SC orders probe after NCLAT judicial member claims 'approached for favour'

The Supreme Court has ordered an inquiry into the claims of a judicial member of the National Company Law Appellate Tribunal (NCLAT) of being "approached by one of the most revered members of the higher judiciary".

Sources privy to the development said the inquiry will be conducted by the apex court’s secretary general with the top court deciding the future course of action on the basis of the outcome.

Justice Sharad Kumar Sharma, the judicial member of the Chennai-based NCLAT, alleged he was approached by a member of higher judiciary for a favourable order in a case which was pending before him.

He recused himself from hearing the matter and even recorded the incident in a two-paragraph order passed on 13 August.

"We are anguished to observe, that one of us, Member (Judicial), has been approached by one of the most revered members of the higher judiciary of this country for seeking an order in favour of a particular party. Hence, I recuse to hear the matter (sic)," the NCLAT order said.

The tribunal then requested the matter to be placed before the "chairperson for nomination of an appropriate bench" for hearing.

The two-member bench comprised Justice Sharma and technical member Jatindranath Swain.

NCLAT judge recuses self from case, cites pressure from higher judiciary

The bench was hearing an appeal filed by A.S. Reddy, suspended director of Hyderabad-based KLSR Infratech, which is facing a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code.

The judgment in the matter was reserved by the insolvency appellate tribunal on 18 June after completion of hearing. It also granted seven days to both parties to file written submissions, if any.

The matter was listed for orders on 13 August before the two-member Chennai bench comprising Justice Sharma and Swain. However, when the matter was called, Justice Sharma recused from the matter and mentioned the reason in a two-paragraph order passed on that day.

The CIRP was initiated by the Hyderabad bench of the NCLT against KLSR Infratech over the plea filed by its creditor AS Met Corp Pvt Ltd on 14 July 2023. It appointed an interim resolution professional after suspending the board of the realty firm. The order was challenged by A.S. Reddy before the NCLAT.

Justice Sharma, who retired from Uttarakhand High Court on 31 December 2023 and joined NCLAT as judicial member on 19 February 2024, has previously recused from several cases, such as hearing matters relating to the insolvency of ed-tech firm Byju's as he had previously appeared as a lawyer for the Board of Control for Cricket in India.