Merely Questioning Process Behind NCLT Findings does not Justify Invoking Writ Jurisdiction: Bombay HC [Read Order]

The Bombay High Court has refused to entertain a writ petition challenging an order of the National Company Law Tribunal ( NCLT ), holding that alleged procedural irregularities must be raised before the National Company Law Appellate Tribunal ( NCLAT ) as per IBC provisions and said that merely questioning the process behind the NCLT’s findings cannot be a good ground for invoking writ jurisdiction.

The Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat observed that “Merely stating that the petitioner is not challenging the finding and only the process by which such finding was reached by NCLT, cannot be a ground for maintaining the Writ Petition before this Court.”

Sunil G. Kundnani filed a petition challenging an order dated 8 July 2024 passed by the NCLT, Mumbai Bench.

The impugned order had dismissed an application seeking recall of an earlier NCLT order dated 3 May 2024. The petitioner challenged only the recall rejection order before the High Court and did not challenge the substantive order dated 3 May 2024 either in the writ proceedings or before the NCLAT.

Union of India, the respondents, argued that Section 61 of the IBC provides statutory appellate remedy before the NCLAT against orders passed by the NCLT. Since such an alternative remedy was available, the petitioner could not directly approach the High Court via writ jurisdiction.

The petitioner, on the other hand, submitted that he was not challenging the findings recorded by the NCLT but the process through which those findings had been reached.

According to the petitioner, the NCLT had committed procedural irregularities by allegedly ignoring written submissions that had been filed before the Tribunal.

It was argued that despite these submissions being on record, the NCLT failed to consider them while passing the order dated 3 May 2024 and later rejected the recall application on an incorrect factual premise.

The Petitioner also noted Supreme Court decisions, including State of Andhra Pradesh v. P.V. Hanumantha Rao, PHR Invent Educational Society v. UCO Bank and B.K. Maniraju v. State of Karnataka, and asserted that the High Court could exercise writ jurisdiction notwithstanding the availability of an alternative remedy where the challenge relates to the decision-making process rather than the decision itself.

The Court observed that the petitioner had a statutory remedy to appeal before the NCLAT under Section 61 of the IBC. Furthermore, the High Court noted the petitioner improperly challenged only the subsequent order rejecting the recall application, failing to contest the substantive main order, which actually affected his rights.

While concluding the order, the division bench observed that “we find that the petitioner has not suffered any prejudice, only because his written submissions were not referred to by the NCLT while passing the order dated 03/05/2024. In paragraph 2.1 to 2.6 of the said order, the contentions of the were duly recorded and considered. Hence, no procedural irregularity can be attributed in that regard.”

In addition, the Court also clarified that the issue regarding the petitioner’s exclusion as a respondent in a pending interim application before the NCLT remained open for adjudication on merits.

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