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2021 (1) TMI 934 - Tri - Insolvency and BankruptcySeeking directions to dismiss the proceedings in the instant matter since no quorum has been reached in accordance with Section 408 and 410 of Companies Act 2013 - HELD THAT - A bare reading of the provisions of Section 419(3) of the Companies Act as well as the order of the NCLT Principal Bench which has been issued with the approval of Hon ble President makes it clear that even though the Bench of NCLT consists of two members it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench by a Single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases as the President may by general or special order specify. In regard to constitution of special Bench for NCLT Kochi the Hon ble President has issued the order under Section 419(3) of the Companies Act 2013 authorising the Judicial Member to function as such. It may also be mentioned that by the aforesaid order no direction is issued that the Special Bench of Member (Judicial) is not empowered to take up cases under the I.B. Code 2016. The contentions raised by the applicant herein that a Single Member Bench cannot hear the IBC matters has no foots to stand and is liable to be dismissed - Application dismissed.
Issues:
- Whether the appointment of a Technical Member in the constitution of the Bench is obligated under the Companies Act, 2013. - Whether the word "shall" employed in section 419(3) of the Companies Act, 2013 is mandatory in nature. - Whether the adjudication and decision-making of the Tribunal in intricate corporate insolvency proceedings can be effective with the Bench comprising a Member (Judicial) and a Member (Technical). Analysis: Issue 1: Appointment of Technical Member The Corporate Debtor filed an IA under section 60(5) of the Insolvency and Bankruptcy Code, 2016, arguing that a Single Member Bench cannot hear IBC matters. The applicant contended that the constitution of a Division Bench with a Technical Member is mandated under the Companies Act, 2013. The applicant cited legal precedents emphasizing the importance of a panel of at least two members, one being a Judicial Member and the other a Technical Member, to ensure expertise and knowledge in complex insolvency matters. However, the Tribunal noted that the Hon'ble President had authorized the Judicial Member to function as a Single Member Bench for specific cases under section 419(3) of the Companies Act, 2013, which includes matters under the I.B. Code, 2016. Consequently, the Tribunal dismissed the IA, stating that the Single Member Bench was empowered to handle IBC matters. Issue 2: Interpretation of "Shall" in Section 419(3) The applicant argued that the word "shall" in section 419(3) of the Companies Act, 2013 implies a mandatory requirement for a Bench to consist of a Judicial Member and a Technical Member. The Tribunal acknowledged the mandatory nature of the term "shall" but highlighted that the President's order authorized Single Member Benches for specific cases as per the Act. The Tribunal emphasized that the President's approval allowed for flexibility in the constitution of Benches, including Single Member Benches for certain matters, as specified. Therefore, the Tribunal concluded that the word "shall" did not preclude the appointment of Single Member Benches for designated cases. Issue 3: Effectiveness of Bench Composition The applicant raised concerns regarding the effectiveness of a Bench comprising only a Judicial Member in adjudicating intricate corporate insolvency matters. Citing legal precedents, the applicant argued that a panel with both Judicial and Technical Members was essential for informed decision-making. However, the Tribunal highlighted that the President's order authorized Single Member Benches, including for IBC matters, under specific circumstances. The Tribunal emphasized that the order did not restrict the Single Member Bench from handling IBC cases and that the applicant's contentions lacked merit. Consequently, the Tribunal dismissed the IA, emphasizing the need to avoid further delays in the Corporate Insolvency Resolution process. In conclusion, the Tribunal dismissed the IA filed by the Corporate Debtor, emphasizing the authorization for Single Member Benches under specific circumstances, including for matters under the I.B. Code, 2016, as per the Companies Act, 2013. The Tribunal's decision aimed to ensure the expeditious resolution of corporate insolvency proceedings without unnecessary delays.
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