Recently, Justice Sharad Kumar Sharma of the National Company Law Appellate Tribunal (NCLAT) recused himself from a case, citing pressure from a “member of higher judiciary.”

Key Highlights of the Case

• Case Background: The matter concerned insolvency proceedings against KLSR Infratech Ltd, a Hyderabad-based real estate company, initiated by AS Met Corp Pvt Ltd, an operational creditor.
• NCLT Decision: The Hyderabad bench of the NCLT admitted the insolvency petition filed by AS Met Corp, noting an unpaid amount of ₹2.88 crore plus interest.
• Company’s Argument: The company argued that this constituted a pre-existing dispute, barring initiation of insolvency under the Insolvency and Bankruptcy Code (IBC), 2016.
• Judicial Recusal: In his order, Justice Sharma recorded that he was approached by a revered member of the higher judiciary seeking an order in favour of one party, leading him to recuse.
• Past Precedent: This was not the first such instance. In 2024, Justice Sharma had recused from a cement company case, citing influence attempts, including a WhatsApp message and family intervention.

What is Judicial Recusal?

• Judicial recusal refers to a judge voluntarily withdrawing from hearing a case where there is a potential conflict of interest, bias, or undue influence.
• Provisions for Recusal in Indian Judiciary
• • No explicit law: The Constitution of India or the Code of Civil Procedure does not lay down binding rules on recusal.
  • Principle of Natural Justice: Recusal stems from the principle that “justice must not only be done but also be seen to be done.”
  • Supreme Court Practice: Judges recuse where they have personal, financial, or relational links to a case, or when external influence is suspected.
  • Transparency Issue: The practice often relies on a judge’s discretion, as reasons for recusal are not always recorded.

About the National Company Law Tribunal (NCLT)

• Introduction: NCLT is a quasi-judicial body established under the Companies Act, 2013 to adjudicate corporate disputes.
• Establishment: Constituted in June 2016, under Section 408 of the Companies Act, 2013.
  • Functions under the Ministry of Corporate Affairs (MCA).
• Jurisdiction and Powers: Adjudicates matters relating to company law, corporate insolvency, and restructuring.
  • Acts as the adjudicating authority for insolvency resolution under the Insolvency and Bankruptcy Code (IBC), 2016.
  • Has the power to approve mergers, demergers, and investigate company affairs.
• Appellate Authority: Decisions of the NCLT can be challenged before the NCLAT, whose orders are appealable before the Supreme Court of India on points of law.

Conclusion

The recusal highlights concerns about judicial independence and integrity in corporate dispute resolution. With insolvency cases often involving high financial stakes, attempts at external influence underscore the need for robust safeguards and transparency in judicial processes.

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