Finolex Cables Dispute: SC Issues Contempt Notices to NCLAT Members

The Supreme Court on Wednesday issued notices to the National Company Law Appellate Tribunal (NCLAT) judicial member Rakesh Kumar and technical member Alok Srivastava, asking for an explanation as to why contempt proceedings should not be initiated against them.

This action comes in response to their alleged defiance of Supreme Court orders in the Finolex Cables dispute matter.

A bench led by Chief Justice DY Chandrachud expressed strong displeasure with the NCLAT bench for passing a judgment. The Supreme Court set aside the NCLAT bench’s October 13 judgment related to the annual general meeting (AGM) of Finolex Cables without delving into its merits.

The bench, also including Justices JB Pardiwala and Manoj Misra, stated that the case would be heard by NCLAT Chief Justice Ashok Bhushan. The Supreme Court raised concerns about the state of affairs at NCLAT, asserting that the NCLAT has deteriorated. The court expressed the view that the NCLAT members had not disclosed accurate facts, and it was essential to take measures to restore the dignity of the court. The court emphasized that parties should not be allowed to circumvent the court’s orders through devious means.

This case pertains to the annual general meeting (AGM) of Finolex Cables and the legal dispute between Prakash Chhabria and Deepak Chhabria over the company’s management control.

Notably, it is a rare occurrence for the Supreme Court to issue contempt notices against NCLAT members. In response to an allegation that one of its benches had proceeded and delivered an order without following the Supreme Court’s directions, the Top Court on Friday directed the NCLAT chairperson to conduct an inquiry and submit a report by the following Monday.

On that day, a three-member Supreme Court bench headed by Chief Justice Chandrachud had directed the NCLAT to proceed with its judgment and announce the results of the meeting only after receiving the scrutinizer’s report.

The Supreme Court order was uploaded at 1.55 pm and the counsel also informed the development to the NCLAT bench, which was scheduled to deliver the judgment at 2 pm.

However, a two-member NCLAT bench, comprising Justice Kumar, Member Judicial, and Srivastava, Member Technical, proceeded to pronounce the order while the scrutinizer’s report was uploaded at 2:40 pm.