Raja Sethunath et al. v. National Company Law Tribunal Kochi Bench and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **MONDAY, THE 06TH DAY OF JANUARY 2020 / 16TH POUSHA, 1941** ## **WP(C).No.35903 OF 2019(K)** ## **PETITIONERS:** - **1 RAJA SETHUNATH AGED 62 YEARS DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** - **2 BIJU RAMESH, SUMTHRIPTHI, TC 37/852, RAJADHANI BUILDING, FORT P.O. THIRUVANANTHAPURAM 695 023.** - **3 N.M. SHERAFUDEEN, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY. SHANMUGHAM ROAD, ERNAKULAM , COCHIN 682 031.** - **4 SHIBU PRABHAKARAN, TC/39/1726-2, DEVIKA GARDEN, GNRA 3H, GANGA NAGAR, MANCAD P.O. THIRUVANANTHAPURAM 695 009.** - **5 NIMMI CHAKOLA, CHAKOLAS DECORETTE 40/3161, DHARMODAYA BUILDING, SHANMUGHAM ROAD, COCHIN 31.** - **6 RASEEF MUHAMMED, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** - **7 U.C. RIYAS, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** WP.(C).No.35903/19 2 - **8 AHAMMED IQBAL, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** - **9 BABUMON, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** - **10 MOHAMMED BASHEER, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** - **11 JOSE J VALAVI, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** - **12 KERALA CHAMBER OF COMMERCE AND INDUSTRY, REP. BY ITS DIRECTOR RAJA SETHUNATH, REGISTERED OFFICE AT NO. XXXVII/801, SHANMUGHAM ROAD, ERNAKULAM, COCHIN 682 031.** - **BY ADV. SHRI.SIVASHANKAR PANICKER** ## **RESPONDENTS:** - **1 THE NATIONAL COMPANY LAW TRIBUNAL KOCHI BENCH REPRESENTED BY ITS DEPUTY REGISTRAR COMPANY LAW BHAVAN, BMC ROAD, THRIKKAKKARA, KAKKANAD, COCHIN 680 021.** - **2 M/S. TAP WORLD, REPRESENTED BY ITS MANGING PARTNER MR. M.K. ANSARI, VILLA NO. 20, KRISTAL GARNET, THRIKKAKKARA P.O. ERNAKULAM 682 021.** - **3 M/S. TRAVANCORE SOLVENTS AND OILDS, REPRESENTED BY IS PROPRIETOR MR. SHAFIEQUEAHAMS K.K. KADAVANTHODE, HOUSE, KURANNIYOORO P.O. CHAVAKKAD 680 506.** WP.(C).No.35903/19 3 - **4 MR.K.N. MARZOOK, FORMER DIRECTOR AND CHAIRMAN, KERALA CHAMBER OF COMMERCE AND INDUSTRY FLORA PHED, SIDE ROAD JANATHA PALARIVATTOM, COCHIN 682 025.** - **5 E.P. GEORGE, FORMER DIRECTOR AND CHAIRMAN, KERALA CHAMBER OF COMMERCE AND INDUSTRY, 36 PER 1686, JUDGES AVENUE KLOOR, ERNAKULAM, KERALA 682 017.** - **6 MAHTEW GEORGE KURUVITHADAM, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY KURUVITHADAM, PERUMBALLOR P.O. MOOVATTUPUZHA, KERALA, 686 673.** - **7 BIJU CHERIAN, FORMER DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, G95, PANAMPILLY NAGAR, COCHIN, KERALA 682 036.** - **8 K.M. ABDULLA, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY 33/1736 A RAHATMANZIL PUTHIYA ROAD, VENNALA, ERNAKULAM, KERALA 682 028.** - **9 A.J. RAJAN, FORMER SECRETARY, KERALA CHAMBER OF COMMERCE AND INDUSTRY, ALINCHUVATTIL HOUSE, VALANJAVATTOM P.O. KADAPRA, PATHANAMTHITTA DISTRICT 689 104.** - **10 REGISTRAR OF COMPANIES (KERALA AND LAKSHADWEEP), COMPANY LAW BHAVAN, KOCHI, KERALA 682 021.** - **11 THE UNION OF INDIA, MINISTRY OF CORPORATE AFFAIRS, MC ROAD, THIKKAKAKRA P.O. KAKKANAD, KOCHI, KERALA 682 021.** WP.(C).No.35903/19 4 **12 DR. RAMESH KUMAR, DIRECTOR, KERALA CHAMBER OF COMMERCE AND INDUSTRY, SHANMUGHAN ROAD, ERNKULAM, COCHIN 682 031.** **R2-3 BY ADV. SRI.C.S.AJITH PRAKASH R2-3 BY ADV. SRI.T.K.DEVARAJAN R2-3 BY ADV. SMT.T.N.SREEKALA R2-3 BY ADV. SRI.PAUL C THOMAS R2-3 BY ADV. SRI.FRANKLIN ARACKAL R2-3 BY ADV. SRI.M.B.SOORI R2-3 BY ADV. SHRI.BABU M. R10-11 BY ADV. SRI.P.VIJAYAKUMAR** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP.