Complete Re-Appointment Process Of NCLT/NCLAT Members Within 2 Months : Supreme Court Directs Centre

A three-judge Bench of Justice Nageswara Rao, Justice Hemant Gupta and Justice Ravindra Bhat issued the direction after being informed by the Attorney General that the process as already been initiated by them as they have written to the CJI regarding appointment of a selection committee.

"As the government has already initiated the process of reappointment by writing to the Chief Justice Of India, we trust and hope that reappointment process should be completed expeditiously as there is no necessity of issuance of any advertisements for participation of other eligible candidates. As strength of members of NCLAT and NCLT is depleting which would be to the detriment of smooth functioning of Tribunals, we direct the government to complete the process at the earliest, not later that two months." the Bench noted.

Court's Order: The Bench noted that the National Company Law Tribunal and the Appellate Tribunal Bar Association has filed this Writ Petition seeking direction to Respondents to fill up the vacancies of Chairman, NCLAT and President of NCLT without further delay. A further direction was sought to issue letters of appointment to selected candidates pursuant to election procedure initiated in 2019 and to fill up remaining vacancies of Members, NCLT and NCLAT.

The Petitioner had also sought a direction to extend the of term of members of NCLT and NCLAT for further period of 5 years as they are completing their tenure by June 2021.

The Bench observed that when the matter was listed, ASG Balbir Singh submitted that the process of appointment of candidates who have been selected pursuant to procedure initiated in 2019 shall be expedited and orders of appointment shall be issued soon.

The Bench further noted that so far as the extension of term of members of NCLT and NCLAT who are completing their tenure in June, 2021 is concerned, the AG has referred to Section 413 of Companies Act 2013 according to which, the President or any other member of the Tribunal shall hold office for a period of 5 years and shall be entitled for reappointment for another term of 5 years. He submitted that the government has initiated the process by requesting the CJI to constitute a committee for purposes of reappointment of members to NCLAT and NCLT.

"Mr Chandiok, appearing for petitioner submitted that he cannot have any objection to process of reappointment being initiated immediately, but has requested that members who are completing tenure should be permitted to continue till process of reappointment is completed." Bench said.

"It was brought to our notice that there are only 39 members at present for the sanctioned strength of 63 and the depletion of the strength of members in Tribunals would adversely effect the functioning of the Tribunals."

The court also made note of the argument that members who are completing tenure should be permitted to continue in interest of justice and for smooth functioning of Tribunals.

Details of the Hearing:

During the hearing, the Bench inquired about the applications filed from NCLT where it was argued that members are retiring today. The Bench asked if the application can be taken up first, as the main matter ( plea challenging the Tribunals Reforms Ordinance 2021) will be heard on Wednesday.

Senior Adv Datar informed the Bench that NCLT is not one of the tribunal in the ordinance .

"What do you say about extension of these NCLT members who are residing today tomorrow." the Bench asked AG.

Attorney General referred to Section 413 of the Companies Act 2013.

"As per website of NCLT, there are 20 judicial and 21 technical members, even if 4 of them retire there will be substantial members who can continue. There will be no need to extend time." Justice Gupta said.

In response to Court's query regarding the number of members in the Tribunal as of today, the Bench was informed that there will be 18 judicial and 21 technical, and 6 members will be retiring in June.

"Please tell us, would there be situation because of these retiring members, that certain benches won't function at all?" the Court asked

Attorney General stated that "in many states there are only 1-2 cases so functioning will not be effected. But what Lordships are supposed to do is to decide upon the reappointment. The Chief Justice will have to constitute a committee, and we have already approached the Chief Justice."

"Can we request that the reappointment can be taken up immediately instead of waiting for other advertisements to be issued" the Bench said

"Yes, Perhaps Your Lordships may do that in this case" AG said.

The Bench then told Sr Adv Chandiok appearing for the petitioner " We it will say say that process of appointments is to be done expeditiously, we won't extend."

Senior Adv Chandiok requested that they may be allowed to continue till the reappointment takes place.