The petitioners in the lawsuit argued that even though the 157 firms are operational, the impugned letter requests for the freezing and disgorgement of their assets to be liquidated. Due to Section 212(14) of the Companies Act, the petitioners challenged the letter. The Petitioners further claimed that the Respondent No. 1's officials had a duty to examine the aforementioned companies' reports, something that evidently wasn't done.
The Petitioners added that on August 15, 2019, Section 212(14A) of the Companies Act went into effect, bringing the power of property disgorgement into force for the first time. However, in this case, an order for disgorgement was granted on June 29, 2019, hence the letter is premature and without authority. Additionally, it was said that NCLT couldn't determine any issue's jurisdiction. Additionally, it was contended that such disgorgement orders, regardless of circumstance, could only be made during a trial, not immediately after the filing of a charge sheet, because the NCLT could not make such an order without the State providing evidence to support its claim.
In the instant case titled Shriraj Investment and Finance Ltd. & Ors. and Casper Consumer Electronics Pvt. Ltd. v. Union of India & Anr., the issue raised for clarification before the Delhi High Court was:
Whether NCLAT can be considered as a forum for appeal?
With regard to this issue, as such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC.
The Court categorically stated that,
"In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectively. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee".