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Orbit Electricals Private Limited vs Deepak Kishan Chhabria & Ors

Contempt Petition (Civil) · 2023 INSC 967Decided 30 Oct 2023
Contempt Petition (Civil) No. 1195 of 2023

Background

This contempt case arose out of a bitter boardroom dispute over the appointment of the Executive Chairperson of Finolex Cables Limited. The Supreme Court had earlier vacated an NCLAT interim order and directed that the result of the company's Annual General Meeting (AGM) held on 29 September 2023 be declared, and that the NCLAT should pronounce its pending judgment only after being told that the AGM result had been declared. On 13 October 2023, despite counsel informing the NCLAT Bench in open court (with CCTV footage later confirming this) that the Supreme Court's order required the AGM result to be declared first, the NCLAT Bench went ahead and pronounced its judgment anyway.

Decision Breakdown

The Supreme Court reviewed CCTV footage and a verified transcript of the NCLAT hearing and found, beyond doubt, that the NCLAT Bench had been clearly apprised of the Supreme Court's order but chose to defy it and pronounce judgment regardless. Exercising its powers under Article 142 of the Constitution, the Court set aside the NCLAT's 13 October 2023 judgment (without commenting on its merits) and directed the appeal to be reheard afresh by a Bench headed by the NCLAT Chairperson. The Technical Member's unconditional apology was accepted, but the Judicial Member (whose affidavit was found to misstate the record) was censured, and he subsequently resigned. The Court also found that the AGM Scrutiniser had acted in concert with Mr. Deepak Kishan Chhabria to unlawfully delay declaring the AGM result, and directed Mr. Chhabria to pay Rs. 1 crore and the Scrutiniser to pay Rs. 10 lakh to the Prime Minister's Relief Fund.

Lesson Learnt

Tribunals and subordinate judicial bodies are bound to comply with Supreme Court orders the moment they are apprised of them, even informally in open court: willful defiance can result in the order being nullified, personal censure of the judicial officer involved, and exemplary monetary penalties on parties who try to engineer outcomes by delaying compliance.

Official source (sci.gov.in)View Judgment (PDF)

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