NCLT Asking Parties To Explore Settlement Not A Reference To Mediation: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has observed that asking parties in a long-pending oppression and mismanagement dispute to explore settlement is not the same as referring the matter to mediation.

The ruling came in an appeal filed by Vijay Data against Data Ingenious Global Ltd and others, challenging an order of the National Company Law Tribunal (NCLT), Jaipur Bench, which had dismissed his application seeking recall of an earlier order dated February 19, 2026.

The dispute stems from a company petition filed by Vijay Data and others alleging acts of oppression and mismanagement by the respondents. The matter has been pending since 2009 and has also seen multiple proceedings before the High Court as well as the Supreme Court. During the pendency of the proceedings, one of the appellants had also passed away.

In its February 19 order, the NCLT had recorded the respondents' willingness to resolve the dispute through mediation and directed Mr. Babu Lal Data and Mr. Vijay Data to remain present in person to explore the possibility of settlement.

A Bench of Judicial Member Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra held, “The impugned order does not disclose the Ld. NCLT has actually referred the matter to mediation. It is simply to call the parties so as to explore the possibility of settlement, if any, due to reasons aforesaid and it cannot be said to be beyond jurisdiction; thus it requires no interference. However, in case the Ld.NCLT decides to refer the matter to mediation, then principles enshrined in the Mediation Act; the law laid down in Rupa and Company (Supra) and other judgements referred to by the appellant in his recall application, may be looked into."

The appellant had argued that the consent of the appellant was necessary before referring the matter to mediation, relying on Rupa & Co Ltd v. Firhad Hakim, where the Supreme Court held that mediation cannot be imposed on parties without their consent.

The appellant further contended, citing Afcons Infrastructure Ltd v. Cherian Varkey Construction Co Pvt Ltd, that if a judge engages in settlement negotiations and fails, the same judge should not adjudicate the matter to avoid apprehension of bias. It was also argued that since there is only one Bench at Jaipur, such an exercise could require transfer of the case.

The NCLAT, however, observed that the impugned order appears to have been passed in exercise of powers under Section 442(2) of the Companies Act, 2013. It noted that the NCLT had only sought the presence of parties to explore settlement in view of the long-standing nature of the dispute, the relationship between the parties, and multiple ongoing litigations, and that such a direction did not in any manner prejudice the rights of the parties.

Holding that the order was within jurisdiction, the appellate tribunal declined to interfere.

It also waived the cost of Rs. 25 thousand imposed on the appellant, noting that the NCLT was attempting to settle the disputes amicably and to maintain a cordial atmosphere.