2025 (4) TMI 660 - AT - IBC

Tribunal President's Discretionary Power to Transfer Cases Upheld, Emphasizing Administrative Flexibility in Judicial Management

Hiren Anand Agarwal & Ors. Versus National Company Law Tribunal & Ors.

NCLT case addressing administrative power of Tribunal President to transfer cases between Benches. SC held that President has discretionary power to ... Circumstances for passing an order under Rule 16(d) of the NCLT Rules, 2016 - parties are entitled to know the said reason - HELD THAT:- The power vested under Rule 16(1)(d) is exercised by the President from time to time. The President is a master of roaster and he can assign the case from one Bench to another Bench when the circumstances so warrant. There is no dispute that power has been exercised which has been communicated. The submission of the Appellant that the Appellant is entitled to know the circumstances under which the order has been passed does not appeal to us. Exercise of administrative power insofar as transfer of cases is concerned by the President arises in different circumstances including the constitution of Benches, transfer of the Members, re-constitution of the Benches. When President has passed an order for transferring one matter to another Court, we are of the view that the said order does not warrant any interference in exercise of the Appellate Jurisdiction. The present is not a case where it can be held that the transfer of the case from one Bench to another Bench prejudicially effects the right of the Appellant who is suspended director of the corporate debtor. The judgment relied by the Appellant in Kranti Associates Pvt. Ltd. [2010 (9) TMI 886 - SUPREME COURT] does not support the submission advanced by the Appellant. Conclusion - There are no grounds to interfere with the President's order to transfer the case. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:1. Whether the President of the National Company Law Tribunal (NCLT) is required to provide reasons for transferring a case from one Bench to another under Rule 16(d) of the NCLT Rules, 2016.2. Whether the transfer of a case from one Bench to another prejudicially affects the rights of the appellant, thereby necessitating the recording of reasons for such administrative decisions.ISSUE-WISE DETAILED ANALYSIS1. Requirement of Reasons for Transfer under Rule 16(d) of NCLT Rules, 2016Relevant Legal Framework and Precedents:Rule 16(d) of the NCLT Rules, 2016 empowers the President to transfer any case from one Bench to another when circumstances warrant. The appellant relied on the Supreme Court's judgment in 'Kranti Associates Pvt. Ltd. vs. Masood Ahmed Khan,' which emphasizes the necessity of recording reasons in administrative decisions that affect parties prejudicially.Court's Interpretation and Reasoning:The Tribunal interpreted Rule 16(d) as granting the President broad administrative powers, including the transfer of cases based on circumstances such as the constitution of Benches or the transfer of Members. The Tribunal noted that the President, as the master of the roster, has the discretion to assign cases without needing to provide specific reasons for each transfer.Key Evidence and Findings:The appellant argued that the case was substantially heard in Court IV and that an earlier transfer application was rejected. However, the Tribunal found that the President's decision to transfer the case was communicated appropriately and was within the scope of his administrative powers.Application of Law to Facts:The Tribunal applied the principles from the 'Kranti Associates' judgment but distinguished the present case by emphasizing that the transfer of a case between Benches does not prejudicially affect the appellant's rights as a suspended director. Therefore, the requirement to record reasons, as outlined in 'Kranti Associates,' was not applicable.Treatment of Competing Arguments:The appellant's contention that reasons must be provided for the transfer was countered by the Tribunal's view that such administrative decisions do not have civil consequences that necessitate the recording of reasons. The Tribunal concluded that the appellant's reliance on the 'Kranti Associates' judgment was misplaced.2. Prejudicial Effect of Transfer on Appellant's RightsRelevant Legal Framework and Precedents:The appellant argued that the transfer of the case could affect their rights prejudicially, invoking the principle that reasons should be recorded in administrative decisions with civil consequences.Court's Interpretation and Reasoning:The Tribunal held that the transfer of a case from one Bench to another does not have a prejudicial effect on the appellant's rights. The Tribunal emphasized that the appellant, as a suspended director, does not have standing to claim that the transfer affects their rights adversely.Key Evidence and Findings:The Tribunal found no evidence to suggest that the transfer of the case had any adverse impact on the appellant's legal standing or rights.Application of Law to Facts:The Tribunal applied the legal principles regarding administrative decisions and concluded that the transfer did not constitute a decision with civil consequences that would require the recording of reasons.Treatment of Competing Arguments:The appellant's argument regarding the prejudicial effect of the transfer was dismissed by the Tribunal, which found no basis for the claim that the transfer affected the appellant's rights.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:The Tribunal stated: 'The submission of the Appellant that the Appellant is entitled to know the circumstances under which the order has been passed does not appeal to us. Exercise of administrative power insofar as transfer of cases is concerned by the President arises in different circumstances including the constitution of Benches, transfer of the Members, re-constitution of the Benches.'Core Principles Established:The Tribunal established that the President of the NCLT has the discretion to transfer cases between Benches without the obligation to provide reasons, as such transfers do not prejudicially affect the rights of the parties involved.Final Determinations on Each Issue:The Tribunal dismissed the appeal, concluding that there were no grounds to interfere with the President's order to transfer the case. The Tribunal found that the appellant's reliance on the 'Kranti Associates' judgment was inapplicable, as the transfer did not have civil consequences requiring recorded reasons.