Bombay High Court Imposes ₹50,000 Costs for Premature Challenge to Reserved NCLT Order, Cites Waste of Judicial Time

MUMBAI – In a stern message against premature and unmaintainable litigation, the Bombay High Court has imposed costs of ₹50,000 on a petitioner who challenged an order of the National Company Law Tribunal (NCLT) that had only been reserved for judgment and not yet pronounced. The ruling serves as a significant judicial admonishment against attempts to preempt tribunal decisions through writ jurisdiction and underscores the court's intolerance for arguments that consume valuable judicial time on non-maintainable grounds.

A division bench comprising Justices R.I. Chagla and Farhan P. Dubash held unequivocally that a writ petition under Article 226 of the Constitution of India cannot be entertained against a judicial or quasi-judicial order that is yet to be delivered. The Court further expressed its displeasure with the petitioner's counsel for insisting on arguing the merits of the case despite being clearly informed of the Court's view on the petition's lack of maintainability.

The Premature Challenge and the Court's Rebuke

The writ petition, filed by Shripal Sevantilal Morakhia, sought to quash an NCLT order dated August 4, 2025. By this order, the Mumbai bench of the NCLT had simply reserved its decision on an interim application within an ongoing insolvency proceeding. Morakhia also sought a stay on the resolution plan that the NCLT had previously approved on May 7, 2025.

The High Court bench swiftly identified the fundamental flaw in the petitioner's approach. It observed that a reserved order, being non-existent in its final, reasoned form, offers no cause of action for a writ challenge. The bench articulated its position clearly in its order:

“Thus, the Order reserved has not yet been pronounced. Accordingly, the Order dated 4th August, 2025 is not amenable to challenge in a Writ Petition under Article 226 of the Constitution of India.”

Despite this definitive stance from the bench, the petitioner's counsel pressed on with arguments on the merits of the underlying insolvency matter. This persistence led the Court to conclude that its time was being deliberately wasted. Consequently, the bench imposed costs, stating:

“The learned Counsel for the Petitioner though having appraised of this Court's view on non maintainability of the Petition, has insisted on going with the arguments on merits and thus wasting this Court's time. Accordingly, we consider it fit to impose cost of Rs.50,000/- and which shall be paid to Indian Red Cross Society, Mumbai.”

Arguments on Delay and the Misapplication of Precedent

The petitioner, represented by Advocate Pratik Sarkar, attempted to justify the writ petition by invoking Rule 150 of the NCLT Rules, 2016. This rule mandates that tribunals pronounce their orders within 30 days of the final hearing. To bolster this argument, the petitioner cited the Bombay High Court's 2019 judgment in Kamal K. Singh v. Union of India , a case where the court had emphasized the importance of avoiding delays in the delivery of judgments.

However, the division bench meticulously distinguished the Kamal K. Singh precedent from the present case. It clarified that while the earlier judgment stressed the need for timely pronouncements, it did not address the specific legal question at hand: whether a writ petition is maintainable against an order that has merely been reserved. The Court noted that the precedent did not create a right to challenge a reserved order and therefore did not support judicial interference at this nascent stage. The bench effectively ruled that a delay in pronouncement, while undesirable, does not automatically create a cause of action to challenge the yet-to-be-delivered order itself via a writ petition.

The Alternative Remedy and Appellate Scrutiny

A crucial element highlighted during the proceedings was that the petitioner had already sought relief from the appropriate appellate forum. Senior Advocate Ashish Kamat, appearing for one of the respondents, informed the Court that Morakhia had filed an appeal before the National Company Law Appellate Tribunal (NCLAT).

Significantly, the NCLAT had already addressed the matter on August 21, 2025. The appellate tribunal had taken note that the NCLT's order was reserved and pragmatically directed that the order could be placed on its record once it was formally pronounced by the NCLT. This fact reinforced the High Court's view that the petitioner was not without remedy and that the proper legal channel was already being utilized. The High Court's observation that the petitioner had "availed the proper appellate remedy" served to further underscore the writ petition's superfluous nature.

Analysis: Upholding Judicial Hierarchy and Discipline

This judgment is a powerful reaffirmation of established principles governing writ jurisdiction and judicial hierarchy. It sends a clear signal to litigants and the bar that the extraordinary remedy under Article 226 cannot be used as a tool to circumvent statutory appellate procedures or to pressure lower tribunals.

The Court's decision rests on several key legal pillars:

1. Non-Existence of a Judgement: A reserved order is not a final, appealable order. It lacks reasoning, findings, and a definitive operative part. Challenging it is akin to challenging a thought process, not a legal pronouncement. The High Court rightly refused to entertain a petition against an order that, for all practical purposes, does not yet exist.

2. Exhaustion of Alternative Remedies: The writ jurisdiction is discretionary and is typically not exercised when an equally efficacious alternative remedy is available. In this case, the NCLAT is the designated statutory body to hear appeals from the NCLT. The fact that the petitioner had already approached the NCLAT made the High Court's intervention both unnecessary and inappropriate.

3. Preventing Abuse of Process: By imposing costs, the Court has taken a stand against what it perceived as an abuse of the judicial process. Insisting on arguing a non-maintainable petition is a drain on judicial resources, delaying justice for other litigants. The penalty serves as a deterrent against filing such "wait-and-watch" petitions, which can be used strategically to disrupt proceedings or gain undue leverage.

For legal practitioners, this order is a critical reminder of the duty owed to the court. While zealous advocacy is expected, it must be balanced with a professional responsibility not to pursue patently untenable claims. The Court's pointed remark about its view being communicated before arguments continued highlights the expectation that counsel will act reasonably and assist the court, rather than engaging in futile exercises. The case, Shripal Sevantilal Morakhia v. National Company Law Tribunal, Mumbai Bench, & Ors. , will likely be cited as a cautionary tale for those contemplating premature challenges to judicial and quasi-judicial proceedings.