Transfer of NCLT Proceedings Cannot Be Sought on Alleged Adverse Observations by Tribunal Members: Supreme Court
- REEDLAW
- 11 hours ago
- 3 min read
REEDLAW Legal News Network reports: In a significant ruling, the Supreme Court reaffirmed that transfer of insolvency proceedings under the Insolvency and Bankruptcy Code cannot be sought merely on the basis of adverse observations made by a tribunal member during the course of hearing. The Court held that speculative allegations against members of an adjudicatory body do not justify interference with institutional functioning and amount to an abuse of process, thereby reinforcing judicial discipline and forum stability within insolvency adjudication.
The decision was rendered by a Bench comprising Justice Surya Kant, Chief Justice of India, and Justice Joymalya Bagchi, while disposing of multiple special leave petitions challenging an administrative order passed by the President of the National Company Law Tribunal rejecting a transfer application. The Court observed that observations made during hearings form part of adjudicatory engagement and cannot, by themselves, constitute grounds for forum transfer. Upholding the rejection of the transfer request, the Supreme Court emphasised the need to protect tribunals from motivated allegations, while keeping a substantive question of law arising from a related High Court judgment open for independent consideration.
The special leave petitions were filed challenging an order passed by the President of the National Company Law Tribunal rejecting a transfer application filed by the petitioners seeking transfer of pending insolvency proceedings from one bench of the Tribunal to another. The transfer was sought primarily on the allegation that during the course of the hearing, a Technical Member of the Tribunal had made observations indicating a possibility of vacating an interim order earlier granted.
The Supreme Court examined the grounds urged in support of the transfer request and found that the allegations were speculative, unsubstantiated, and amounted to an attempt to browbeat the Members of the Tribunal. It was observed that judicial or quasi-judicial proceedings cannot be transferred merely because a presiding member makes observations during the course of a hearing, particularly when such observations are part of an adjudicatory engagement.
The Court held that the very foundation of the transfer application was motivated and unjustified, and that the President of the NCLT was correct in treating the application as not maintainable, even though the reasoning adopted differed. The Court reiterated the importance of protecting the independence and institutional functioning of tribunals from unfounded allegations.
While declining to interfere with the impugned order rejecting the transfer application, the Supreme Court clarified that the substantive question of law arising from a related High Court judgment was kept open and would be examined independently in separate proceedings where notice had already been issued.
Mr. Arunava Mukherjee, AOR and Mr. Nisarg P. Khatri, Advocate, represented the Petitioners.
Mr. Neeraj Kishan Kaul, Sr. Advocate with Mr. Ashim Sood, Ms. Ruby Singh Ahuja, Mr. Vishal Gehrana, Mr. Varun Khanna, Ms. Aakriti Vohra, Mr. Devang Kumar, Mr.Deepak Joshi, Ms. Ira Mahajan, Advocates and M/s. Karanjawala and Co., AOR, appeared for the Respondents.
Mr. Deepak Khosla, Mr. Pranav Sachdeva, Mr. P. Tohit Ram, Mr. Sangam Jain, Ms. Khushboo Singhal and Ms. Divya Santosh, Advocates, appeared for the respondents.
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