The National Company Law Appellate Tribunal (NCLAT) has called for an inquiry into the operations of the Chennai Bench of the National Company Law Tribunal (NCLT), citing irregularities in a 2022 order that it deemed “dubious.”
A Bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain directed the Principal Bench of the NCLT to investigate, emphasizing the need to uphold public confidence in the tribunal’s fairness.
The case stemmed from an appeal by Asset Reconstruction Company (India) Limited (ARCIL) challenging an NCLT order issued on March 15, 2022. Although the appeal was dismissed as infructuous, NCLAT scrutinized the manner in which the original order was issued, uncovering inconsistencies.
Red Flags in NCLT’s Proceedings
The appellate tribunal identified multiple procedural lapses:
- Unscheduled Hearing: The case was last recorded for a hearing on February 15, 2022, but there was no official listing for March 15, 2022, the date the ruling was passed.
- Cause List Discrepancy: While the opposing counsel claimed the case was scheduled, NCLAT found no prior notice or documentation supporting this.
- Questionable Basis for Order: The ruling appeared to rely on observations and directions allegedly made on the same day, raising doubts about its legitimacy.
The March 15, 2022 order referenced a direction issued on the same day, followed by a memo submission—yet no record of such a directive or memo exists.
Call for Transparency
Given these anomalies, NCLAT has urged the President of the NCLT to conduct a thorough inquiry and submit a report to the Chairperson in New Delhi, with a copy forwarded to NCLAT for further action. The tribunal underscored the importance of maintaining procedural integrity to safeguard public trust in the judicial system.