Current AffairsIndia

Plea in Supreme Court seeks to make Chennai Bench of NCLAT functional

A petition has been filed in the Supreme Court seeking a direction to make functional the Chennai Bench of the National Company Law Appellate Tribunal (NCLAT).

It is stated that the proposed Bench has not been functioning even though an order was passed to set up the same in March this year.

The petition has been filed by Corporate, Insolvency and Bankruptcy Laws Bar Association (CIBBA) through its Secretary, Senior Advocate R Murari.

The petitioner association states that since NCLAT functions only out of New Delhi, the “vast distances greatly impede access to justice and also greatly increase the costs that litigants must incur for access to justice.”

It has been averred that the NCLAT at Delhi exercises jurisdiction over benches of the National Company Law Tribunal (NCLT) located at 15 cities across India (including at Kochi, Guwahati, and Ahmedabad), each of which has a substantial caseload.

In this light, the plea states,

“Functioning of the NCLAT solely out of New Delhi is arbitrary and unreasonable, and also amounts to denial of equal protection of the law guaranteed to all persons under Article 14.”

The plea goes on to point out that it is imperative that regional benches are made functional to ensure access to justice and stop continued violation of Articles 14 and 21 of the Constitution.

CIBBA relies on the judgment of Madras Bar Association v Union of India, by which the Supreme Court had struck down the constitution of the National Tax Tribunal. One of the reasons for the same, the plea states was “that locating the tribunal solely at New Delhi would render the remedy inefficacious and, thus, unacceptable in law.”

It is further claimed that all “preparations have been made at Chennai for the Chennai Bench, at considerable expense to the exchequer.”

While upholding the provisions of the Insolvency and Bankruptcy Code in Swiss Ribbons Private Limited v. Union of India, the Supreme Court had noted in its order,

“The learned Attorney General has assured us that this judgment will be followed, and Circuit Benches will be established as soon as it is practicable. In this view of the matter, we record this submission and direct the Union of India to set up Circuit Benches of the NCLAT within a period of 6 months from today.”

On March 13 this year, the Central government notified the constitution of the NCLAT Chennai Bench. As per the notification, the NCLAT Chennai shall hear appeals from the NCLTs having jurisdiction over Karnataka, Tamil Nadu, Kerala, Andhra Pradesh, Telangana, Lakshadweep, and Puducherry.

Earlier this month, a petition was moved before the Madras High Court for steps to ensure the commencement of the NCLAT at Chennai at the earliest, in terms of the Supreme Court’s 2019 order and the consequent notification issued by the Centre in March.

The High Court had issued notice in the matter on December 14, noting that the Supreme Court’s 2019 order had indicated that the concerned authorities were obliged to set up circuit benches of the NCLAT within six months.

The Court had observed during that hearing,

Subject to verification, suppose there is no extension (of the time to set up the circuit benches) it appears to be per se contempt. Of course, we cannot pass orders (since it is not a High Court order that has not been complied with) someone will have to move Supreme Court.”

The case before the High Court has been listed for hearing on January 28, 2021.

Via Bar & Bench
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