On 22nd of May the National Company Law Appellate Tribunal set aside the order of National Company Law Tribunal, Delhi. The now set-aside order was passed by the Principal Bench of NCLT, Delhi on 22nd of November, 2019, (IB)-939(PB)/2018.

Initial order by NCLT, Delhi

The Principal Bench of NCLT, New Delhi on 22nd November, 2019 in the now quashed order stated the following :

"We further direct that in all cases of Insolvency & Bankruptcy Code and Company Petition, the Union of India, Ministry of Corporate Affairs through the Secretary be impleaded as a party respondent so that authentic record is made available by the officers of the Ministry of Corporate Affairs for proper appreciation of the matter. This shall be applicable throughout the country to all the benches of National Company Law Tribunal."


The Contentions

Union of India, being the Appellant herein, contended that NCLT's order in question carries numerous infirmities emphasising on the 'Adjudicating Authority' of NCLT which does not allow passing of an order which was in reality in the 'nature of a rule'. The said Appellant claimed that the capacity to form rules in this matter is reserved for the Central Government which is followed by the requirement of being placed before the August House of the Parliament. 

The counsel for the Respondent Bank pointed out that in the order there was no direction issued to the Bank and that the order was passed in an Appliaction filed by the Resolution Professional pertaining to the hassling faced by him in complying with the Comapnies Act, 2013. 

Observations made by Justice M. Venugopal, Justice V.P. Singh and Justice Alok Srivastava


It was observed by the Bench that the procedural intricacies existed to be followed and not to be circumvented in "compelling fashion". It was also observed that the addition of particular Respondents cannot be made into a blanket-rule and should only be done so on a case to case basis.

Furthermore, it was added that “such a wholesale, blanket and omnibus directions cannot be issued in single stroke". The Bench quashing the order stated that the directions issued regarding the Application filed by the Resolute Professional to implead 'Secretary of Ministry of Corporate Affairs' as Respondent in all the cases under the Insolvency & Bankruptcy Code is beyond the power of the Tribunal.