Fifteen NCLT Members To Retire On 3rd July, NCLT Benches To Suffer From Shortage Of Members
The National Company Law Tribunal Benches across the country are set to undergo shortage of Members as fifteen Members are retiring on 03.07.2022 and no extension has been granted to their tenure till now. The NCLT benches have been re-constituted with the remaining Members vide circulars dated 01.07.2022. Background The Ministry of Corporate Affairs ("MCA") vide a notification...
The National Company Law Tribunal Benches across the country are set to undergo shortage of Members as fifteen Members are retiring on 03.07.2022 and no extension has been granted to their tenure till now. The NCLT benches have been re-constituted with the remaining Members vide circulars dated 01.07.2022.
Background
The Ministry of Corporate Affairs ("MCA") vide a notification dated 20.09.2019 ("Notification") had appointed 23 NCLT Members for a term of 3 years or till the age of 65 years, whichever is earlier. However, Section 413 of the Companies Act, 2013 prescribes the term of the Members as 5 years.
The Central Government had granted extension of tenure to eight out of the twenty-three Members appointed through the Notification, while the remaining Members are retiring on 03.07.2022. Till now the total strength of NCLT Members was forty-five, which will come down to thirty on 3rd July 2022.
Proceedings Before The Supreme Court
The National Company Law Tribunal Bar Association ("NCLTBA") had filed a writ petition titled as National Company Law Tribunal Bar Association v Union of India before the Supreme Court in May 2022, seeking modification of the term of 3 years fixed by the MCA Notification as 5 years. The NCLTBA had argued that that the said Notification was contrary to Section 413 of the Companies Act, 2013 and the early expiration of the tenure will add to the pendency of cases before Tribunals. It was submitted that the Notification contradicts the judgments passed by the Supreme Court in Madras Bar Association v. Union of India & Anr. (2010) and Madras BarAssociation v. Union of India & Anr. (2021), wherein it was observed that longer term was necessary to ensure independence of Tribunals and the Court had held that the term of members should be 5 years.
In a hearing held on 20.06.2022, the Supreme Court opined that the appointees had accepted the three years period of appointment in 2019 without any demur and had till date did not raised any challenge against the same. The Supreme Court declined to grant any interim relief while observing that:
"Taking into account the fact that none of the appointees under the impugned Notification so far challenged the same and accepted it with open eyes, no interim order can be passed now. We are of the view that matter relating their right to continue beyond the period of three years on the strength of the aforesaid notification can also be considered in the Writ Petition itself, provided the issue of locus standi is answered in favour of the petitioner."
The next date of hearing before the Supreme Court has been fixed to 20.07.2022.