The Supreme Court indicated its plan to scrutinise the scope of powers wielded by the NCLT President in transferring cases across state benches, as Chief Justice Surya Kant and Justice Joymalya Bagchi heard submissions on the sensitive administrative authority.
NEW DELHI: The Supreme Court indicated its intention to review the extent of the powers held by the President of the National Company Law Tribunal (NCLT) regarding the transfer of cases between NCLT benches in different states.
This issue was discussed by a Bench consisting of Chief Justice of India Surya Kant and Justice Joymalya Bagchi.
The controversy revolves around Rule 16(d) of the NCLT Rules, 2016, which permits the NCLT President to “transfer any case from one Bench to another Bench when the circumstances so warrant.”
A recent ruling by the Gujarat High Court determined that this authority is strictly limited to intra-state transfers. The High Court contended that the President cannot “alter or extend” the territorial jurisdiction set by the Central government, implying that cases cannot be shifted across state lines.
However, the Supreme Court expressed “prima facie doubts” regarding this interpretation, highlighting that if a tribunal member is required to recuse themselves in a location with only one bench, transferring the case across state lines may be the only solution to prevent a complete halt in proceedings.
This discussion arose during the hearing of petitions concerning ArcelorMittal Nippon Steel India Limited.
Two benches of the NCLT in Ahmedabad had previously recused themselves from cases related to ArcelorMittal, prompting the NCLT President in Delhi to issue an administrative order transferring the cases to Mumbai.
ArcelorMittal challenged both the recusal and transfer orders from the NCLT, claiming they violated the NCLT Rules and were influenced by bench hunting and forum shopping by certain respondents.
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The Gujarat High Court set aside all five contested orders, instructing the NCLT President to either reassign the cases to any bench in Ahmedabad or, if necessary, establish a virtual bench for quicker resolution.
The High Court stated,
“It is increasingly being observed that when judicial officers do not align with the expectations of certain litigants, attempts made to browbeat or pressurize them to avoid the passing of unfavourable orders. Such conduct cannot be tolerated. Judicial magnanimity should never be mistaken for weakness. Courts and Tribunals are not powerless to deal with such situations; they possess ample authority to take appropriate action against such misconduct. Therefore, instead of resorting to recusal in such circumstances, the proper course would be to take firm and lawful measures against the wrongdoers,”.
During the hearing, CJI Kant questioned the rationale for tribunal members to recuse themselves in response to threats or litigant pressure.
The Court remarked,
“Why can’t the tribunal members recuse? The tribunal should come heavily on the party which does it. A party which threatens a tribunal can’t get away with it,”
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The Bench also challenged the strict approach taken by the Gujarat High Court ruling, which had been used to deny transfer requests.
The Court asked,
“What is the business of the High Court to cut in the powers of the tribunal like this?”
When counsel argued that the High Court was concerned about the transfer to Mumbai and suggested a virtual bench instead, the Bench explored a hypothetical scenario where recusal made a hearing impossible at a specific bench:
“First, let us forget about that there are two benches, assuming there is only one bench at one place. And one of the members, due to a conflict of interest, has to recuse. Therefore, in that place, the matter cannot be heard. So it has to go from Ahmedabad…to A place, B place or C place.”
The case is now scheduled for a hearing on February 23, 2026, with Senior Advocate Neeraj Kishan Kaul representing ArcelorMittal.
Case Title: Nita Rayapati v. Arcelor Mittal Nippon Steels India