[Shourya Parihar is a 4th year B.A. LL.B. (Hons.) student at Vivekanand Institute of Professional Studies, Guru Gobind Singh Indraprastha University, New Delhi]
The Supreme Court has agreed to look into an institutional question concerning the National Company Law Tribunal(NCLT). The issue is narrow, yet its implications are substantial. At its centre lies is the extent of the President’s administrative authority, and whether that authority permits the transfer of cases between State Benches when objections to such transfer are already pending before the Tribunal in its judicial capacity.
It bears noting that the Supreme Court has not yet delivered a final ruling on the issue. This discussion therefore proceeds on the basis of the Gujarat High Court’s judgment and the Supreme Court’s preliminary observations while issuing notice. The Supreme Court issued notice in a petition that arose from a judgment of the Gujarat High Court. The matter was placed before the Chief Justice of India, Surya Kant, sitting with Justice Joymalya Bagchi. The matter arose from a judgment of the Gujarat High Court that set aside administrative orders transferring proceedings from the NCLT Ahmedabad Bench to the Mumbai Bench. While issuing notice, the Supreme Court indicated that the reasoning of the High Court did not entirely persuade it. At the same time, it clarified that its consideration would be limited to the question of administrative power.
The challenge before the Gujarat High Court was brought by ArcelorMittal, which questioned the validity of the NCLT President’s administrative transfer orders. The Supreme Court has issued notice in a Special Leave Petition (SLP) challenging the High Court’s decision. As of now, no final ruling has been delivered, and the matter remains at the notice stage. The precise SLP title and number would need to be confirmed from the Supreme Court’s cause list or order sheet.
The dispute itself goes back to proceedings connected with the Corporate Insolvency Resolution Process (CIRP) of Essar Steel under the Insolvency and Bankruptcy Code, 2016 (IBC). What may initially appear to be a procedural dispute raises broader concerns about the internal functioning of tribunals, the boundary between administrative supervision and adjudication, and whether transfers of this nature risk enabling forum shopping in insolvency matters.
This post argues that while limited administrative flexibility is necessary, inter-Bench transfers of pending matters should ordinarily follow a judicial route once objections are on record.
How the Dispute Reached the High Court
The resolution plan with respect to Essar Steel was approved by the NCLT, Ahmedabad, under section 31 of the IBC in 2019. That approval was later examined by the Supreme Court and ultimately upheld. After the resolution process had come to an end, contempt and recall petitions were filed before the Ahmedabad Bench of the NCLT. These petitions alleged that the terms of the approved resolution plan had not been complied with. The Bench did not find merit in those allegations, and the petitions were dismissed in January 2024.
Events after that dismissal complicated the situation. Members of the NCLT–I Bench recused themselves without assigning reasons. Soon thereafter, the NCLT–II Bench also recused, referring to alleged intimidation by counsel. At this stage, the pending issues had not been resolved on the merits. Despite this, the President of the NCLT issued administrative orders transferring the pending proceedings from the Ahmedabad Bench to the Mumbai Bench.
ArcelorMittal challenged these developments before the Gujarat High Court under Article 226 of the Constitution. The High Court set aside both the recusal orders and the transfer orders. It held that the President of the NCLT could not transfer cases across State Benches through administrative action when objections to such transfer were pending before the Tribunal on its judicial side. The Court directed that the matters be placed before an appropriate Bench at Ahmedabad, while permitting the constitution of a virtual Bench to avoid further delay.
The Question Before the Supreme Court
The Supreme Court has chosen to frame the issue in fairly narrow terms. In doing so, it has largely adopted the question as it was earlier articulated by the High Court. Put simply, the Court is examining whether the President of the NCLT, while acting in an administrative capacity, can transfer cases from one State Bench to another at a stage when objections to such transfer are already pending before the Tribunal on its judicial side.
Answering this question necessarily calls for a closer look at how tribunals function internally. In particular, it requires an examination of the balance between administrative supervision and adjudicatory decision-making within tribunals constituted under section 408 of the Companies Act, 2013.
