Supreme Court to Decide If NCLAT Can Refer Split Verdicts to Third Member or Must Rehear Cases with Larger Bench
Bench of Justices Pardiwala and Viswanathan Seeks Solicitor General’s Assistance on Procedural Gap in NCLAT Functioning
Case Arises from Appeal Against Registrar of Companies Order; Court to Clarify Legal Validity of Split Verdict References
By Our Legal Correspondent
New Delhi: November 06, 2025 — The Supreme Court of India has agreed to examine a crucial procedural question regarding the functioning of the National Company Law Appellate Tribunal (NCLAT). The issue is whether, in cases where a two-member bench of the NCLAT delivers a split verdict, the matter can be referred to a third member for resolution, or whether it must be reheard afresh by a larger bench.
This question arose in the case of R. Narayananswamy vs. Registrar of Companies, Tamil Nadu, where the NCLAT had referred a split verdict to a third member. The Supreme Court, however, observed that there is no clear statutory provision governing such situations.
Background of the Case
The dispute originated when the Registrar of Companies (RoC), Tamil Nadu, struck off a company’s name from the Register of Companies under Section 248(5) of the Companies Act, 2013. The company challenged this decision before the NCLAT.
A two-member bench of the NCLAT heard the matter but delivered a split verdict. Instead of constituting a larger bench, the case was referred to a third member for adjudication. This procedure was questioned before the Supreme Court, leading to the current examination.
Supreme Court’s Observations
- No clear statutory procedure exists for handling split verdicts in NCLAT.
- The practice of referring matters to a third member may not have explicit legal backing.
- The issue raises a procedural gap in the functioning of the tribunal.
- The Court has sought the assistance of the Solicitor General of India to resolve the matter.
The Court emphasized that clarity is essential to ensure consistency and fairness in tribunal proceedings, especially given the increasing number of corporate disputes being handled by NCLAT.
Why This Matters
- Procedural Clarity: It will determine whether split verdicts can be resolved by a third member or require a fresh hearing.
- Judicial Efficiency: A clear procedure will prevent delays and ensure smoother functioning of NCLAT.
- Corporate Governance: Companies involved in disputes will benefit from predictable and transparent processes.
- Legal Precedent: The Supreme Court’s decision will set a precedent for other tribunals facing similar procedural questions.
Industry and Legal Reactions
- Corporate Lawyers: They argue that clarity is essential, as split verdicts are not uncommon in complex corporate disputes.
- Academics: Scholars note that the case highlights the importance of procedural safeguards in quasi-judicial bodies.
- Business Community: Companies see this as a step towards ensuring fairness and reducing uncertainty in tribunal proceedings.
Comparative Perspective
- UK Tribunals: Typically rehear cases with a larger panel.
- US Federal Courts: Split decisions are resolved by en banc hearings.
India’s approach, therefore, requires clarification to align with global best practices.
Case Timeline
- Registrar of Companies Order: Company name struck off under Section 248(5).
- NCLAT Hearing: Two-member bench delivers split verdict.
- Referral: Case referred to a third member for adjudication.
- Supreme Court Intervention: Bench of Justices Pardiwala and Viswanathan questions legality of referral.
- Next Steps: Solicitor General to assist Court in clarifying procedure.
Broader Implications
The Supreme Court’s ruling will not only affect NCLAT but could also influence other tribunals where similar procedural gaps exist. It underscores the need for statutory clarity in tribunal functioning, especially as India increasingly relies on specialized bodies to handle complex disputes.
Conclusion
The Supreme Court’s decision to examine whether NCLAT can refer split verdicts to a third member is a landmark moment in corporate jurisprudence. By addressing this procedural gap, the Court will ensure greater transparency, efficiency, and fairness in tribunal proceedings.
For businesses, lawyers, and regulators, the ruling will provide much-needed clarity on how split verdicts should be handled. More broadly, it reflects the judiciary’s commitment to strengthening India’s corporate dispute resolution framework.