Procedure in case of split verdict in National Company Law Appellate Tribunal (NCLAT)

Supreme Court Questions NCLAT Procedure in Split Verdicts. Absence of Regulations for Handling Split Verdicts in NCLAT Under Scrutiny

In a landmark judgment, the Supreme Court of India has raised concerns over the procedural approach adopted by the National Company Law Appellate Tribunal (NCLAT) in handling split verdicts. The case, "R Narayanasamy v. Registrar of The Companies, Tamil Nadu," involved an appeal by R Narayanasamy challenging the procedure followed by the NCLAT after a split verdict in the case concerning the striking off of M/s. Shree Laxmi Spinners Private Limited from the Register of Companies.

The appellant, Narayanasamy, was aggrieved by the decision of the Registrar of Companies, Tamil Nadu, which struck off the company's name from the register, a decision initially upheld by the National Company Law Tribunal (NCLT). However, when the matter was taken to the NCLAT, a split verdict emerged. One member of the appellate tribunal found the Registrar's action unjustified, while another member supported it. Consequently, the matter was referred to a third member, who upheld the decision to strike off the company's name.

The Supreme Court bench, comprising Justices J.B. Pardiwala and K.V. Viswanathan, heard arguments from Mr. Viraraghavan Rama Krishnan, the Senior Advocate for the appellant. The key contention raised was the procedural correctness of referring a split verdict to a third member, rather than constituting a bench of three members for a rehearing. The appellant pointed out the absence of specific regulations in the NCLAT to address such situations.

The Supreme Court emphasized the need for clear regulations to handle split verdicts in appellate tribunals like the NCLAT. The bench has sought the assistance of the Solicitor General of India to examine the procedural issues and guide the court in resolving this matter. The case is scheduled for further hearing on November 19, 2025.

This judgment highlights a significant gap in the procedural framework of the NCLAT, potentially affecting numerous cases where split verdicts occur. Legal experts anticipate that the Solicitor General's input will be crucial in shaping future regulations to ensure consistency and fairness in the tribunal's proceedings.

Bottom Line:

Procedure in case of split verdict in National Company Law Appellate Tribunal (NCLAT) - Matter should not have been referred to a third Member - Instead, a bench of three Members should have been constituted to re-hear the case - Appellant challenges the procedure adopted, highlighting the absence of regulations in NCLAT for such situations.

Statutory provision(s): Companies Act, 2013 Section 248(5), Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 Rule 9

R Narayanasamy v. Registrar of The Companies, Tamil Nadu, (SC) : Law Finder Doc Id # 2804535