The Supreme Court has expressed serious concerns regarding the Ministry of Corporate Affairs, stating that it has “completely hijacked” the autonomy of the National Company Law Tribunal (NCLT) and its appellate body, the National Company Law Appellate Tribunal (NCLAT). This assertion was made during a hearing on Thursday, where a bench led by Chief Justice Surya Kant, alongside Justices Joymalya Bagchi and V Mohana, highlighted the detrimental impact of the ministry’s actions on the independence of these judicial bodies.

The court suggested that the presidents of both the NCLT and NCLAT should have greater control over appointments to ensure their autonomy. It proposed that an interim solution could involve the use of deputation, followed by a structured recruitment process facilitated by the Union Public Service Commission (UPSC) or the Staff Selection Commission (SSC). The Chief Justice articulated concerns over the ministry’s desire for control, describing it as “most unfortunate.” He emphasised that the tribunal’s integrity is at stake if such trends continue.

Concerns Raised by Contractual Employees

The hearing was prompted by a petition filed by contractual employees at the NCLT and NCLAT, who are facing potential termination of their contracts. Senior advocate Meenakshi Arora, representing the employees, urged the court to intervene, arguing that individuals who have served for an extended period should not be dismissed abruptly. She indicated that the employees might be required to leave their positions by November 1 or 2, as a private company is expected to take over their roles.

Arora highlighted that these employees have worked for six years and possess certain rights despite their contractual status. She pointed out that when appointed by the Ministry of Corporate Affairs, they do not receive housing or dearness allowances, which further complicates their situation. The advocate referenced the NCLT’s recruitment rules, which allow for regularisation, and questioned the fairness of terminating their contracts without due process. She argued that such actions would violate Articles 14 and 16 of the Constitution, which pertain to equality and non-discrimination.

The Chief Justice responded critically to the practice of contractual appointments, recalling an incident in Bombay where contractual employees allegedly mishandled sensitive documents. He expressed concern that these employees do not regard the roles of judicial or technical members seriously, suggesting that their presence has led to complications within the tribunal. The Chief Justice reiterated the need for complete autonomy to be restored to the presidents of the NCLT and NCLAT.

Proposed Solutions for Strengthening NCLT and NCLAT

In light of the issues raised, the Chief Justice recommended that experienced personnel from government departments should be appointed on a deputation basis as a temporary measure. He advocated for a phased approach to recruitment, allowing the NCLT and NCLAT to gradually establish their own staffing through formal channels such as the UPSC or SSC. This approach aims to ensure that both immediate and long-term solutions are in place to reinforce the independence of these tribunals.

The bench has issued a notice regarding the petition, citing the broader implications for the judicial system. The court’s suggestions for interim deputation and structured recruitment processes reflect a commitment to restoring the autonomy of the NCLT and NCLAT, which is deemed essential for their effective functioning. The ongoing developments in this case will be closely monitored as the court seeks to address the concerns surrounding the influence of the Ministry of Corporate Affairs.

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