Supreme Court Issues Notice On NCLT Bar Association's Petition Challenging MCA Notification Fixing NCLT Members' Term As 3 Years

The Supreme Court on Tuesday issued notice in a writ petition seeking to modify the term of 3 years fixed by a notification issued by the Ministry for the members of the National Company Law Tribunal as 5 years.The Notification was issued on 20.09.2019 by the Ministry of Corporate Affairs in exercise of the powers conferred by section 408 of the Companies Act, 2013. The term was fixed as 3 years or till the age of 65 years, whichever is earlier. A bench comprising Justices L. Nageswara Rao, B.R. Gavai and Aniruddha Bose issued notice to the Central Government on the Writ Petition filed by the National Company Law Tribunal Bar Association (NCLTBA) through its Secretary, Saurabh Kalia Adv. It was argued that that the said notification is contrary to the Sec. 413 of the Companies Act, 2013 which prescribes the term of the members for 5 years. Also, the early expiration of the tenure will create a void and will add to the pendency of cases before Tribunals. Further, the Notification is contrary to the judgments passed by the Supreme Court in Madras Bar Association v. Union of India & Anr. (2010) and Madras Bar Association v. Union of India & Anr. (2021) where the Court held that the term of members should be 5 years. Also, in the Madras Bar Association judgment, the Supreme Court disapproved shorter term and observed that a longer term was necessary to ensure independence.It is argued that a term of three years is very short and by the time the members achieve the required knowledge, expertise and efficiency, one term will be over. Hence, the discharge of full five years is necessary for Tribunals to functions effectively and efficiently.Also, a hort tenure of the Members of Tribunals is anti- merit and has the effect of discouraging meritorious candidates to accept posts of Judicial Members in Tribunals Last year, in the order dated 31.05.2021, the apex Court observed that the depleting strength in NCLT and NCLAT would be detrimental to the smooth functioning of Tribunals. The Bench, therefore, issued notice and considering the term of members coming to an end in June/July listed the matter for further consideration after 4 weeks.Case Title: National Company Law Tribunal Bar Association Vs Union Of IndiaCase No. W.P.(C) No. 180/2022Counsel for the Petitioner: V.K. Chaudhary, Sanjiv Sen and P. Nagesh, Sr. Advocates, Supriya Juneja Advocate-on-Record.Click Here To Read/Download Order

Supreme Court Issues Notice On NCLT Bar Association's Petition Challenging MCA Notification Fixing NCLT Members' Term As 3 Years

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