Institute of Legal and Management Studies

The Supreme Court is set to decide whether, in the case of a split verdict by the National Company Law Appellate Tribunal (“NCLAT”), the reference of the case to a third member would be legally justifiable or should the matter be referred to a larger bench of three members for fresh adjudication.

Observing that there is no clear procedure to address situations where a two-member bench of the NCLAT delivers a split verdict, a bench of Justices J.B. Pardiwala and K.V. Viswanathan sought the assistance of the Solicitor General in a case challenging the NCLAT's decision to refer such a matter to a third Member for adjudication.

The Appellant's company name was struck off by the Registrar Of Companies (“RoC”). Challenging the RoC's decision, the company appealed to the NCLT, which upheld the RoC's decision. On further appeal, the NCLAT delivered a split verdict, one Member holding that the ROC's action was illegal, and the other upholding it as valid. The matter was then referred to a third Member, who sided with the view that the ROC's action was justified, resulting in the dismissal of the company's appeal.

Challenging this NCLAT's decision, the company approached the Supreme Court.

Before the Supreme Court, Senior Advocate V. Rama Krishnan, appearing for the appellant, argued that in the absence of express regulations governing such cases, the NCLAT was not empowered to refer a matter to a third Member. Instead, the case should have been reheard by a new bench of three Members. He submitted that there is no statutory provision or NCLAT rule prescribing the procedure for resolving split verdicts, leading to potential procedural impropriety and miscarriage of justice

Upon hearing the Counsel, the Court found it a “peculiar situation” requiring systemic clarity. The Court emphasized that the issue involved an important procedural lacuna in the NCLAT's functioning.

“In such circumstance, referred to above, we solicit the assistance of the learned Solicitor General of India.”, the court said, requesting him to look into the matter and assist us on the next date of hearing scheduled on November 19, 2025.

Cause Title: R NARAYANASAMY VERSUS THE REGISTRAR OF THE COMPANIES, TAMIL NADU

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