Supreme Court Expunges Adverse Remarks Of NCLAT 5 Member Bench Against 3-Member Bench

The Supreme Court on Friday expunged the adverse remarks made by a 5-member bench of the National Company Law Appellate Tribunal(NCLAT) against a 3-member bench of the NCLAT comprising Justices (Retd) Jarat Kumar Jain, Bavinder Singh and Vijai Pratap Singh.A Supreme Court bench comprising Justices RF Nariman and BR Gavai passed the order on a petition filed by the three serving NCLAT members."We are with you, shall we expunge straight away?", Justice Nariman asked Senior Advocate VK Garg, who represented the petitioners.On the senior lawyer agreeing, the bench ordered the expunging of the adverse remarks made by the 5-member bench.A 3-member bench comprising these members had made a reference to a larger bench of the NCLAT doubting the correctness of V Padmakumar decision which had held that entries in books of accounts will not amount to acknowledgment of debt under Section 18 of the Limitation Act, 1963.Later, a 5-member bench headed by NCLAT Chairperson Justice Bansi Lal Bhat turned down the reference observing that the same was unwarranted as V Padmakumar decision was in accordance with Supreme Court precedents.Aggrieved by some of the observations made by the 5-member bench, the three sitting members of National Company Law Appellate Tribunal (NCLAT) approached the top court. The plea has been filed by Advocate Amit Sharma on behalf of Justice (Retd) Jarat Kumar Jain, Bavinder Singh and Vijai Pratap Singh and has urged the Court to expunge the "unsavoury and disparaging remarks" made against them. According to them the Larger bench crossed both limits of its jurisdiction and has made unsavory and most disparaging comments which tend to be personal in nature against the referral bench. The impugned statements in the order of the five-judge Bench which have been challenged before the Apex Court state that it was a matter of judicial discipline for the referral bench to follow the judgment of the 5 member bench in V Padmakumar's case as a binding precedent and not question the correctness of the judgment by adopting cut and paste methodology in branding the five member bench judgment in V Padmakumar's case as so very incorrect divorced of the context. The order also said that the stand taken by the three-judge Bench was a misadventure and the reference made was incompetent.The plea states that the Three-judge Bench, while deciding the case, had opined that the judgment in V. Padmakumar passed by a five-Members Bench was in direct conflict with the several judgments of the Supreme Court and also the law laid down by High Court in several cases. Considering this apparent conflict, the Three members Bench was persuaded to not follow the law laid down by that judgment. The Bench also noted that while it was bound to follow the law laid down by the Five Member Bench o f the Tribunal, they considered it appropriate to refer it to a larger Bench in wake of the doubt regarding correctness of the Five Members Bench. In support of their decision, they have also cited judgment of the Supreme Court in the case of Central Board of Dawoodi Bohra Community vs State of Maharashtra (2005), incompliance of which the decided to refer the matter. The plea has stated that the Five Members Bench heard the case referred and decided it through their order dates 22nd December 2020. However, they took the view that the reference was not maintainable, and a matter of judicial indiscipline for the referral Bench to have questioned the correctness of judgment passed by a Five Member Bench of the NCLAT. The Bench has stated that such judicial indiscipline creates uncertainty and impairs public faith in Rule of La w, and crossing of red lines by disregarding the binding precedent results in making the legal proposition uncertain." It is not open to the referral Bench to appreciate the judgment rendered by the earlier Bench as if sitting in appeal to hold that the view is erroneous. Escaping of attention of the earlier Bench as regards a binding judicial precedent or a patent error is of relevance but not evaluation of earlier judgment as if sitting in appeal. We are sad to note that the Referral Bench has overlooked all legal considerations. Such misadventures weaken the authority of law, dignity of institution as also shake people's faith in the rule of law." – the Five Member Bench had stated. According to the petitioners, while the Larger Bench crossed the limits of its jurisdiction while making such unsavory remarks against the referral Bench, it did not even dwell on the issue referred to it regarding the apparent conflict between law laid down by NCLAT and that laid down by the Supreme Court and High Court.

Supreme Court Expunges Adverse Remarks Of NCLAT 5 Member Bench Against 3-Member Bench

Srishti Ojha

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