SC RULES NCLAT TO ACT WITHIN THE DOMAIN PRESCRIBED BY LAW

The Supreme Court, in M/s B. Himmatlal Agrawal v. Competition Commission of India & Anr., decided on 18^th May, 2018, has held that the National Company Law Appellate Tribunal (NCLAT) has no jurisdiction to dismiss the appeal failing non-compliance of deposit as a pre-condition for grant of stay.

In the instant case, the Competition Commission of India had imposed penalty of Rs. 3.61 crores on the Appellant, namely, M/s B. Himmatlal Agrawal and nine other parties for indulging in anti-competitive and unfair trade practices. The Appellant appealed against the order before the NCLAT, and also prayed for interim stay of the penalty order. The NCLAT granted stay to the Appellant on the condition that it deposits 10% of the total penalty. The Appellant failed to deposit the amount and the NCLAT disposed off the appeal without further reference to the Bench.

The pure legal question that came up for consideration before the Supreme Court was whether the order of the NCLAT dismissing the main appeal itself for non-compliance of the direction to deposit the amount as a condition for grant of stay, is justified and legal.

The Bench of Justice A. K. Sikri and Justice Ashok Bhushan, referring to Section 53B of the Competition Act, 2002, which pertains to Appeal to NCLAT, ruled as follows:

“This statutory provision does not impose any condition of pre-deposit for entertaining the appeal. Therefore, right to file the appeal and have the said appeal decided on merits, if it is filed within the period of limitation, is conferred by the statute and that cannot be taken away by imposing the condition of deposit of an amount leading to dismissal of the main appeal itself if the said condition is not satisfied. Position would have been different if the provision of appeal itself contained a condition of pre-deposit of certain amount. That is not so. Sub-section (3) of Section 53B specifically cast a duty upon the Appellate Tribunal to pass order on appeal, as it thinks fit i.e. either confirming, modifying or setting aside the direction, decision or order appealed against. It is to be done after giving an opportunity of hearing to the parties to the appeal. It, thus, clearly implies that appeal has to be decided on merits.”

In conclusion, it needs to be understood that the condition of deposit was attached to the order of stay. In case of non-compliance of the said condition, the consequence would be that the stay has ceased to operate as the condition for stay is not fulfilled. However, non-compliance of the conditional order of stay would have no bearing insofar as the main appeal is concerned.

Surabhi Aggarwal

Senior Associate

The Indian Lawyer