On Recusal From Hearing, Members Can't Transfer Case To Another Bench In Another Place : NCLAT Delhi

Background Facts

Mrs. Sonia Khosla ("Appellant") had filed a Company Petition No. 114 of 2007 ("Company Petition") under Sections 397, 398, 402 and 403 of the Companies Act, 1956, before the erstwhile Company Law Board, New Delhi. Thereafter, an application for amendment of pleadings was allowed by the NCLT New Delhi, with liberty to withdraw the Company Petition and re-file the same with amendments. The Company Petition was accordingly filed afresh and was listed before Special Bench of NCLT New Delhi. The Special Bench passed an order dated 02.09.2021 stating the following:

"As both the members of this Bench have recused to take up these matters. These matters have to be posted before any other Bench at Delhi but most of the Judicial Members at Delhi are not inclined to take up these matters. For want of time, we have no other option but to post the same before Chandigarh Bench, which is relatively nearer to the petitioner in the matter. We transfer the files to Chandigarh Bench at the earliest possible time. Chandigarh Bench according to its own convenience will fix the date of hearing."

Aggrieved by the order dated 02.09.2021, the Appellant filed an appeal before the NCLAT Delhi.

Contentions Of The Appellant

The Appellant submitted that the Impugned order dated 02.09.2021 was discriminatory and arbitrary to the extent that it orders transfer of the petition to a different Bench outside Delhi, whereas, both the Parties are based at Delhi.

Decision Of The Bench

The Bench observed that when both the Members recused to take up the matter, the Company Petition ought to have been placed before the Acting President/ President of NCLT on administrative side, for assigning the matter to an appropriate Bench. No order could have been passed for transferring the matters to the Chandigarh Bench.

The NCLAT directed the Company Petition to be placed before the President of NCLT, New Delhi for exercising its jurisdiction as conferred under Rule 16(d) of the NCLT Rules, 2016 for passing an appropriate order for hearing of the Company Petition.

"We are not expressing any opinion as to whether both the CPs are to be heard at the Principal Bench or any other Bench at New Delhi or to be transferred at any other Bench. It is for the President to consider all aspects of the matter and take appropriate decision. In result, we partly allow these Appeals, set aside the impugned order dated 02.09.2021 and remit the matter to the Hon'ble President of the NCLT to pass appropriate orders in exercise of its jurisdiction under Rule 16(d) of the NCLT Rules, 2016 for hearing, in accordance with law."

Case Title: Sonia Khosla & Anr. v Montreaux Resorts (P) Ltd. & Ors., Comp. App. (AT) No. 118 of 2021

Counsel For Appellant: Mr. Deepak Khosla, Advocate

Counsel For Respondent: Mr. Jay Salva, Senior Advocate with Mr. Anand M Mishra, Advocate for R2-4. Mr. Rishi Sood, Advocate for R5.

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