NCLAT’s Verdict on Appeal Filed by Jitendra Virmani
Parties’ Acceptance of NCLT Jurisdiction and Impugned Order
The National Company Law Appellate Tribunal (NCLAT) in Chennai, with Justice M. Venugopal as the Judicial Member and Shreesha Merla as the Technical Member, recently rendered a decision, dismissing the appeal lodged by Jitendra Virmani, the Appellant. This appeal pertained to an order issued by the National Company Law Tribunal (NCLT) in Bangalore, dated 27.11.2019. The Appellate Tribunal, in its ruling, asserted that grounds not previously raised on jurisdiction before the NCLT cannot be recontested on appeal. This is based on the principle that the parties have, by their actions, accepted the jurisdiction of the NCLT.
Jitendra Virmani Initiates Proceedings
Background Facts
Jitendra Virmani, the Chairman and Founder of the Embassy Group, initiated the proceedings. He alleged oppression and mismanagement against Mro-Tek Realty Limited, a real estate company, specifically targeting a real estate development project.
Simultaneously, Virmani instigated multiple proceedings in the Civil Courts in Bengaluru. At first, he withdrew his petition concerning oppression and mismanagement. Later, he initiated a new proceeding on the same grounds. However, the NCLT in Bangalore ultimately dismissed this second proceeding. Consequently, Virmani lodged an appeal against the NCLT’s decision with the NCLAT in Chennai.
Legal Arguments
Appellant’s Assertions
Jitendra Virmani asserted that the NCLT’s order was deeply flawed. He claimed it was ‘non-est,’ ‘ab initio’ “void,” and ‘illegal.’
He argued that a single member of the Tribunal, the Hon’ble Member (Judicial), issued the order, without the Hon’ble Member (Technical) present, despite prior hearings involving both members.
According to Virmani, the Tribunal usually operates with benches consisting of two members, one being Judicial and the other Technical. This practice remains unless the Hon’ble President of the Tribunal issues a specific order authorizing a single-member bench.
Company’s Defense
Firstly, The respondent company countered these claims, asserting that the quorum of the bench was reconstituted in accordance with the law, with no legal irregularities. Furthermore, the company argued that the appellant had never raised this jurisdictional issue before the NCLT during the original proceedings. In fact, Virmani actively participated in those proceedings without protest. This argument, now presented for the first time before the NCLAT, was seen as an attempt to manipulate the proceedings.
NCLAT’s Final Decision
In its final verdict, the NCLAT upheld the principles of acquiescence and party acceptance of jurisdiction.
The NCLAT interpreted the appellant’s participation in the NCLT proceedings without objection. This interpretation resulted in the waiver of his right to later challenge the jurisdiction of the NCLT.
Furthermore, the NCLAT ruled that Virmani’s conduct effectively estopped him from assailing the impugned order. The tribunal also emphasized that Virmani’s tacit participation in the proceedings prevented him from both ‘approbating’ and ‘reprobating’ the same proceedings.
The NCLAT made it clear that Virmani’s actions constituted consent to the hearings in which the impugned order was issued. This made any subsequent challenge to the jurisdiction untenable.
Case Details
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
- Mr. Pawan Jhabakh, Advocate, representing R1, R11, R13 & R15
- Ms. Parina Lalla, Advocate, representing R2 to R8 & R14
