Supreme Court Transfers NCLAT Chennai Case to Delhi After Member Flags Alleged Approach by “Revered” Judge

The Bench of Justices Surya Kant and Joymalya Bagchi said the immediate priority was to ensure a fair and untainted adjudication of the underlying company appeal, which had been heard but not decided by the Chennai Bench.

The Court clarified that although no notice had been issued to respondents 4 and 5, the directions passed would not prejudice them.

Transferring the entire case record to New Delhi in view of the “peculiar facts”, the Court requested the NCLAT President to list the matter before his own bench and dispose of it expeditiously after issuing notice to all contesting parties. Respondents 4 and 5 were specifically directed to ensure that no impediment is created in the swift conclusion of the appeal.

Addressing the wider institutional concerns raised by Justice Sharma’s disclosure, the Bench observed that the issues flagged were of “vital public importance”. It noted that the competent authority would have already examined the available material and taken appropriate steps.

The Court added that any further action on these sensitive matters would fall within the administrative domain of the Chief Justice of India.

Treating the writ petition as a representation, the Bench directed that the information be placed before the CJI for consideration, adding that “the law should take its own course.”

In a related news, in August, the Apex Court had ordered an inquiry into a startling disclosure made by Justice Sharad Kumar Sharma, Judicial Member of the National Company Law Appellate Tribunal (NCLAT) Chennai. Justice Sharma had revealed that he had been approached by “one of the most revered members of the higher judiciary of this country” to deliver a favourable order in an insolvency case. The Court had directed its Secretary General to conduct the probe to ascertain the identity of the judge; whether from the Supreme Court or a High Court, who allegedly attempted to influence the outcome.

This is not the first time Justice Sharma had stepped aside after attempts to influence his adjudication.

-June 11, 2024: While hearing disputes involving Shri Ramalinga Mills, he recused himself after recording that one of the respondents attempted to approach him for a favourable judgment.

-November 18, 2024: He withdrew from a matter concerning Jeppiar Cements, stating in his order: “Since I have been approached by my real brother who has dropped in the following messages...With a very sorry note, I refuse to hear this appeal.”

-Earlier in 2024: He also recused from hearing cases related to the insolvency of edtech firm Byju’s, citing prior professional association with the Board of Control for Cricket in India (BCCI), the petitioner in that matter.

The August 13 order has triggered serious concern across the legal fraternity, as references to “higher judiciary” encompass judges from the Supreme Court or High Courts. While Justice Sharma did not name anyone, the disclosure of attempted influence from such quarters is rare and raises troubling questions about judicial independence in insolvency proceedings.

With his latest recusal, the insolvency case involving KLSR Infratech Ltd. will now be placed before a fresh coram, prolonging proceedings that already had hearings concluded and orders reserved.