Plea filed before Madras High Court challenging decision to allow hearing of only new cases at NCLAT Chennai Bench

The decision to allow only new or fresh matters to be taken up by the recently established National Company Law Appellate Tribunal (NCLAT), Chennai has been challenged before the Madras High Court (CA V. Venkata Siva Kumar v. The Hon`ble Registrar, The Hon`ble NCLAT and ors). .Last week, a Bench of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy sought the response of the Central Government (Ministries of Finance and Corporate Affairs) and the Registrar of the NCLAT, Delhi and directed them to file their counter-affidavits in the case. The responses have to be filed before the next hearing on April 21. .The petition was moved by a Chartered Accountant and insolvency professional, V Venkata Siva Kumar, challenging the validity of Standing Order No. 1 dated January 11, 2021. By this communication, the NCLAT Registrar had informed that only new cases would be entertained at the NCLAT, Chennai until further orders. ."The old cases already filed or pending or as may be filed till the date of operationalizaion of the NCLAT Chennai Bench shall be heard and decided by the Principal bench, NCLAT New Delhi", the notification further said. .Venkata Siva Kumar contested the validity of this notification on grounds that:It is ultra vires of Article 323B (concerning tribunals for certain matters) of the Constitution of India;It violates Article 21 (right to life and personal liberty) of the Constitution of India;It is manifestly arbitrary and substantively unreasonable, thereby violating Article 14 (right to equality) of the Constitution of India; It is without jurisdiction as per the provisions of Section 410;(Constitution of Appellate Tribunal) and 419 (Benches of Tribunal) of the Companies Act, 2013; The said notification renders the directions of the Supreme Court in the Swiss Ribbons case (wherein the Court had favoured the constitution of a regional NCLAT bench) meaningless. .The petitioner highlighted that the NCLAT's principal Bench at Delhi is generally only able to hear 10-15 cases in the forenoon session, "resulting in repeated adjournments, which are beyond the control of authorities, resulting in the litigation costs going beyond the reach of ordinary small and medium companies and defeating the objective of the time-bound resolution.".The number of cases pending from South alone has accumulated into thousands, it was submitted. The Southern NCLAT Bench at Chennai was constituted to de-clog the number of pending cases and make access to justice cheaper and more effective, it added. .The petitioner went on to assert that the NCLAT, Chennai can handle more cases and reduce the mounting burden on the NCLAT's principal Bench. It is also pointed out that when special courts are created or an existing court is bifurcated, even pending cases are transferred to the newly established Bench if they fall under the jurisdiction of such Bench. .In this regard, the Madras High Court's example was also cited. "... when the Hon’ble Madras high court was bifurcated and Madurai bench of the hon’ble high court started functioning on July 24, 2004, a total of 25,432 cases pending before the principal seat of the court in Chennai were transferred onto the files of the newly created bench", the plea stated. .The petitioner pointed out the examples of Armed Forces Tribunal (AFT) and National Green Tribunal (NGT) in this regard. "When southern benches of the hon’ble Armed Forces Tribunal (AFT) and the National Greet Tribunal (NGT) were created, howsoever was the small number of cases concerning the newly craved out logistical jurisdiction were pending, they were all transferred and posted before the new benches.".Sivakumar also submitted that if cases are not transferred in this manner, it will create two categories of "unintelligible classes of cases", i.e. those cases filed before the creation of the new court and those filed after the new court comes into existence. "In such a scenario, lawyers and the litigant-public will be constrained to pursue their remedies before two forums. Worse, there will arise a third category of litigants if an IA needs to be filed for a pending case. The new IAs will have to be filed before the old jurisdiction court", the petitioner added..The usual practice followed whenever new courts are created is to identify the cases falling under the purview of such courts and to transfer them to such courts. "It is, of course, a matter of discretion to re-assign serial numbers or to continue with the existing numbers, but transfer of the case bundle is done as quickly as possible so as to avoid miscarriage of justice", the petitioner submitted. .The High Court was, therefore, urged to declare the NCLAT Registrar's January 11 communication intimating that NCLAT, Chennai would only hear new cases as an "improper exercise of discretion and ultra vires to the constitution." .It was also requested to direct that all pending cases coming within the NCLAT, Chennai's jurisdiction be transferred to the Chennai Bench from the Principal (Delhi) Bench. .[Read Order]