Saturday, February 4, 2023

Supreme Court issues notice in a petition seeking modification in the appointment of NCLT members

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The Supreme Court of India on Tuesday issued notice in a petition seeking change in Notification of appointing members of the National Company Law Tribunals for 3 years instead of 5 years.  The impugned notification was issued on September 20, 2019 by the Ministry of Corporate Affairs in exercise of the powers conferred by section 408 of the Companies Act, 2013.

A division bench of Justices L. Nageswara Rao, B.R. Gavai and Aniruddha Bose were pleased to issue notice in the petition filed by the National Company Law Tribunal Bar Association (NCLTBA) through its Secretary, Advocate Saurabh Kalia and has been filed through AOR Supriya Juneja.

Justice L. Nageswara Rao:

“We are happy that the Bar Associations are active, when the Tribunals were not functioning for a want of forum your efforts were appreciated, now you are interested in the tenure of the members?”

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Senior Advocate appearing on the behalf of National Company Law Tribunal Bar Association submitted that some members are appointed for 5 years while others are appointed for 3 years and that this exercise was arbitrary and discriminatory. He brought the court’s notice to the fact that some of the members were reaching at the end of their tenure, thereby requesting the court to grant a short date. The Apex Court obliged issuing Notice returnable in 4 weeks.

According to the petition that the impugned notification is contrary to the Sec. 413 of the Companies Act, 2013 which prescribes the term of the members for 5 years. The petition has relied Madras Bar Association v. Union of India & Anr. (2010) and Madras Bar Association v. Union of India & Anr. (2021) stating that the impugned notification was antithetic to the aforementioned judgements of the Supreme Court.

The petition has contended that the Notification appoints members for the term 3 years instead of 5 years, this early expiration of the tenure will create a void and will be a catalyst to pendency of cases before Tribunals.

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