The Supreme Court of India has issued a strong rebuke to the Ministry of Corporate Affairs (MCA) regarding its management and control over the National Company Law Tribunal (NCLT). The apex court asserted that the administration of the NCLT had been "completely hijacked" by the ministry, undermining its essential autonomy.
Court Demands Tribunal Autonomy and Staffing Control
During a recent hearing, a bench led by Chief Justice of India Surya Kant expressed deep concern over the MCA's apparent determination to maintain full control over the bankruptcy tribunals. The court described the situation as "most unfortunate" and emphasized that the power to appoint tribunal staff should rest solely with the NCLT President, not the ministry or private contractors.
"We will not allow you people to continue; we will not allow these private contractors to continue," the court stated, adding, "The entire power of appointment must be with the President only."
Concerns Over Outsourced Recruitment and 'Backdoor Entrants'
The court's comments were prompted by revelations that the recruitment of NCLT staff had been outsourced to a private company. While petitioners raised concerns about existing contractual employees being displaced, the court also questioned the legitimacy of these contractual appointments themselves.
"You (contractual employees) are also backdoor entrants. I know how contractors play their hands. They don't care about judicial/technical members," the bench observed, suggesting, "Let them also go. Let this company also be disbanded. Complete autonomy must be with both presidents of NCLT and NCLAT."
The bench, which included Justices Joymalya Bagchi and V Mohana, indicated it would examine the matter from a broader public interest perspective. Potential solutions proposed by the court included initially appointing experienced government officials on deputation, followed by phased regular recruitment, possibly through the Union Public Service Commission (UPSC) or Staff Selection Commission (SSC).
Crumbling Infrastructure and Vacancies Flagged
In addition to administrative control, the Supreme Court also highlighted the deteriorating infrastructure at the NCLT. The lawyers' association informed the court about the dire conditions at the NCLT's principal bench in Delhi, citing collapsing roofs and the closure of multiple floors, leading to courts functioning at half strength.
The association also pointed out 16 vacancies for judicial and technical members, further hampering the tribunal's efficiency. The court instructed Attorney General R Venkataramani to impress upon the Centre the urgent need to provide basic amenities to the tribunals.
Venkataramani suggested a joint meeting involving government representatives, the NCLT President, and lawyers' associations to collaboratively address these critical issues.
Previous Interventions Highlight Systemic Issues
These latest observations follow a suo motu intervention by the Supreme Court in April, when it took cognizance of significant delays in approving corporate insolvency resolution plans. At that time, the court stressed that such issues needed to be addressed "on war footing" to prevent the frustration of the Insolvency and Bankruptcy Code (IBC, 2016)'s purpose.