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Doctrines of stare decisis applies to NCLP & NCLAT as per the ruling of National Company Law Appellate Tribunal (NCLAT). What does the doctrine states


Since December 2016, multiple changes and ordinances to the Insolvency and Bankruptcy Code, 2016 (IBC) have been introduced to address teething concerns that were not anticipated when the Code was first introduced.

Despite several revisions, some of which are dubious, one of the most serious issues left unaddressed is the “National Company Law Appellate Tribunal’s” lack of supervisory jurisdiction. 

Despite the fact that the IBC is “a code in itself,” independent of any other law, the Legislature has failed to address such a critical issue. This has resulted in a flurry of lawsuits in which people who have been harmed by NCLT orders have conveniently invoked the writ system under Articles 226 and Article 227 of the Indian Constitution.

This strategy either postpones the start of the “corporate insolvency resolution process” (CIRP) or the liquidation procedure. As a result, the entire purpose of the IBC’s expedited disposal process is defeated. This essay seeks to fill this basic void in the IBC, which necessitates a thorough understanding of the CIRP scheme.


A higher court’s decision is binding on the lower court and serves as a precedent for the lower court’s decision that cannot be manipulated by the lower court. This idea is defined as Stare decisis which effectively means “stand by what has been decreed.” It is widely referred to as the precedence notion in India.[1]

According to Black’s Law Dictionary, stare decisis means standing by cases that are decided, maintaining precedents, or retaining previous verdicts on similar matters.

The notion of stare decisis arose from the need for consistency and longevity in the law. This idea was first used in mediaeval England and America when common-law judges used previous case decisions as direction and had the authority to dismiss those that they did not think were good or poor.

Originally, the concept of stare decisis wasn’t really employed given the lack of keeping the decisions or judgments of cases in formal writing, however after the idea of retaining a record of verdict came about; broad usage of this theory was observed.

The judgement of the Exchequer court was granted binding power for the 1st time in England in the 17th century. After the British invasion of India, the idea of precedent was developed in India, which led to a court hierarchy and the conception of a superior court’s decision being regarded an enforceable decision on subordinate courts. As a result, stare decisis has been a hallmark of our court system since the 18th century.


“Any law pronounced by the Supreme Court to be obligatory on all courts within the territory of India,” according to Article 141 of the Indian Constitution. Just the “ratio decidendi” of a case, not the “obiter dictum” or the simple facts of the cases, is binding, according to Art. 141. As a result, in order for the other courts to apply S.C.’s ruling, they must first know the correct principle established by the preceding case.

Some fundamental topics are highlighted in Art.141.

  • All Indian courts are legally required to follow the Supreme Court’s decision and maintain the principle.
  • First and foremost, the judgement must be read in its entirety, with the observations from the ruling being assessed in light of the issues before the court.
  • Only if a judgement is predicated on resolving or deciding a legal question may it be used as a precedent.
  • When a court is divided in deciding a case, the result reached by the majority of justices will be cited as a precedent, rather than the one reached by the minority of judges.
  • Ex-parte rulings by the Supreme Court are also legally binding which can be referenced as precedents.
  • The decision of S.C. does not bind it.
  • The obligatory essence of a judgement is not affected by procedural irregularities or immateriality.
  • “Special leave petition” are legally binding.


The “National Company Law Appellate Tribunal” (NCLAT), a bench of Delhi, ruled that the stare decisis doctrine extends to the NCLT, NCLAT.[2] Through two deposit agreements, the Corporate Debtor acquired two loans from the Financial Creditor. The very first deposit was protected by a mortgage’s deed and certain other collateral instruments. Likewise, the 2nd agreement was backed by a mortgage deed and perhaps other collateral papers. The initial debt was repayable 3 months after it was made, according to the conditions of the First Deposit Agreement. The deadline for payment has been extended until March 31, 2018. The Company Debtor was obligated to pay the due principle balance as well as interest. Financial Creditor filed a request per Section 7 of the ‘I&B Code’ alleging debt default.

Following the Adjudicating Authority’s issuance of a notice, the Corporation Debtor arrived and contested the Petition. The Corporate Debtor opposed the application on the grounds that “I the Financial Creditor breached the contract by failing to completely pay the advance amount under the Second Deposit Agreement, and (ii) monies under the First Deposit are secured, as are amounts under the Second Deposit”. The Adjudicator granted the Application in the assailed judgement.

According to “Arun Kathpalia”, Senior Legal representatives showing up for the Appellant in favour of the Appeal, the Financial Lender should not have made an appeal under Section 7 because the entire amount was secured under the T&C of the “agreement and mortgage deed”, as well as the assets collateralized were of greater value than that of the balance payable. According to the contractual terms of the loan deed, the Appellant should have been able to recover its money from the collateral, and the appeal under Section 7 was just not sustainable.

In contrast, “Amit Sibal”, Senior Counsel acting for said Respondent, opposing the opinion of the Senior Counsel for the Applicant, believes that the Financial Creditor’s Application filed under Section 7 was competent and entirely maintainable. Under the T&C of the Loan Deed, the Mortgagee had the right to seek redress by realizing his repayments from collateral or to pursue any other legal remedy. The coram, presided over by “Justice Ashok Bhushan”, Judiciary Member “Justice Jarat Kumar Jain”, and Expert Member “Dr. Alok Srivastava”, concluded that the concept of stare decisis is entirely applicable to NCLT and Appellate Tribunal rulings.

At this point, the Tribunal underlined that perhaps the ruling of the jurisdictional Tribunal is obligatory as precedence here on Company Law Tribunal. Rulings rendered by the National company law tribunal in other jurisdictions are only convincing. In this matter, a decision of the coordinate Panel of the jurisdictional Tribunal was mentioned. “As a result, we believe that the Adjudicating Authority made no error in admitting the Financial Creditor’s Section 7 Application.” This plea is without merit. “The Tribunal rules that the Appeal is dismissed.”[3]

[1] Chirag Shah & co., (last visited Feb. 21, 2022).

[2] Principle Of Stare Decisis Applies To NCLT As Well As NCLAT, LiveLaw, Jan. 31, 2022, 1:23 PM),

[3] Mariya Paliwala, Doctrine of stare decisis applies to NCLT, NCLAT, rules NCLAT [Read Order], Taxscan (Jan. 31, 2022, 9:08 PM),

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