(C).No.35903/19 5 ## **JUDGMENT** ## **Dated this the 6[th] day of January 2020** ## 1.This writ petition is filed seeking the following prayers:- i)Call for the records leading to Exhibit P21 impugned interim order dated 11[th] December 2019 and quash the same by a writ of certiorari or such other writ order or direction. ii)Call for the records leading to the Exhibit P19 impugned order dated 29[th] November, 2019 and quash the same by a writ of certiorari or such other writ, order or direction. iii) Direct the Ld.NCLT, Kochi to grant the petitioners the opportunity to file their submissions and be heard before passing any order by following the procedure laid down under the NCLT Rules 2016 and the principles of natural justice.” - 2.Heard the learned Senior Counsel appearing for the petitioners as well as the learned counsel appearing for respondents 2 and 3. - 3.It is submitted by the learned Senior Counsel appearing - for the petitioners that the petitioners are the present office bearers of the Kerala Chamber of Commerce and WP.(C).No.35903/19 6 Industry, which is a company registered under the Companies Act 1956. It is submitted that a company petition had been preferred by respondents 2 and 3 under Sections 241,242 and 242(4) of the Companies Act 2013 before the NCLT, Chennai. It is submitted that appointment has been made by the NCLT of a Chairman to hold Annual General Meeting of the company. It is contended that without considering the objections raised, by Exhibit 19 order, the NCLT, Kochi, to which the company petition had been transferred, has appointed a retired judge of this Court as Chairman to conduct the Annual General meeting, which is to be conducted without further delay. It is submitted that the writ petitioners had been impleaded as parties to the company petition and notice was issued to them only on 13.12.2019. However, by Exhibit P21 order dated 11.12.2019, it is stated that the petitioners in the Company Petition, who had been suspended from the membership of the company, had been permitted to WP.(C).No.35903/19 7 participate in the deliberation of the Annual General meeting to be conducted by the Chairman appointed by the Tribunal. It is ordered in Exhibit 21 that the suspension of membership is revoked to the extent of enabling them to participate in deliberations of the proposed Annual General meeting. 4.The petitioners' challenge Exhibits P19 and P21 on the ground that the petitioners, who are the present Directors of the company, had not been put on notice or heard before the said orders were passed. It is submitted that Exhibit P21, being an order passed without even an interim prayer being made in that behalf and without hearing the present Directors of the company, who are affected by the same, is one issued in complete violation of the principles of natural justice and that as such, the same is liable to be challenged before this Court under Article 226 of the Constitution of India, even in spite of the existence of an appellate remedy, as provided in the Act. WP.(C).No.35903/19 8 5.The learned Senior Counsel places reliance on a decision of the Supreme Court in Embassy Property Developments Pvt.Ltd v. State of Karnataka [2019 (17) SCALE 37]. It is submitted that where the Tribunal passes orders which are inherently lacking jurisdiction, the exercise of such erroneous jurisdiction by the Tribunals would certainly be amenable to the jurisdiction of this Court under Article 226 of the Constitution of India, in spite of the availability of a remedy of appeal. Relying on a decision of the Apex court in General Manager, Electrical Rengali Hydro Electric Project, Orissa and others v. Giridhari Sahu and others [(2019) 10 SCC 695] it is contented that an order passed in utter violation of the principles of natural justice is equivalent to an order passed without jurisdiction and that as such, the remedy of judicial review under Article 226 of the Constitution of India would be available as against such orders as well. WP.