The Gujarat High Court has directed the petitioner, a taxation and commercial law advisor, who sought direction to the Centre to appoint a technical member on the Ahmedabad bench of the National Company Law Tribunal, to make a representation before the NCLT president.
A bench of Chief Justice R Subhash Reddy and Justice Vipul M Pancholi was hearing a PIL filed by Nipun Praveen Sanghvi, a corporate law expert and consultant, who had sought appointment of a technical member on the NCLT, Ahmedabad bench, which at present has only one judicial member.
The NCLT, Ahmedabad bench, exercises jurisdiction over Gujarat and Madhya Pradesh and two union territories -- Dadra Nagar Haveli and Daman & Diu.
The petitioner said in absence of any expert technical member, it was not possible for the judicial member to discharge all functions effectively especially when there are several high-profile insolvency cases pending before it.
While refusing to entertain the PIL at this stage, the Gujarat High Court directed the petitioner to make a representation before the NCLT president.
Before, passing the order, the bench noted that initially the Ahmedabad bench was constituted with a one judicial and one technical member. However, exercising his powers under the Companies Act, the president reduced the strength to one judicial member only.
“At the first instance, Notification was issued by constituting Bench with two members viz. Member (Judicial) and Member (Technical) at Ahmedabad. But subsequently, exercising powers conferred under proviso to Section 419 of the Companies Act, 2013, order dated 12.08.2016 is passed constituting Bench at Ahmedabad with only Member (Judicial). Reading of the provisions referred in Section 419 of the Companies Act, it empowers the President to constitute the Bench with only one member. If there is any difficulty, it is open for the petitioner to make representation, but at the same time, we do not find any reason to entertain the petition at this stage,” the high court ordered.
“While granting liberty to the petitioner to file representation before the President of National Company Law Tribunal, this petition is disposed of. It is made clear that in the event of any further difficulty, liberty is granted to the petitioner to approach this Court,” it added.
In his petition, Nipun Sanghvi had submitted that “the jurisdiction exercised by the Tribunal involves serious determination of mixed issues of law and facts which can only be done by a person with technical member and expertise as it requires deep knowledge of subject, the acute ability to weigh evidence by identifying the relevant factors that go towards such determination and ignoring the irrelevant ones, and the skill of ascertaining facts and therefore, requires persons with technical experience and expertise. Hence, non-appointment of a technical member in the current constitution of the tribunal and its mode of functioning are in blatant violation of the provisions of the law”.
“It is seen that NCLT Ahmedabad has been handling few high profile Insolvency cases prominent being Essar Steels Limited which involved debt of Rs. 45,000 crores. Also, recently it has cleared Insolvency of few listed companies involving debt of Rs. 1,000 crores and above like Anil Limited and Rainbow Papers Limited,” he said.
It is to be noted that the Centre had appointed 16 judicial and 7 technical members on NCLT. The NCLT president vide order dated July 5, 2016 constituted NCLT benches wherein NCLT Ahmedabad was constituted with one judicial and one technical member.
The NCLT President modified this order on August 12, 2016 and reduced the constitution of the Ahmedabad bench from technical and judicial member to judicial member only.
In August 2017, the president of NCLT appointed second judicial member at the Ahmedabad bench but no technical member has been appointed till date.