Companies Act, 2013: s.413 – Appointment of Members – Modification of tenure – On 20 September 2019, Ministry of Corporate Affairs issued Notification appointing 28 candidates as members of NCLT for tenure of three years – NCLT Bar Association filed writ petition seeking modification of tenure of appointment of the Members of NCLT from three to five years – Plea of petitioner that the Notification was contrary to provisions of s.413 which prescribes for a term of five years – The Union government stated that the appointment of the Members for a period of three years was approved by the Appointments Committee of the Cabinet and before appointment, the Members were given an offer of appointment for three years – Pursuant to the offer, the Members joined the NCLT – Hence, it was urged that the Bar Association can have no locus to question the term of appointment when the Members have not raised a grievance – On 29 March 2022, the President of the NCLT addressed a communication to the Union Government recording that the tenure of 23 Members would come to an end in June-July 2022 and that the resultant vacancies would create difficulties in the “pan-India functioning” of the NCLT – The President of the NCLT requested that the probable vacancies may be factored in during the course of the deliberations in the selection process – The meeting of the Selection Committee was convened and a report was obtained from the President of the NCLT about the “work performance and suitability” of 23 Members – The Selection Committee then opined that there was no specific provision which empowered it to consider the issue of revising the term of office of the Members of the NCLT – The Committee however observed that considering the sensitive nature of the functions and duties of the Members of the NCLT, and considering the verification reports bearing on the character, antecedents, performance and suitability of the Members, the Union government may take “appropriate action in the matter” – Pursuant to the above process, a notification was issued on 14 June 2022 by the Union government by which approval was granted for revising the tenure of two Judicial Members and six Technical Members for a period of five years or till they attain the age of 65 in consonance with the provisions of s.413 of the Act 2013 – Selection Committee initiated the process of selection – The vacancies which are being processed for selection include those arising upon the end of the three-year term of the members who were appointed on 20 September 2019 – The grant of any relief would interfere with the ongoing selection process – Plea of petitioner that the Notification was contrary to provisions of s.413 which prescribes for a term of five years cannot be accepted as petition was filed by those who are not the members of the NCLT – The prayer for extension was asked at a belated stage when the tenure of the Members was nearing its end – Not only had the Members consciously accepted the post for a duration of three years, the Selection Committee also already directed the government to take appropriate action on basis the performance report – Accordingly, Union Government had issued the notification dated
14 June 2020 extending the tenure of two judicial and six technical members – Furthermore, in the present circumstances, the selection process for fresh appointments of Members of the NCLT has already begun and is partially at an advanced stage – Hence, no interference warranted – Directions issued to make the further appointments in accordance with the provisions u/s.413 of the Companies Act. Disposing of the Petition, the Court
HELD: 1. These proceedings under Article 32 of the Constitution have been instituted by the National Company Law Tribunal Bar Association against the Union government in the Ministry of Corporate Affairs. The petitioner contends that the notification dated 20 September 2019 issued by the Ministry of Corporate Affairs appointing 28 candidates as Members of the National Company Law Tribunal for a tenure of three years is contrary to the provisions of Section 413 of the Companies Act 2013. Pursuant to the above process, a notification was issued on 14 June 2022 by the Union government in the Ministry of Corporate Affairs by which approval was granted for revising the tenure of two Judicial Members and six Technical Members for a period of five years or till they attain the age of 65 in consonance with the provisions of Section 413 of the Companies Act 2013. [Paras 1, 2, 12][1124-C-D; 1127-A-D]
2. In the present case, there is no challenge to the Rules or the provisions of the statute itself. The petitioners have instead sought an extension of the tenure of the retiring Members, who are not petitioning parties to the proceedings before this Court. The prayer for extension is also at a belated stage when the tenure of the Members is nearing its end. Not only had the Members consciously accepted the post for duration of three years, the Selection Committee also already directed the government to take appropriate action basis the performance report. The Union Government has accordingly issued the notification dated 14 June 2020 extending the tenure of two judicial and six technical members. Furthermore, in the present circumstances, the selection process for fresh appointments of Members of the NCLT has already begun and is partially at an advanced stage. Accordingly, this Court’s orders at the present stage would interfere with the selection process. Hence, the appropriate course of action to be followed in the present case would be to allow the selection process which has been initiated to continue so that it can be concluded at an early date. The interest of the Bar Association which has moved these proceedings is that the vacancies in the Tribunal should be filled in on an expeditious basis so that work does not suffer and the functioning of the Tribunal is not hampered. The Bar Association cannot have a choice in regard to who should be a Member of the Tribunal. However, this Court directed that in making appointments to the NCLT in the future, the Union Government shall be bound by the statutory provisions embodied in Section 413 of the Companies Act 2013. [Paras 24, 26, 27][1130-E-G; 1131-C-D]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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