In a rare incident, appellate tribunal NCLAT has directed an investigation into an order passed by the Chennai bench of the National Company Law Tribunal (NCLT).

The National Company Law Appellate Tribunal (NCLAT) has directed the President of NCLT to conduct an enquiry into an order passed by it on March 15, 2022 saying it “cannot ignore the fact that the manner in which the order of March 15, 2022, has been passed”, appears “dubious” and “not plausible”. The facts and submissions in the matter “raise questions over the functioning of NCLT”, the appellate tribunal observed while passing the order.

“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,” said two-member bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain. Moreover, the Chennai bench of NCLAT also directed the NCLT to send a copy of the finding of the investigation to the Chairman at the Delhi-based principal bench of NCLAT and a copy to it also. “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,” said NCLAT Chennai bench while passing the order last week.

The appellate tribunal’s direction came during the hearing of a petition filed by the Asset Reconstruction Company (India) Ltd over admission of its claims.

Though NCLAT dismissed the appeal, however, the appellate tribunal said it cannot ignore the manner in which the order of March 15, 2022 was passed.

In its two-page order, NCLAT highlighted irregularities in the NCLT order.

The appellate tribunal observed “when the proceedings itself was taken up on March 15, 2022, the observations/directions as observed by NCLT, Chennai on March 15, 2022, has been taken as to be the basis of passing of the impugned

order on March 15, 2022 itself, which is not plausible.”

NCALT observed that the proceedings MA/61/CHE/2021, was taken up before the NCLT, Chennai on January 18, 2022, the matter was marked as part-heard and was directed to be listed on February 15, 2022. Asset Reconstruction submitted “as per the order-sheet drawn up on February 15, 2022, the said matter was not listed nor was directed to be listed on March 15, 2022 by the NCLT”.

“But the matter is shown to have been taken up for hearing on March 15, 2022, without there being any record of prior fixation of such date for hearing, the date on which the impugned order is shown to have been passed, which is otherwise being argued to the contrary by the counsel for the Respondent, that as per the cause list showing the status of the case, the matter was taken March 15, 2022 and it was directed to be listed for further consideration on April 25, 2022,” it said.