NCLAT Chennai: NCLT Has Inherent Powers To Look Into Earlier Litigations To Ascertain The Bonafide Of A Party

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 in Jitendra Virmani vs. MRO – Tek Reality Limited. Jitendra Virmani (Appellant) filed the appeal against the National Company Law Tribunal (‘NCLT’) Bangalore order dated 27.11.2019. The Appellate Tribunal held the NCLT is well within the ambit with its inherent powers to look into the earlier orders and the observations made to ascertain the bonafide of the Appellant. 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 raised a plea against the action of NCLT to place reliance on ‘orders’ relating to earlier litigations, to find out the Appellant’s conduct. The Respondents submitted that the aspect of ‘Good Faith’ being a ‘sine qua non’ for maintaining a petition under Section 241 of the Companies Act, 2013, has to be tested by the Appellant’s conduct as reflected not only in the proceedings before the ‘Tribunal’ but also in the parallel proceedings, in the civil courts and in other ‘civil litigations’, in other ‘forms’. The Respondents argued that the NCLT’s order dated 27.11.2019 provides that the ‘Tribunal’ had not merely placed reliance on the orders passed earlier but had in fact, independently, assessed the ‘conduct’ and ‘Bonafides’ of the Appellant in numerous proceedings, initiated by him, before different forums, before approaching the ‘Tribunal’, and hence, no-fault or infirmity can be attributed to the ‘Tribunal’. NCLAT Verdict: The NCLAT held that the Tribunal is well within the ambit with its inherent powers to look into the earlier orders and the observations made to ascertain the bonafide of the Appellant. The Appellate Tribunal pointed out that the NCLT Bangalore in its order dated 27.11.2019 had not only looked into the orders but also, separately / independently, taking into consideration the Appellant’s ‘bonafide’, in preferring, various proceedings, before numerous forums, before approaching it. NCLAT concluded that there is no fetter, in Law in regard to the Tribunal’s power to not look into the orders to ascertain the bonafide of the ‘Appellant’. 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: NCLT Has Inherent Powers To Look Into Earlier Litigations To Ascertain The Bonafide Of A Party

Sachika Vij

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