Approach NCLT: Delhi HC Disposes Of Petition Filed By DDCA Secretary Challenging Appointment Of Ex-Judge Justice MM Kumar

The Bench headed by Justice Subramonium Prasad said that “it is always open for the NCLT to stay the effect of the resolution dated 10.04.2023 and reverse any order passed by the Ombudsman or any action taken by him/her if it is not in the interest of the DDCA. The Petitioner has not made out a case that it is imperative for this Court to entertain the present Writ Petition even though an equally efficacious alternative remedy/forum is available to the Petitioner and that the Ombudsman can pass such orders which are irreversible in nature and cannot be rectified if they are found to be faulty.”

The Court further added that “The present case also does not fall within the exceptions that have been laid down by the Apex Court in South Indian Bank Ltd. (supra) which would compel this Court to entertain the present Writ Petition even in the presence of an equally efficacious alternative remedy to the Petitioner. This Court is, therefore, not inclined to entertain the present Writ Petition at this stage and grants liberty to the Petitioner to approach the NCLT for the redressal of its grievances.”

Senior Advocate Sachin Puri and Senior Advocate Rahul Mehra appeared for the Petitioner while Senior Advocates Rajeev Nayyar, Sandeep Sethi, Mohit Mathur, Rajshekhar Rao and ASG Aishwarya Bhati appeared on behalf of the Respondent.

The Petition was filed by Mr. Siddharth Sahib Singh, the incumbent Secretary of the DDCA. It was alleged that a Notice was issued by the DDCA calling for a meeting to pass off a resolution. The resolution appointed Justice M M Kumar (Retd.), Former Chief Justice of High Court of Jammu & Kashmir as the Ombudsman cum Ethics Officer of the DDCA.

The Petitioner stated that the said resolution goes against the provisions of Articles of Association of the DDCA. The Petitioner further submitted that the High Court has power to exercise jurisdiction under Article 226. Further, the Petitioner cannot approach the NCLT by filing an application under Section 241, Companies Act, as Section 244 of the Companies Act can only be filed if such an application is supported by at least 20% of the total number of members of the company and, therefore, the Petitioner had no other remedy for redressal of his grievance.

The High Court had to deal with the issue of maintainability of the Petition. The Court held that “It is well settled that the jurisdiction of a High Court under Article 226 of the Constitution of India is couched in wide terms and the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly provided in the Articles but the exercise of the jurisdiction is discretionary and it is not exercised merely because it is lawful to do so.”

For the reasons provided for not approaching the NCLT by the Petitioner, the Court said “Though Section 244(1)(b) of the Companies Act provides that an application under Section 241 of the Companies Act can be entertained only if it is supported by one-fifth of the total number of members of the company but the NCLT has power to waive of this requirement. The Petitioner, therefore, ought to have approached the NCLT and if the NCLT would have refused to waive off the stipulated requirement of support of one-fifth members of the company then it was always open for the Petitioner to approach this Court by contending that no equally efficacious alternative remedy is left to him.”

Accordingly, the High Court disposed of the Petition and asked the Petitioner to approach the NCLT.

Cause Title: Siddharth Sahib Singh v. Apex Council of DDCA

Click here to read/download Judgment