NCLAT Chennai: Grounds Not Taken On Jurisdiction Before Cannot Be Contested Afresh On Appeal When The Parties Accepted The Jurisdiction In NCLT

The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Shreesha Merla (Technical Member) dismissed the appeal filed by Jitendra Virmani (Appellant) against the National Company Law Tribunal (‘NCLT’) Bangalore order dated 27.11.2019. The Appellate Tribunal held that the grounds not taken on jurisdiction before the NCLT, cannot be contested afresh on appeal as the parties have exercised acquiescence and accepted the jurisdiction of the NCLT. Background Facts: Proceedings were initiated by the Appellant who is the Chairman and Founder of the Embassy Group against Mro-Tek Realty Limited (‘Company’) on the grounds of oppression and mismanagement challenging a real estate development undertaken by the Company. Multiple proceedings were initiated by the Appellant before the Civil Courts in Bengaluru. The Appellant withdrew an oppression and mismanagement petition and initiated another proceeding for oppression and mismanagement against the Company, which was dismissed by the NCLT Bangalore. The said order of NCLT Bangalore dated 27.11.2019 is in appeal before the NCLAT Chennai. Contentions of the Parties: The Appellant argued that the NCLT’s order is ‘non-est’, ‘abinitio’ "void" besides being an ‘illegal one’ as it was passed by Hon’ble Member (Judicial) of the ‘Tribunal’, sitting singly, in the absence of the Hon’ble Member (Technical), wherein all previous hearings had taken place before two members, one being Judicial and one being Technical. Further, the powers of the ‘Tribunal’ shall be exercisable by Benches, consisting of two Members (Judicial) and(Technical) except in the case of the Hon’ble President of the ‘Tribunal’ by general or special order may authorize the Hon’ble Judicial (Member), to singly constitute the Bench. The Company defended that the quorum of the Bench passing the order was reconstituted as per law with no infirmity. Further, no such ground was ever raised before the NCLT and the Appellant participated in the proceedings before the NCLT without any protest and is being adopted for the first time before the NCLAT. NCLAT Verdict: The NCLAT dismissed the appeal and held that the grounds not taken on jurisdiction before the NCLT, cannot be contested afresh on appeal as the parties have exercised acquiescence and accepted the jurisdiction of the NCLT. The Tribunal held that the Appellant had willingly participated in the proceedings before the NCLT without any murmur, by his own conduct and is now estopped from assailing the impugned order, and also tacitly took part in the proceedings, cannot ‘Approbate’ and ‘Reprobate’ because of the fact, he had acquiesced to the hearing in which the Impugned Order was passed. Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited Case No.: Company Appeal (AT) No.363/2019 Counsel for Appellant: Dr. U.K. Chaudhary, Senior Advocate Mr. Manisha Chaudhary, Advocate Mr. Mansumyer Singh, Advocate Mr. Manisha Sharma, Advocate Mr. Shravan Chandrashekhar, Advocate Counsel for Respondent: Mr. P.H. Arvindh Pandian, Senior Advocate For Mr. Pawan Jhabakh, Advocate, For R1, R11, R13 & R15 Ms. Parina Lalla, Advocate, For R2 to R8 & R14 Click Here To Read/Download Order

NCLAT Chennai: Grounds Not Taken On Jurisdiction Before Cannot Be Contested Afresh On Appeal When The Parties Accepted The Jurisdiction In NCLT

Sachika Vij

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