Single-member bench of the NCLT cannot hear insolvency plea: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has ruled that a single-member bench of the National Company Law Tribunal (NCLT) can’t hear and decide on a company when the law requires a division bench, including both judicial and technical members, to constitute the adjudicating authority.

Indison Agro Foods Ltd. (Debtor) was facing insolvency resolution by Allahabad Bank in the Ahmedabad NCLT, after which Indison Agro had approached the NCLAT, seeking the appellate tribunal’s intervention for referring the matter to a division bench.

The Debtor argued that when the matter came for hearing at the NCLT Ahmedabad, initially the judicial member of the division bench recused from the hearing and hence the matter was referred to the registrar for reconstitution of the bench.

The debtor claimed that the registrar had referred the matter to the single member. The law requires the bench to consist of two members, with both judicial and technical competence, to hear cases related to the Insolvency & Bankruptcy Code (IBC).

Indison Agro Foods had challenged the constitution of the bench at the NCLAT.

The acting chairperson of NCLAT, Justice Bansi Lal Bhat, Justice Jarat Kumar Jain and a technical member Ashok Kumar Mishra, disposed of the case and directed the President of NCLT to constitute a bench comprising a judicial member and a technical member.

“This ruling will leave no room for further challenges on the validity of the benches’ constitution since technical members are included for their expertise,” said Nipun Singhvi, advocate for Indison Agro Foods.

The appellate tribunal recently set aside Mumbai NCLT’s ruling where the point of law involved the authority of a technical member, originally not a part of the hearings, to sign an order.