Plea in Madras High Court Challenging Decision of Hearing only Fresh Matters by NCLAT Chennai Bench

Plea in Madras High Court Challenging Decision of Hearing only Fresh Matters by NCLAT Chennai Bench

The Madras High Court (HC) in the case titled CA V. Venkata Siva Kumar v. The Hon'ble Registrar, NCLAT & Ors. has sought the response of the Central Government (Ministries of Finance and Corporate Affairs) and the Registrar of the National Company Law Appellate Tribunal (NCLAT).

The HC bench comprising of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy directed the Central Government and the Registrar of the NCLAT to file their counter-affidavits in the case. It further directed that the reply shall be filed by 21 April 2021 i.e. on the next date of hearing before the Court.

The factual matrix of the case is that a petition was filed by a Chartered Accountant and insolvency professional, V Venkata Siva Kumar. He challenged the validity of standing order no. 1 dated 11 January 2021. Under the said notification it was informed that only new cases would be entertained at the NCLAT, Chennai (newly established bench) until further orders.

The notification provided that the old cases that are filed or pending or as may be filed till the date of operationalization of the NCLAT Chennai Bench shall be heard and decided by the Principal Bench, NCLAT New Delhi.

The petitioner challenged the validity of this notification on the following grounds-

- It is in violation of the provisions of Article 323B of the Constitution of India that deals with the establishment of Tribunals for adjudication of matters ;

- It is ultra vires to Article 21 of the Constitution of India that deals with the right to life and personal liberty;

- It is arbitrary and unreasonable violating Article 14 of the Constitution of India that deals with the right to equality;

- It is beyond jurisdiction according to the provisions of Section 410 deals with 'Constitution of Appellate Tribunal' and Section 419 'Benches of Tribunal' of the Companies Act, 2013;

It was mentioned in the petition that the Appellant Tribunal, Principal Bench at Delhi is able to take up approx. 10-15 cases in the forenoon session and hence it would result in repeated adjournments, that shall cause undue delays resulting in the litigation costs going beyond the reach of ordinary small and medium companies and defeating the objective of the time-bound resolution.

The petitioner contended that the NCLAT, Chennai bench can handle more cases and reduce the burden of the Principal Bench. The petition reads that the special Courts are established with an aim to avoid undue delays and pendency of the case. It was pointed out by the petitioner that the usual practice followed whenever new Courts are created is to identify the cases falling under the purview of such Courts and to transfer them to such Courts.

The petitioner contended that it is the Court's discretion to re-assign serial numbers or to continue with the existing numbers, but the transfer of the case bundle is done as quickly as possible so as to avoid the miscarriage of justice.

The petitioner requested the HC to direct that all pending cases coming within the NCLAT, Chennai's jurisdiction be transferred to the Chennai Bench from the Appellate Tribunal's Principal Bench.