NCLAT Order Not Invalid Just Due To Technical Member Majority: SC

New Delhi, Mar 12 (KNN) The Supreme Court has held that an order of the National Company Law Appellate Tribunal (NCLAT) cannot be considered illegal merely because the bench deciding the case had a majority of technical members.

A bench comprising Justices Sanjay Kumar and K. Vinod Chandran made the observation while dismissing appeals by minority investors challenging the capital reduction scheme of Bharti Telecom Limited.

Bench Composition Challenge Rejected

The appellants argued that the NCLAT bench hearing their case consisted of two technical members and one judicial member. Citing the Union of India v. Madras Bar Association (2010) Constitution Bench ruling, they argued that tribunals replacing High Courts must have a majority of judicial members.

Rejecting the contention, the Supreme Court said the current legal framework does not require judicial members to outnumber technical members in NCLAT benches. 

The Court noted that Section 418A of the Companies Act, 2013 only mandates that a bench must include at least one judicial member and one technical member.

In the present case, the bench was headed by a judicial member and the decision was unanimous, the Court observed, finding no reason to interfere with the NCLAT order.

Role of Technical Members

The Court also cautioned against treating technical members as inferior adjudicators simply because they do not come from a judicial background. It noted that technocrats and administrative officers often possess significant expertise in handling complex commercial, financial and administrative disputes, which is valuable in tribunal adjudication.

The Court also reiterated that when the NCLT and NCLAT record concurrent findings, it will not normally re-examine evidence in appeals under Section 423 of the Companies Act, 2013, unless a clear question of law arises.

MSME Implications

For MSME operational creditors who rely on the NCLT–NCLAT system for insolvency, restructuring and corporate disputes, this ruling may enable faster resolution by limiting delays over bench composition.

(KNN Bureau)