(C).No.35903/19 9 6. The learned counsel for the respondents would contend that the appointment of a Chairman for the conduct of Annual General meeting was an order passed on consensus and on an application preferred by the 1[st] petitioner herein. It is contended that it was only the person of the Chairman which was decided by the NCLT and that petitioners, if there were aggrieved by the appointment of the Chairman can very well approach the NCLT for a change in the person of such Chairman. With regard to Exhibit P21 order, it is contended that the 1[st] petitioner was very much on the party array as on the date when Exhibit P21 order was passed and that there were earlier orders issued by this Court as well as the NCLT with regard to the powers to be exercised by the newly appointed Directors, including the petitioners herein. It is submitted that the petitioners were required to carry out only the normal day to day administrative functions of the company and that they were disabled from taking any policy decisions by inter parte judgments of this Court. It is further contended that this Court had directed the conduct of the General body WP.(C).No.35903/19 10 meeting within a time frame and that the attempt of the petitioners is only to delay the said proceedings. 7. I have considered the contentions advanced. The primary contention of the petitioners with regard to Exhibit P19, which was an order passed in an application preferred by the 1[st] petitioner, is only with regard to the propriety of the appointment of the Chairman for the conduct of the Annual General Meeting. In that case, I am of of the opinion that it is for the petitioners to approach the NCLT seeking any modification, as required and the challenge as against Exhibit P19 would not be maintainable before this Court. With regard to Exhibit P21, it is the specific case of the learned Senior Counsel for the petitioners that petitioners were not put on notice or heard before Exhibit P21 order was passed. It is contended by the learned counsel for the respondents that the lifting of the suspension was only to permit the suspended members to participate in the Annual General meeting and in the deliberations therein. It is stated that an I.A. had been preferred specifically for the said purpose and that in case the WP.(C).No.35903/19 11 petitioners have any objections to the orders passed, they have to prefer an appeal in the NCLT under Section 421 of the Companies Act 2013. 8. The contention of the petitioners is that Exhibit P21, being an order which was rendered without hearing the petitioners and without considering their objections, is an order which is equivalent to an order passed without jurisdiction. The decision of the Apex court in Embassy Property Developments Pvt.Ltd 's case (supra) is an authority on the point that where an order is passed without jurisdiction by the Tribunal, the same would be amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. In the instant case, the challenge against Exhibit P21 is not a ground of inherent lack of jurisdiction. The challenge raised is with regard to the violation of the principles of natural justice inasmuch as the petitioners were not heard and they were not permitted to file a counter affidavit with regard to the relief sought for. Though the learned counsel would place reliance on the decision of the Apex court in General Manager, WP.(C).No.35903/19 12 Electrical Rengali Hydro Electric Project, Orissa (supra), I am of the opinion that the said decision is with regard to the interference by the High Court in awards passed under the Industrial Disputes Act 1947. It is pertinent to note that there is no alternative remedy provided by any statue as against an award of the Labour court or the Industrial Tribunal. The nature of the jurisdiction of this Court has been held to be supervisory in nature and the limits of the jurisdiction in interfering with the awards under the ID Act has been stated and re-stated by the Apex Court time and time again. It is in the above context that the Apex court has held that where an award or an order of the Labour Court or Tribunal is in utter violation of the principals of natural justice, an interference by the writ court may be justified. 