Transfer of Case by NCLT President Valid; NCLAT Holds No Appeal Maintainable Under IBC and Clarifies Remedy Lies Under Companies Act
- REEDLAW
- Jul 20
- 3 min read
NCLAT held that the transfer of the case by the NCLT President was valid, clarified that no appeal is maintainable under the IBC against such an order, and affirmed that the appropriate remedy lies under the Companies Act.
On 17 July 2025, the National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson), Justice N. Seshasayee (Judicial Member), and Mr. Arun Baroka (Technical Member), while adjudicating a company appeal, held that an order passed by the NCLT President under Rule 16(d) of the NCLT Rules, 2016—pertaining to the transfer of a case from one Bench to another—is administrative in nature, falls outside the purview of Section 61 of the IBC, but is appealable under Section 421 of the Companies Act, 2013. The Tribunal further clarified that such a transfer does not require a hearing of all stakeholders unless they are parties to the proceedings.
The National Company Law Appellate Tribunal (NCLAT), led by Justice Ashok Bhushan (Chairperson), dismissed the appeal challenging the order dated 09.05.2025 passed by the President of the National Company Law Tribunal (NCLT), allowing a transfer application under Rule 16(d) of the NCLT Rules, 2016. The appellant had contested the transfer of proceedings in the CIRP of the Corporate Debtor on the grounds of violation of natural justice, alleging that it was a stakeholder whose claim was pending adjudication and that it was not heard before the matter was transferred.
The CIRP against the Corporate Debtor was initiated on 16.10.2023 by order of NCLT, New Delhi Bench-V, on an application under Section 7 of the IBC. The appellant filed its claim on 31.10.2023. In the meantime, the suspended directors settled with the original financial creditors, and a Section 12A application was eventually filed by the IRP pursuant to liberty granted by the NCLAT in a related appeal. On 25.02.2025, all pending applications, including the Section 12A application and the appellant’s claim-related application, were heard by the then-constituted Bench, which directed the parties to file written submissions. Due to a subsequent reconstitution of the Bench, the matter could not be taken up on the next hearings. Thereafter, the suspended director filed a transfer application, which was allowed by the President of the NCLT, transferring the matter back to the Bench that had earlier heard it on 25.02.2025.
The appellant argued that it was a necessary party and ought to have been heard in the transfer application. However, the NCLAT held that the appellant was not a party to the original proceedings, its claim had not yet been admitted, and it was not entitled to be heard in a transfer application decided under Rule 16(d). The Tribunal further clarified that the power of the President to transfer matters between Benches was administrative in nature and did not require compliance with adversarial hearing principles. The Tribunal noted that such orders, while not appealable under Section 61 of the IBC, were appealable under Section 421 of the Companies Act, 2013, and thus the appeal was maintainable on that basis.
Relying on its earlier decisions and the scheme of Rule 16(d), the NCLAT observed that the President of the NCLT, being the master of the roster, was empowered to transfer matters between Benches where circumstances so warranted, including in cases of bench reconstitution. The impugned transfer order was found to be justified, especially since the original Bench had already concluded hearings on 25.02.2025 and had merely directed parties to file written submissions. The Tribunal also clarified that the present appeal pertained only to the validity of the transfer order and did not deal with the merits of the Section 12A application or the pending claim of the appellant.
Accordingly, the NCLAT dismissed the appeal, upholding the order dated 09.05.2025 passed by the President of the NCLT.
Mr. Suhail Dutt, Sr. Advocate, with Mr. Vikas Tiwari and Mr. Kumar Deepraj, Advocates, represented the Appellant.
Mr. Krishnendu Dutta, Sr. Advocate with Mr. Palash S. Singhai, Mr. Harsh Gurbani and Mr. Harshal Sareen, Advocates, appeared for the Respondent No. 1.
Mr. Abhishek Anand, Mr. Karan Kohli and Ms. Ridhima Mehrotra, Advocates, appeared for the Respondent No. 2.
To access the full content related to this article, including the complete judgment text, detailed legal analysis, ratio decidendi, headnotes, cited case laws, and updates on relevant statutes and notifications, we invite you to subscribe to our premium service.
Click "Subscribe" to unlock these exclusive legal resources.
If you are already a subscriber, please explore these resources by clicking the following citation/link.
Comments