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Writ Jurisdiction of High Court under Article 226 cannot be invoked to challenge NCLT order: Kerala High Court

The writ jurisdiction under Article 226 of the Constitution cannot be invoked to challenge the order passed by NCLT held by the Division Bench of Hon’ble Justices S Manikumar and Shaji P Chaly in Sulochana Gupta & Ors. V. RBG Enterprises Pvt. Ltd. [WP(C) No. 14341/2020(P)].

The facts relate to the writ petition is: the company petitions were pending before the NCLT. In the impugned order itself, the NCLT referred to the prayers in the company petitions and post the matter for hearing of the I.A. to 7.8.2020. The learned counsel for the petitioners has submitted that the proper course of action was to file an appeal before the NCLT. It was submitted that such a course of action is presently rendered impossible due to the prevailing pandemic situation in the country and the petitioners were disabled from travelling to Delhi to prefer the appeal in view of the restrictions and the rising number of cases in the country. Though it was contended by the learned counsel appearing for the respondents that the writ petitions were not maintainable without the NCLT on the party array, he was with the opinion of that in the facts and circumstances of the instant cases, especially in view of request for adjournment made by the counsel for the petitioners before the NCLT, the passing of an order interdicting all financial transactions by running companies would create serious prejudice to the company. The technical objection raised that the NCLT was not made a party to these proceedings, according to him, should not stand in the way of the consideration of these writ petitions in the peculiar circumstances prevalent at present.

The Hon’ble Court after examining a catena of judgements observed that “Giving due consideration to the facts of this case and the decisions cited supra, we are of the view that the instant writ petition filed under Article 226 of the Constitution of India was not maintainable on the ground that there is an alternative remedy. Judicial orders of the Court/Tribunal can be challenged only under Article 227 of the Constitution of India and not under Article 226.” It was further expounded by the Hon’ble Court that “In the case on hand, admittedly, all parties in the writ petition are private parties. On the issue as to whether, a writ petition is maintainable under Article 226 of the Constitution of India, in a dispute between private parties, when they do not fall under the definition of State, authority, or instrumentality of the State, or a private person, not discharge public function or duty.”

The Hon’ble Court observed that “First of all, there is an alternative remedy under Rule 49(2) of the NCLT Rules, 2016, to set aside an ex parte order. As stated above, writ petitioners/respondents 1 & 2 herein have not chosen to approach the NCLT under the said rule”. Having directed the writ petitioners/respondents to avail a right of appeal, before NCLT, writ court ought not to have entertained the writ petition for the reason that, it would be amounting to allowing the writ petitioners/respondents to prosecute their challenge to the interim order passed in I.A. No.83/2020 in C.P. No.114/KOB/2019 in two different forums; one before NCLT, New Delhi and by way of filing a writ petition under Article 226 of the Constitution of India. In the foregoing paragraphs, we have clearly held that a writ petition under Article 226 of the Constitution of India, against the order of the Tribunal, is not maintainable in law.”

It was noted by the Hon’ble Court that 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. The 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.

The Hon’ble Court while examining the difference between Article 226 and Article 227 of the Constitution observed that, it was clear that insofar as a challenge to the judicial acts of the Courts or the Tribunals, in the exercise of the powers under Article 227 of the Constitution of India, the High Court exercises overall superintendence on such Tribunals under Article 227. Orders by Courts or Tribunals, as the case may be, can be challenged by way of filing a writ petition under Article 227 of the Constitution of India, and the administrative orders passed by the Courts, or the Tribunals, as the case may be, can be challenged under Article 226 of the Constitution.

It was noted that Administrative orders passed by the State, authority or instrumentality of the State, can be challenged by way of a writ petition under Article 226 of the Constitution of India, as they do not fall under the ambit of superintendence and control, in the exercise of Article 227 of the Constitution of India.

The Hon’ble Court set aside the judgement passed by the Single bench which granted limited relief to the party in a challenge against an order passed by the NCLT, Kochi bench.

Click here to read the judgement

 

Judgement reviewed by-Sarita Kumari

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