Can NCLAT refer split verdicts to a third member? Supreme Court to consider

The Supreme Court recently said that it would examine whether the National Company Law Appellate Tribunal (NCLAT) can refer cases that result in a split verdict to a third member for decision, or whether such matters must be heard afresh by a larger coram [R Narayananswamy v. The Registrar of Companies, Tamil Nadu].

A Bench of Justices JB Pardiwala and KV Viswanathan sought the assistance of the Solicitor General of India to help clarify the correct procedure, observing that the issue raised a procedural gap in the NCLAT’s functioning.

The question arose in an appeal filed against the order of the Registrar of Companies (ROC), Tamil Nadu striking off a company’s name from the Register of Companies under Section 248(5) of the Companies Act, 2013.

The company’s name had been removed from the Register in 2018, prompting the appellant to approach the National Company Law Tribunal (NCLT), Chennai Bench. The NCLT dismissed the appeal in 2020, after which the appellant moved the NCLAT.

At the NCLAT, the matter resulted in a split verdict. One member held that the ROC’s striking-off order was not in accordance with law, while the other member upheld it. The case was then referred to a third member, who agreed with the latter view and upheld the ROC’s order.

Challenging this procedure, the appellant moved the top court.

Before the Supreme Court, the appellant argued that in the absence of any specific NCLAT regulation to govern such situations, a matter in which members differ should be placed before a new three-member coram for a complete rehearing rather than being referred to a third ,ember for tie-breaking.

The appellant's counsel contended that referring the case to a single third member to resolve a division between two members may not satisfy the requirement of collective adjudication.

The Supreme Court took note of this contention and said that the procedural question warranted authoritative guidance.

The Court accordingly directed its Registry to forward a copy of the order to Solicitor General Tushar Mehta and asked the appellant’s counsel to bring the direction to his attention.

The matter will now be taken up on November 19 after the Solicitor General’s inputs.

The appellant was represented by Senior Advocate Viraraghavan Rama Krishnan along with Advocates NC Ashok Kumar, B Karunakaran, Pooja Lakshmi, G Nishanth, Anoop Prakash Awasthi, Vivek Kr Tripathi, Rushikanta Dash and Shubham Dubey.

The respondent was represented by Advocates Arvind Kumar Sharma, Shailesh Madiyal, Anmol Chandan, Annirudh Sharma, Anuj Udupa, Prashant Singh and Sudharshan Lamba.

[Read Order]