Supreme Court upholds constitutionality of the National Company Law Tribunal and the National Company Law Appellate Tribunal [Read the Judgment]

Partly allowing a writ petition filed by the Madras Bar Association challenging various provisions of Chapter XXVII of the Indian Companies Act, 2013, more particularly Sections 408, 409, 411, 412, 413, 425, 431 and 434 – which broadly deal with the constitution of the National Company Law Tribunal and the Appellate tribunal, their powers to punish for contempt,. Partly allowing a writ petition filed by the Madras Bar Association challenging various provisions of Chapter XXVII of the Indian Companies Act, 2013, more particularly Sections 408, 409, 411, 412, 413, 425, 431 and 434 – which broadly deal with the constitution of the National Company Law Tribunal and the Appellate tribunal, their powers to punish for contempt, prescription of qualifications including term of office, salary and allowances etc and structure of the selection committee for appointment of President/Members of the NCLT and Chairperson/Members of the NCLAT - the Supreme Court, re-affirming the directions given by it in its 2010 judgment in Union Of India vs R. Gandhi, the Supreme Court has held that only officers who are holding the ranks of Secretaries or Additional Secretaries of the Government of India alone are to be considered for appointment as technical Members of the NCLT. A Constitution Bench of the Apex Court led by CJI H L Dattu observed that Section 409 of the Act, 2013 which again makes the Joint Secretary to the Government of India or equivalent officer eligible for appointment, if he has 15 years experience as member of Indian Corporate Law Service or Indian Legal Service, out of which at least 3 years experience in the pay scale of Joint Secretary is clearly in the teeth of dicta pronounced in 2010 judgment. The Court also observed that though challenge is laid to the vires of Section 408, it conspicuously omits Section 410 and, “thus, in essence, there is no challenge to the constitution of NCLAT insofar as relief claimed is concerned.” The Supreme Court however repelled the challenge to the constitutionality of the National Company Law Tribunal and the Appellate tribunal, holding that the same was barred by res judicata, inasmuch as the same was considered and dealt with by it in its 2010 judgment, and the issue cannot be reopened.