Can NCLAT Send Split Verdicts to a Single Member? Supreme Court to Decide
The Supreme Court has decided to examine whether the National Company Law Appellate Tribunal (NCLAT) is legally allowed to refer cases resulting in a split verdict to a third member for a final decision, or whether such cases must be heard afresh by a larger bench.
A Bench of Justices JB Pardiwala and KV Viswanathan observed that the issue highlights a procedural gap in the NCLAT’s functioning. The Court has sought the assistance of the Solicitor General of India to clarify the correct process to be followed.
The case originated from an appeal filed against the order of the Registrar of Companies (ROC), Tamil Nadu, which had struck off a company’s name from the Register of Companies under Section 248(5) of the Companies Act, 2013. After the NCLT, Chennai, dismissed the company’s plea in 2020, the appellant approached the NCLAT.
At the NCLAT, the two-member bench delivered a split verdict — one member held that the ROC’s action was invalid, while the other upheld it. The case was then referred to a third member, who sided with the latter view and confirmed the ROC’s order.
Challenging this procedure, the appellant argued before the Supreme Court that there is no specific regulation in NCLAT’s framework to deal with such situations. Hence, cases with differing opinions between members should be heard again by a new three-member bench, rather than by a single third member. The counsel for the appellant contended that referring such matters to a single member does not align with the principle of collective adjudication.
The Supreme Court acknowledged that the question involves an important procedural clarification. It directed that a copy of its order be sent to Solicitor General Tushar Mehta, and asked the appellant’s counsel to ensure the same is brought to his attention. The case is scheduled for further hearing on November 19 after receiving the Solicitor General’s inputs.
Senior Advocate Viraraghavan Rama Krishnan appeared for the appellant, along with a team of advocates. The respondents were represented by Advocates Arvind Kumar Sharma and others.
