Delhi HC Issues Notice In Plea Moved By Judicial Member Of NCLT Challenging His Transfer From Mumbai To Kolkata Bench [Read Order]

The Single Bench of Justice V Kameswar Rao has issued notice to the Central Government and will next take up the matter on June 12.

A member (judicial) of National Company Law Tribunal (NCLT) has moved the Delhi High Court against the order transferring him from the Mumbai Bench to the Kolkata Bench of NCLT.

The challenge is with respect to two transfer orders, dated April 30 and May 12, through which a number of members posted in various cities were transferred to different cities. This includes the transfer of the Acting President of NCLT, by the Acting President of NCLT, from Chennai to Mumbai.

Thus, such orders are contended to be "in violation of the statutory provisions of law, the rules of transfer and also the law laid down by the Hon'ble Supreme Court of India, in this regard."

The petitioner, who was appointed as a judicial member in May 2019 and posted in Mumbai, apprises the Court of the Order dated May 12, whereby it is informed that BSV Prakash Kumar, the Acting President, has been transferred to Mumbai by the competent Authority. The competent authority to order transfers is the President himself, adds the petitioner.

Apropos this, the petitioner goes on to highlight that the Order dated May 12, through which he was transferred to Kolkata, and a separate Order with the same date, through which Kumar was transferred to Mumbai, do not specify the authority under which they were passed.

Further, it is informed that Kumar was transferred out of Mumbai vide order dated 18.9.2018, the present transfer order is against the law.

"The action of the Respondent No.2 (Acting President, NCLT) in issuing the transfer orders transferring Petitioner, is in violation of rule 15A of the NCLT (Salary, Allowances & other Terms and Conditions of Service of President and other Members) Rules, 2015, as amended from time to time as also the law laid down by the Hon'ble Supreme Court of India.

The "competent authority'' is the President of the NCLT, so effectively, the second respondent has ordered his own transfer to Mumbai. Further, since Respondent no. 2 was transferred out of Mumbai on 18.09.2018, the transfer is in violation of Rule 15A(2)(d) of the NCLT Rules."

The petitioner, Rajasekhar VK, also argues that the President of NCLT must function from the Principal Bench located in Delhi, and cannot transfer himself while acting in such capacity.

Furthermore, it is stated that Kumar has been functioning out of Chennai, in violation of the law. By transferring himself to Mumbai now, he continues to violate the provisions of law, adds the petitioner.

"Section 419(2) of the Companies Act, 2013 stipulates that the Principal Bench of the NCLT shall be at New Delhi which shall be presided over by the President of the Tribunal. Despite this specific mandate of the law, the second respondent has been holding court from Chennai and not from principal seat of NCLT in New Delhi, in violation of the law. And, now by transferring himself to Mumbai from Chennai, he continues to violate the statutory provisions of law and the law as laid by the Hon'ble Supreme Court of India."

In addition, Rajasekhar has also questioned Kumar's qualifications to act as the President of NCLT. Citing the judgment of a Constitutional Bench in Union of India v. Madras Bar Association, it is argued that it was specifically held that an NCLT President must be a sitting or former Judge of the High Court, which Kumar is/was not.

"It is also submitted that the second respondent-Acting President only worked as District Judge, and as member Company Law Board and thereafter member Judicial NCLT therefore not being a High Court judge, he is not eligible to be appointed as President", states the petition.

Citing the same judgment, the petitioner has questioned the authority under which the transfer Orders were issued. It is illegal to issue such an order in the absence of consultation through the Law Ministry, he contends.

"…in absence of any consultation or order passed by the Central Government through its Law department, orders of transfer of members of NCLT are illegal, being against the decision of the Constitution Bench judgment of the Hon'ble Supreme Court, which is law under Article 141 of the Constitution of India and binding on courts and tribunals throughout India."

In this light, it has been prayed that the transfer orders be set aside as illegal, and status quo be ordered regarding current postings in NCLT.

The petitioner further urges the Court to appoint an 'eligible member' as the President of NCLT and further direct the President, Acting or newly appointed, to function out of the Principal Bench in New Delhi.

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