under Article 226 of the Constitution of India. Difference between the exercise of powers under Articles 226 and 227 of the Constitution of India has been explained in the foregoing paragraphs. Thus, in the case on hand, when none of the parties, State or authority or instrumentality of the State, or any private body, discharging public functions, have been arrayed as respondents, when the writ petition has been filed under Article 226 of the Constitution of India, having regard to the roster followed in listing the cases, writ court ought to have directed the respondents/writ petitioners to make necessary amendments, to the provisions under which the writ petition ought to have been filed, or in the alternative, directed that the writ petition be placed before the concerned court, dealing with the challenges made to the orders passed by Courts, or Tribunals, as the case may be. Admittedly, the order impugned in the writ petition (Exhibit-P1) is not an administrative order, passed by the National Company Law Tribunal. Thus, there is an error in exercising the jurisdiction under Article 226 of the Constitution of India - The issues raised for consideration are answered in favour of the appellants - Appeal allowed.
Issues Involved:
1. Whether a writ petition under Article 226 of the Constitution of India is maintainable against an order of the National Company Law Tribunal (NCLT). 2. Whether a writ petition under Article 226 of the Constitution of India is maintainable when an alternate remedy is available. 3. Whether a writ petition is maintainable under Article 226 of the Constitution of India when a party pursues multiple remedies. 4. Whether a writ petition is maintainable under Article 226 of the Constitution of India in a dispute between private parties. 5. Whether a relief is available under Article 226 of the Constitution of India when the respondents/writ petitioners are guilty of suppression of crucial material. 6. Whether NCLT should be made a party in a petition filed under Articles 226 or 227 of the Constitution of India. 7. Whether the judgment in W.P.(C) No. 14341/2020 dated 22-7-2020 can be treated as a binding precedent, so as to enable the respondents to file a writ petition under Article 226 of the Constitution of India. 8. Whether the appellants have been given adequate opportunity to file a counter affidavit before the writ court. 9. Whether the writ appeal has become infructuous. Issue-Wise Detailed Analysis: 1. Whether a writ petition under Article 226 of the Constitution of India is maintainable against an order of the National Company Law Tribunal (NCLT): The court held that a writ petition under Article 226 is not maintainable against an order of the NCLT. The appropriate remedy is to file an appeal before the National Company Law Appellate Tribunal (NCLAT) as per Section 421 of the Companies Act, 2013. The court emphasized that judicial orders of civil courts are not amenable to writ jurisdiction under Article 226. 2. Whether a writ petition under Article 226 of the Constitution of India is maintainable when an alternate remedy is available: The court reiterated the principle that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. The court cited several precedents to support this principle, emphasizing that the availability of an alternate remedy bars the maintainability of a writ petition under Article 226. 3. Whether a writ petition is maintainable under Article 226 of the Constitution of India when a party pursues multiple remedies: The court held that pursuing multiple remedies is not permissible and constitutes an abuse of the process of law. It was noted that the respondents/writ petitioners had filed an appeal before the NCLAT and simultaneously filed a writ petition under Article 226, which is not allowed. 4. Whether a writ petition is maintainable under Article 226 of the Constitution of India in a dispute between private parties: The court held that a writ petition under Article 226 is not maintainable in disputes between private parties unless the private party is discharging a public function or duty. The court emphasized that the remedy under Article 226 is available against a State or authority or instrumentality of the State, not for enforcing civil rights inter se private parties. 5. Whether a relief is available under Article 226 of the Constitution of India when the respondents/writ petitioners are guilty of suppression of crucial material: The court held that suppression of material facts disentitles the petitioner from obtaining any relief under Article 226. The court found that the respondents/writ petitioners had suppressed the fact of filing an appeal before the NCLAT and therefore, were not entitled to any relief. 6. Whether NCLT should be made a party in a petition filed under Articles 226 or 227 of the Constitution of India: The court held that the NCLT, whose order is challenged, must be made a party to the proceedings. The court referred to the decision in Udit Narain Singh Malpaharia v. Additional Member, Board of Revenue, Bihar, which mandates that the tribunal or authority whose order is sought to be quashed must be a party to the writ proceedings. 7. Whether the judgment in W.P.(C) No. 14341/2020 dated 22-7-2020 can be treated as a binding precedent, so as to enable the respondents to file a writ petition under Article 226 of the Constitution of India: The court held that the judgment in W.P.(C) No. 14341/2020 cannot be treated as a binding precedent for entertaining a writ petition under Article 226 against an order of the NCLT. The court emphasized that the decision did not address the issue of maintainability and therefore, cannot be relied upon as a precedent. 8. Whether the appellants have been given adequate opportunity to file a counter affidavit before the writ court: The court found that the appellants were not given adequate opportunity to file a counter affidavit as the entire cause papers were not served on them. This amounted to a violation of the principles of natural justice. 9. Whether the writ appeal has become infructuous: The court held that the writ appeal has not become infructuous. Even if the order of the NCLT has been implemented, the challenge to the validity of the order is not rendered redundant. The court emphasized that an order passed without jurisdiction is void and must be set aside. Conclusion: The writ appeal was allowed, and the impugned judgment in W.P.(C) No. 14341 of 2020 dated 22-7-2020 was set aside. The court reiterated the principles of law regarding the maintainability of writ petitions under Article 226 and emphasized the importance of exhausting alternate remedies and adhering to the principles of natural justice.
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