9. In the instant case, there is no dispute that the petitioner has an alternative remedy of appeal to NCLAT in accordance with Section 421 of the Companies Act. Since the contention is that Exhibit P21 is an order issued without notice to the petitioners and without considering their objections, it may WP.(C).No.35903/19 13 also be open to the additionally impleaded parties to seek a review of the order and a consideration of their contentions. In the above view of the matter, I am of the opinion that this writ petition raising a challenge against Exhibits P19 and P21 is not maintainable before this Court. The writ petition fails and the same is accordingly dismissed. However, in case the petitioners have any grievance as against Exhibits P19 and P21 orders, they are free to approach the Tribunal seeking the chance to substantiate their contentions and for modification of the orders, if so advised. Sd/- **Anu Sivaraman, Judge** sj WP.(C).No.35903/19 14 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE 59TH ANNUAL GENERAL MEETING DATED 12TH NOVEMBER 2016.** **EXHIBIT P1 A A TRUE COPY OF THE 60TH ANNUAL GENERAL MEETING DATED 129TH DECEMBER 2017.** **EXHIBIT P1 B A TRUE COPY OF THE BOARD RESOLUTION DATED 13 DECEMBER 2017.** **EXHIBIT P1 C A TRUE COPY OF THE MINUTES OF THE BOARD MEETING DAD 31ST JANUARY 2019.** **EXHIBIT P2 A TRUE COPY OF THE NOTIFICATION DATED 27.07.2018.** **EXHIBIT P3 TRUE COPY OF THE LETTER DATED 12.10.2015 INTIMATING THE 2ND RESPONDENT OF THE DECISION TO SUSPEND HIM.** **EXHIBIT P4 A TRUE COPY OF THE BOARD RESOLUTION DATED 13.09.2018.** **EXHIBIT P5 A TRUE COPY OF THE BOARD RESOLUTION DATED 19.09.2018.** - **EXHIBIT P6 A TRUE COPY OF THE BOARD RESOLUTION ACCEPTING THE RESIGNATION OF THE 9TH RESPONDENT ON 21ST FEBRUARY 2019.** **EXHIBIT P7 A TRUE COPY OF THE PETITION IN C.P. NO. 10/2016 DATED 01.11.2016 (WITHOUT ITS ANNEXURES.)** **EXHIBIT P8 A TRUE COPY OF THE PETITION IN C.A. NO. 54 (WITHOUT ANNEXURES).** 15 WP.(C).No.35903/19 **EXHIBIT P9** **A TRUE COPY OF THE MEMO FILED BY RESPONDENT NOS. 2 AND 3 DATED 8TH OCTOBER 2018.** **EXHIBIT P9A TRUE COPY OF THE STATEMENT OF SHRI JUSTICE K. NARAYANA KURUP'S SON-IN-LAW DATED 5TH NOVEMBER, 2018 BEFORE THE NCLT, CHENNAI.** - **EXHIBIT P9 B THE OBJECTIONS RAISED BY THE PETITIONER NO. 13 IS IN NOVEMBER 2018.** - **EXHIBIT P9 C A TRUE COPY OF THE ORDER DATED 26TH NOVEMBER 2018 PASSED BY THE NCLT CHENNAI.** - **EXHIBIT P10 A TRUE COPY OF THE FINAL REPORT FILED BY THE NCLT, CHENNAI, APPOINTED CHAIRMAN RECEIVED ON DATED 4TH MARCH 2019.** **EXHIBIT P11 A TRUE COPY OF THE DAILY ORDER DATED 27 AUGUST 2019.** - **EXHIBIT P12 A TRUE COPY OF THE ORDER DATED 2ND SEPTEMBER 2019.** - **EXHIBIT P13 A TRUE COPY OF THE DAILY ORDER DATED 9TH OCTOBER 2019 OF RESPONDENT NO.1.** - **EXHIBIT P14 A TRUE COPY OF THE DAILY ORDER DATED 24 OCTOBER 2019.** - **EXHIBIT P15 A TRUE COPY OF THE DAILY ORDER DATED 25TH NOVEMBER 2019.** - **EXHIBIT P16 A TRUE COPY OF THE IA NO. 66/KOB/2019.** - **EXHIBIT P17 A TRUE COPY OF THE TYPED THROUGH A COPY OF THE DAILY ORDER DATED 28TH NOVEMBER 2019.** **EXHIBIT P18 A TRUE COPY OF THE DAILY ORDER PASSED ON 29TH NOVEMBER 2019.** WP.(C).No.35903/19 16 **EXHIBIT P19 A TRUE COPY OF THE IMPUGNED ORDER DATED 29 NOVEMBER 2019 PASSED IN I.A. 66/KOB/2019. EXHIBIT P20 A TRUE COPY OF THE I.A. NO. 62/KOB/2019. EXHIBIT P21 A TRUE COPY OF THE IMPUGNED INTERIM ORDER DATED 11.12.2019. EXHIBIT P22 A TRUE COPY OF THE DAILY ORDER DATED 11 DECEMBER 2019. EXHIBIT P23 A TRUE COPY OF THE NOTICE ISSUED BY THE LD. NCLT, KOCHI TO ALL PARTIES. True copy** **Ps to Judge**