Supreme Court to Test Limits of NCLT President’s Administrative Authority on Case Transfers

Supreme Court to Test Limits of NCLT President’s Administrative Authority on Case Transfers

Introduction

The Supreme Court of India has agreed to examine an important jurisdictional question concerning the powers of the President of the National Company Law Tribunal (NCLT) specifically, whether cases can be transferred from one State Bench to another by way of an administrative order. The issue arises in the backdrop of post-resolution litigation connected to the Essar Steel insolvency.

Factual Background

The controversy traces its origins to proceedings following the Corporate Insolvency Resolution Process (CIRP) of Essar Steel, which was approved by the NCLT, Ahmedabad in 2019 and later upheld by the Supreme Court. After the resolution was implemented, certain parties initiated contempt and recall petitions alleging non-compliance with the approved plan. These petitions were dismissed by the Ahmedabad Bench in January 2024.

Subsequently, a series of recusals followed. Members of NCLT–I at Ahmedabad recused themselves after receiving an email from counsel for some parties. Thereafter, Members of NCLT–II also recused, citing intimidation. While objections to these recusals were pending, the NCLT President issued administrative orders transferring the matters from Ahmedabad to the Mumbai Bench.

Procedural Background

Aggrieved by the transfer, ArcelorMittal approached the Gujarat High Court. The High Court quashed both the recusal orders and the administrative transfer orders, holding that the NCLT President lacked authority to transfer cases across States in an administrative capacity. It directed that the matters be heard by a suitably constituted Bench at Ahmedabad and permitted the NCLT President to form a virtual Bench to ensure expeditious disposal.

Challenging this decision, a special leave petition was filed before the Supreme Court. A Bench comprising the Chief Justice of India Surya Kant and Justice Joymalya Bagchi issued notice, expressing prima facie doubt over the correctness of the High Court’s view.

Issues

1. Whether the President of the NCLT, acting in an administrative capacity, has the authority to transfer cases from one State Bench to another, particularly when objections to such transfer are pending on the judicial side.

Reasoning and Analysis

While issuing notice, the Supreme Court indicated its inclination to scrutinise the boundaries between administrative control and judicial functioning within the NCLT framework. The Court noted that questions of transfer cannot lightly be conflated with administrative convenience, especially where judicial objections and recusals are involved.

In a connected matter referred to during the hearing, the Court reiterated that transfer pleas cannot be used as tools to pressure or “browbeat” Tribunal Members. It observed that mere dissatisfaction with judicial observations or conduct during hearings does not justify seeking transfer of proceedings.

At the same time, the Court consciously left the broader question of law open, signalling that the present case provides an appropriate opportunity to settle the extent of the NCLT President’s transfer powers.

Decision

The Supreme Court has issued a notice limited to examining whether the NCLT President possesses the administrative authority to transfer cases across State Benches. The matter remains pending for detailed adjudication, with the Court poised to clarify an issue that has significant implications for the functioning, independence, and internal governance of the NCLT.

In this case the petitioner was represented by Mr. Arunava Mukherjee, AOR and Mr. Nisarg P. Khatri, Advocates.