NCLT President Cannot Transfer Cases Beyond Territorial Jurisdiction Of Bench: Gujarat High Court In Essar Steel Insolvency Case

The Gujarat High Court has recently held that the President of the National Company Law Tribunal (NCLT) has no authority to transfer cases from one State to another through administrative orders.The ruling came in proceedings linked to the Essar Steel insolvency process, where the court also found that repeated recusals by NCLT Members in Ahmedabad were neither "legal" nor "justified."A single bench of Justice Niral R Mehta made the finding in a petition filed by Arcelormittal Nippon Steel India Limited (formerly Essar Steel India Limited).The petition challenged an order of the NCLT, Delhi, which had, through administrative directions, transferred several insolvency related disputes concerning Essar Steel from the NCLT Ahmedabad Bench to the NCLT Mumbai Bench, even though those transfer applications were still pending before the Tribunal.The court observed, “The President of the NCLT has no administrative power to alter or extend the territorial jurisdiction of any Bench. Such an administrative decision directly affecting pending judicial proceedings is, therefore, subject to judicial review. Accordingly, the orders dated 6th June 2024 and 10th February 2025 passed by the NCLT, New Delhi, on the administrative side, are without any legal authority and are liable to be quashed and set aside.”The case stemmed from the aftermath of the Corporate Insolvency Resolution Process (CIRP) of Essar Steel, which was approved by NCLT, Ahmedabad, in 2019 and upheld by the Supreme Court later that year. After completion of the process, some respondents filed contempt and recall petitions alleging non-compliance. These were dismissed by NCLT, Ahmedabad, in January 2024. Following this, the counsel for some of the respondents sent an email to the Tribunal, and the Members of NCLT–I recused themselves the very next day without explanation. Later, NCLT–II also recused, stating that the conduct of the same counsel amounted to “intimidation.”While these issues were still before the Tribunal, the NCLT President in New Delhi issued two administrative orders on June 6, 2024, and February 10, 2025, transferring the pending matters from NCLT Ahmedabad to NCLT Mumbai. Counsel appearing for Arcelormittal argued that both the recusals and transfers were illegal. He stated that the Tribunal can only recuse itself for reasons specified in Rule 62 of the NCLT Rules and argued that allowing otherwise would give unfair advantage to unscrupulous litigants and lawyers. Regarding the transfers, he submitted that Rule 16 does not authorize the President to transfer cases beyond the territorial jurisdiction of a Tribunal. The respondents' counsel did not oppose the petitions being allowed and suggested the formation of a virtual Bench for Ahmedabad.Finding merit in the arguments, The High Court quashed the recusal orders of January 9, April 23, and April 24, 2024, and the administrative transfer orders of June 6, 2024, and February 10, 2025. It directed that the cases be placed before a suitable Bench at Ahmedabad and allowed the NCLT President to constitute a virtual Bench for expeditious adjudication.The court also made strong remarks about courts yielding to external influence. “If Courts and the Tribunals begin to succumb to pressure or intimidation from counsel or litigants, it would only embolden those who seek to manipulate judicial proceedings and promote practices such as browbeating, forum shopping, and attempts to influence the Bench.", "Courts and Tribunals are expected to be magnanimous, but such magnanimity should never be at the cost of judicial dignity or independence,” it added.It further added that tribunals are not powerless to tackle such situations and must take appropriate action against wrongdoers. "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."Case Number: R/SPECIAL CIVIL APPLICATION NO. 11679 of 202Case Title: ARCELORMITTAL NIPPON STEEL INDIA LIMITED V NATIONAL COMPANY LAW TRIBUNALFor Petitioner: Senior Advocate Mihir Joshi with Advocates Keyur Gandhi, Raheel Patel, Isa Hakim, and Aradhana Jain for Gandhi Law AssociatesFor Respondents: Advocate PY Divyeshvar for Registrar, NCLT ; Advocate Kshitij M. Amin for Respondent No. 2; Advocate Deepak Khosla with Advocate Jaydeep M. Shukla for other respondentsClick here to read/download orderCitation : 2025 LiveLaw (Guj) 174

NCLT President Cannot Transfer Cases Beyond Territorial Jurisdiction Of Bench: Gujarat High Court In Essar Steel Insolvency Case

Sahyaja MS

Tags