Administrative Transfers and Tribunal Independence
The Supreme Court expressed comparable concerns regarding administrative control over tribunals in Madras Bar Association v. Union of India, where it emphasised that tribunal independence is a core requirement for fair adjudication.
The NCLT is a statutory tribunal established under the Companies Act, 2013. Its jurisdiction extends to insolvency proceedings under section 60 of the IBC, as well as to company law disputes more generally. The President of the NCLT is entrusted with administrative supervision of the Tribunal. This includes responsibilities relating to the constitution of Benches and the allocation of cases, as provided under section 419(1) of the Companies Act. This authority, however, is administrative in character. Adjudication before the NCLT is governed by section 424 of the Companies Act, which requires compliance with principles of natural justice.
When proceedings are already pending and objections to transfer have been raised, transferring cases through administrative orders alone raises serious concerns. Such transfers affect where parties are heard, how proceedings continue, and how predictability is maintained in insolvency resolution. Without clear standards, administrative transfers may also raise concerns about forum shopping.
The Gujarat High Court appears to have been guided by these considerations. Once objections were raised before the Tribunal in its judicial capacity, the Court held that the transfer decision should have followed a judicial route.
Supreme Court’s Initial Observations
While issuing notice, the Supreme Court indicated prima facie disagreement with the High Court’s restrictive reading of administrative power. At the same time, it did not resolve the issue conclusively. The question has been left open.
In a separate but related matter involving a request to transfer proceedings from the NCLT Amravati Bench to the Hyderabad Bench, the Supreme Court adopted a firmer tone. It was observed that proceedings cannot be shifted merely because a Presiding Officer or Member makes adverse observations during hearings. This observation reinforces the principle of tribunal independence, which is embedded in section 424 of the Companies Act.
Why the Decision Matters
The Supreme Court’s eventual ruling will carry implications beyond the immediate dispute. Insolvency proceedings under the IBC operate under strict timelines, particularly under section 12 of the IBC. Some degree of administrative flexibility is necessary to prevent procedural deadlock, especially where recusals occur.
At the same time, excessive centralisation of transfer powers risks undermining confidence in the neutrality of tribunal proceedings. In insolvency cases, timelines are compressed and financial stakes are high. Unexplained or frequent transfers between Benches can disrupt resolution processes and weaken the objective of value maximisation under section 30(2) of the IBC. This assumes particular significance given the increasing frequency of recusals and transfer requests before the NCLT in high-value insolvency proceedings.
Possible Ways Forward
There is a need for clearer guidance on the scope of the NCLT President’s powers under section 419 of the Companies Act, 2013, read with rule 16 of the NCLT Rules, 2016. While these provisions speak of administrative supervision, they do not address situations where judicial objections are pending. A clarificatory amendment or a binding practice direction under section 469 of the Companies Act, 2013, could require recorded reasons for administrative transfers of pending matters.
Further, disputes relating to inter-Bench transfers should be subjected to limited judicial scrutiny within the Tribunal. A mechanism for placing such objections before a specially constituted Bench would ensure compliance with section 424 of the Companies Act, 2013.
In cases involving multiple recusals or allegations of intimidation, the use of virtual Benches under rule 20 of the NCLT Rules, 2016, should be considered before physical transfers across State Benches. This preserves territorial jurisdiction under section 60 of the IBC while allowing proceedings to continue. Finally, uniform transfer guidelines would help reduce concerns of forum shopping. Factors such as the stage of proceedings and prior judicial engagement should be expressly considered.
Conclusion
The Supreme Court’s decision to examine the transfer powers of the NCLT President may bring needed clarity to the boundary between administrative supervision and judicial independence. At a basic level, the ruling will have to answer whether administrative authority can still be exercised when judicial objections are already on record, and how far supervisory control can go without crossing into adjudication.
The way the Court approaches this issue will matter beyond internal case management within the NCLT. It is likely to influence how parties view the fairness and reliability of insolvency proceedings more generally, and whether confidence in the stability of India’s insolvency framework under the IBC is maintained.
– Shourya Parihar
