NCLAT conflicting order: Judicial member Rakesh Kumar resigns following contempt notice issued by Supreme Court

Rakesh Kumar, judicial member of the National Company Law Appellate Tribunal (NCLAT), on Monday tendered his resignation in the wake of the Supreme Court issuing a contempt notice against him for passing a verdict defying an interim order of the Apex Court.

Appearing for Kumar, Senior Advocate P.S. Patwalia, apprised the Apex Court about the development, just before the Bench led by Chief Justice of India D.Y. Chandrachud decided to dictate the order in the case.

Earlier on October 18, the Apex Court had issued showcause notice to NCLAT, asking why contempt proceedings should not be initiated against them over a verdict in violation of a status quo order passed by the Supreme Court.

The Bench of Chief Justice of India D.Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra issued showcause notices to Judicial Member Rakesh Kumar and Technical member Dr Alok Srivastava over NCLAT’s October 13 judgement, which ignored a status quo order passed by the Apex Court.

It further directed the NCLAT members to personally appear before the Supreme Court on October 30.

Noting that although the NCLAT Bench was informed about the Apex Court order, it proceeded to pass the judgement, the Bench said the manner in which the NCLAT passed the directions was ‘unbecoming’ of a tribunal and that the members of NCLAT Bench were liable to be proceeded against in contempt proceedings.

The top court of the country set aside the verdict passed by the NCLAT and transferred the case to a Bench led by the Chairperson of NCLAT for being heard afresh.

During the forenoon session on October 13, the Supreme Court had passed an order of status quo in the matter pertaining to the Annual General Meeting (AGM) of Finolex Cables.

The matter was again mentioned in the afternoon session, wherein the lawyers apprised the Apex Court that the NCLAT proceeded to deliver the verdict despite being told about the status quo order.

The Supreme Court then directed NCLAT Chairperson Justice Ashok Bhushan to conduct an inquiry. The inquiry report of the NCLAT Chairperson was today produced before the Supreme Court. The two judicial members reportedly told the NCLAT Chairperson that they were not aware of the Apex Court order.

However, lawyers from both the sides categorically stated that the order was mentioned before the NCLAT Bench before it proceeded to deliver the judgement at 2 pm on October 13.

The Apex Court today noted that on October 16, the NCLAT Bench suo motu suspended the judgement citing the Supreme Court order.

It expressed doubts about the genuineness of the version given by NCLAT members and went to the extent of saying that the subsequent order was passed on October 16 to create an impression that they became aware of the interim order only at a later point of time.

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