‘Questions Over Functioning of NCLT’: NCLAT Orders Inquiry Into ‘Dubious’ Tribunal Proceedings"
Isabella Mariam
The National Company Law Appellate Tribunal (NCLAT), Chennai, has directed the President of the National Company Law Tribunal (NCLT) to conduct an inquiry into procedural irregularities observed in the handling of a case before the NCLT Chennai Bench. The order, issued by Justice Sharad Kumar Sharma and Member (Technical) Jatindranath Swain, follows the dismissal of an appeal as infructuous but raises significant concerns regarding the manner in which the NCLT order dated March 15, 2022, was passed. The tribunal has requested a report on the inquiry to be submitted to the Chairperson of NCLAT, New Delhi.
The appeal, filed by Asset Reconstruction Company (India) Limited, challenged an order passed in proceedings concerning the corporate insolvency resolution process of Regen Powertech Private Limited. However, the appellant submitted that the claim had been admitted, rendering the appeal infructuous. While dismissing the appeal on that ground, the NCLAT recorded its observations on the procedural discrepancies in the NCLT proceedings and directed an inquiry to ensure fairness and maintain public confidence in the adjudicatory process.
The matter originated from proceedings in MA/61/CHE/2021 before the NCLT, Chennai, relating to the corporate insolvency resolution process of Regen Powertech Private Limited. The appellant, Asset Reconstruction Company (India) Limited, had filed an appeal against an order dated March 15, 2022, but later submitted that the appeal had been rendered infructuous due to the admission of its claim. Consequently, the NCLAT dismissed the appeal.
However, the appellate tribunal took note of alleged procedural irregularities in the NCLT’s handling of the matter. The tribunal observed that the order dated March 15, 2022, appeared to have been passed under questionable circumstances.
The appellant’s counsel submitted that the matter had been part-heard on January 18, 2022, and was then directed to be listed on February 15, 2022. However, as per the appellant, the order sheet of February 15, 2022, did not indicate that the matter was listed or directed to be heard on March 15, 2022. Despite this, the order in question was passed on March 15, 2022, without any recorded prior fixation of that date for hearing.
The respondent’s counsel argued that the case status indicated the matter was taken up on March 15, 2022, and subsequently listed for further consideration on April 25, 2022. The NCLAT, however, noted that there was no clear record of the case being scheduled for March 15, 2022, raising concerns about procedural propriety.
The NCLAT recorded that the manner in which the order of March 15, 2022, was passed appeared "rather dubious" and required further examination. It identified four key concerns:
- The matter was part-heard on January 18, 2022, and directed to be listed on February 15, 2022. However, the order sheet of February 15, 2022, did not indicate that the case was scheduled for March 15, 2022.
- Despite this, the case appeared to have been taken up for hearing on March 15, 2022, with no prior recorded fixation of that date.
- The impugned order was passed on March 15, 2022, despite the absence of a clear listing for that day.
- The observations and directions recorded by the NCLT on March 15, 2022, formed the basis of the order passed on the same day, which the NCLAT noted was "not plausible."
These observations led the NCLAT to direct an inquiry into the procedural handling of the case.
The appellate tribunal recorded:
"The facts and submissions as above raise questions over the functioning of NCLT."
To ensure procedural fairness and maintain public confidence in the tribunal’s adjudicatory role, the NCLAT requested the President of NCLT to examine the issue and submit a report. The order stated:
"The President, NCLT, is requested to look into the issue and conduct an enquiry, particularly in order to attach fairness to the proceedings of the NCLT so as to repose confidence in the public at large on these major issues."
The NCLAT directed that the inquiry be conducted promptly and that the President of the NCLT submit a report to the Chairperson, NCLAT, New Delhi. The order stated:
"It is hoped and trusted that as soon as the aforesaid process is completed by the Honourable President, he is requested to furnish the report back to the Honourable Chairperson, New Delhi, (with a copy to us) for necessary further action."
Advocates Representing the Parties
For the Appellant: E. Om Prakash, Senior Advocate, for VV Sivakumar, Advocate
For the Respondent: Pranava Charan, Advocate
Case Title: Asset Reconstruction Company (India) Limited v. Mr. Ebenezar Inbaraj, Resolution Professional of Regen Powertech Private Limited & Anr.
Case Number: Company Appeal (AT) (CH) (Ins) No.186/2022
Bench: Justice Sharad Kumar Sharma (Member Judicial), Jatindranath Swain (Member Technical)
[Read/Download order]
