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2024 (5) TMI 139 - SCH - Insolvency and BankruptcyJurisdiction of NCLT - Constitution of its Benches - Competency of Member of the Tribunal to function as a Bench - Admitting an application under Section 9 IBC 2016 - NCLAT observed that the Member (Judicial) has not been authorized by the President under Proviso Section 419(3) to exercise the powers of the Tribunal - Admission of application for initiation of CIRP - HELD THAT - In exercise of power under proviso to Section 419(3) of the Act, the President has constituted a Special Bench at New Delhi for 13.02.2020 and 14.02.2020 comprising of Single Member (Judicial). The Member (Judicial) heard the application under Section 9 on 04.02.2020 and delivered the judgment on 17.08.2020. It is apparent that the Appellate Tribunal did not have the benefit of the above referred notification dated 12.02.2020 before it arrived at its decision. The order impugned clearly notes that, nothing has been brought to our notice during the course of hearing that the President of the Tribunal had issued any general or special order to give power to the single member (Judicial Member) to function as a bench . The civil appeal is allowed.
Issues involved:
The judgment deals with the issue of the National Company Law Appellate Tribunal (NCLAT) setting aside the order of the Special Bench, NCLT, regarding the adjudication of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) due to lack of authorization by the President under Proviso Section 419(3). Details of the judgment: 1. Background of the case: The appeal was filed by an association of home buyers who had invested in a real estate project by a corporate debtor. An operational creditor initiated insolvency proceedings under Section 9 of the IBC. 2. Adjudication by Special Bench: The application under Section 9 was heard by a Special Bench of a Member (Judicial) of the NCLT, which admitted the application and commenced the insolvency resolution process. 3. Challenge before NCLAT: The respondent appealed to the NCLAT, arguing that the Member (Judicial) did not have the authority to exercise the powers of the Tribunal due to lack of authorization by the President under Proviso Section 419(3). 4. Decision of NCLAT: The NCLAT allowed the appeal, emphasizing the requirement of a general or special order by the President for a single Member (Judicial) to function as a bench. 5. President's authorization: The President of the NCLT had indeed issued an order on 12.02.2020, constituting a Special Bench of a Single Judicial Member for the relevant Court, in accordance with the proviso to Section 419(3) of the Act. 6. Judgment of the Supreme Court: The Supreme Court, after considering the President's authorization and the NCLAT's oversight of this fact, allowed the Civil Appeal and set aside the NCLAT's order. The insolvency resolution process was directed to continue as per the Code. 7. Conclusion: The Supreme Court refrained from expressing any opinion on the merits of the matter, directing the adjudicating authority to conduct the CIRP proceedings as per the Code and make appropriate orders under Section 31 after giving all parties a fair opportunity. By this judgment, the Supreme Court clarified the importance of the President's authorization for a single Member (Judicial) to exercise the powers of the Tribunal, ensuring the proper adjudication of insolvency cases under the IBC.
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