Temporary Unavailability Of A Member To Sign The Order Not A Ground For Fresh Hearing, If Order Was Passed With Consent Of Such Member: NCLAT Delhi

Background Facts

Axis Bank Ltd. had filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against Cengres Tiles Ltd. ("Corporate Debtor"). The NCLT had admitted the petition and initiated CIRP against the Corporate Debtor on 27.04.2022, while clarifying that:

"The matters were heard almost in the month of March but orders could not be pronounced because Technical Member was not available. Technical Member will not be available for another couple of weeks, hence, matter cannot be kept pending for pronouncement because hearing was concluded almost a month ago. Hence orders are pronounced invoking Rules 151 of NCLT Rules, 2016 with consent of the other Member."

The Suspended Board of Director of the Corporate Debtor filed an appeal before the NCLAT challenging the order dated 27.04.2022 over the ground that the pronouncement of the order is not in accordance with Rule 151 and 152 of the National Company Law Tribunal Rule, 2016 ("NCLT Rules").

Contentions Of The Appellant

The Appellant submitted that the impugned order bears signature of only the Judicial Member and not the Technical Member. As per Rule 152 of the NCLT Rules, if any Member who has heard the matter is not available then approval of the President is required, which was not reflected by the record. The Appellant further argued that when other Member, who had heard the matter was not available to sign the order, it should have been released in form of part-heard and listed for hearing afresh in view of Rule 152(4).

Relevant Law

Rule 151 and Rule 152 of the NCLT Rules, 2016.

"151. Pronouncement of order by any one member of the Bench-

(1) Any Member of the Bench may pronounce the order for and on behalf of the Bench.

(2) When an order is pronounced under this rule, the Court Master shall make a note in the order sheet, that the order of the Bench consisting of President and Members was pronounced in open court on behalf of the Bench."

"152. Authorising any member to pronounce order-

(1) If the Members of the Bench who heard the case are not readily available or have ceased to be Members of the Tribunal, the President may authorise any other Member to pronounce the order on his behalf after being satisfied that the order has been duly prepared and signed by all the Members who heard the case.

(2) The order pronounced by the Member so authorised shall be deemed to be duly pronounced.

(3) The Member so authorised for pronouncement of the order shall affix his signature in the order sheet of the case stating that he has pronounced the order as provided in this rule.

(4) If the order cannot be signed by reason of death, retirement or resignation or for any other reason by any one of the Members of the Bench who heard the case, it shall be deemed to have been released from partheard and listed afresh for hearing."

Observation Of NCLAT

The NCLAT Bench observed that Rule 151(1) empowers any Member of the Bench to pronounce the order for and on behalf of the Bench. The Bench observed that the impugned order clearly mentions that order was pronounced under Rule 151 of the NCLT Rules, 2016 with 'consent' of the other Member and hence, there was no error in the order. Further, as the reason for not signing the order by the Technical Member was not death, retirement or resignation; Rule 152(4) cannot be invoked, as the Technical Member was merely unavailable for a couple of weeks to sign the order and the pronouncement was made with his consent. Accordingly, the appeal was dismissed.

Case Title: Ashish Chandravandan Patel v Axis Bank Ltd. & Anr., Company Appeal (AT) (Insolvency) No. 618 of 2022.

Counsel for Appellant: Mr. Mandeep Singh Saluja and Mr. Atul Sharma, Advocates.

Counsel for Respondents: Mr. Anshuman Gupta, Mr. Vignesh Raj and Ms. Aditi Mane, Advocates.

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