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Top Court Weighs NCLT Inter-State Case Transfers
The Supreme Court signaled on Monday its intent to review the scope of the National Company Law Tribunal (NCLT) President's powers concerning the transfer of cases between benches located in different states. The significant legal question arises from the case of Anita Rayapati v. Arcelor Mittal Nippon Steels India.
A bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi is overseeing the matter. The core of the dispute revolves around Rule 16(d) of the NCLT Rules, 2016, which grants the NCLT President the authority to "transfer any case from one Bench to another Bench when the circumstances so warrant".
Gujarat High Court Ruling Under Scrutiny
A recent ruling by the Gujarat High Court had held that this transfer power is strictly intra-state. The High Court's rationale was that the President cannot alter or extend the territorial jurisdiction established by the central government, effectively barring inter-state case movement. However, the Supreme Court expressed initial doubt regarding this restrictive interpretation.
The apex court noted that in situations where a tribunal member must recuse themselves from a case at a bench with limited members, an inter-state transfer might become the sole viable option to prevent proceedings from stalling entirely. This observation was made during the hearing of petitions related to ArcelorMittal Nippon Steel India Limited.
ArcelorMittal Case Context
In a preceding instance, two NCLT benches in Ahmedabad had recused themselves from hearing cases involving ArcelorMittal. Subsequently, the NCLT President in Delhi issued an administrative order transferring the matter to Mumbai. ArcelorMittal challenged these recusal and transfer orders, alleging they contravened NCLT Rules and constituted bench hunting or forum shopping by certain respondents.
The Gujarat High Court had previously set aside five challenged orders, directing the NCLT President to re-allot the cases to an Ahmedabad bench or, if necessary, constitute a virtual bench for swift adjudication.
Court's Observations on Recusal and Pressure
During the Supreme Court hearing, the bench led by CJI Kant questioned the premise that tribunal members should recuse themselves when faced with threats or litigant pressure. "Why can't the tribunal members recuse? The tribunal should come heavily on the party which does it," the Court remarked, emphasizing that parties exerting pressure should not escape consequences.
The Court also queried the rigid approach seen in the Gujarat High Court ruling that had been used to reject transfer requests. "What is the business of the High Court to cut in the powers of the tribunal like this?" the Bench asked.
When counsel for a party pointed out the High Court's concern about the transfer to Mumbai and its suggestion of a virtual bench, the Supreme Court presented a hypothetical scenario: a single bench where a member recuses due to a conflict of interest, making hearings impossible. In such a scenario, the Court suggested, the case would logically need to be transferred to another location.
The matter is scheduled for further hearing on February 23, 2026. ArcelorMittal was represented by Senior Advocate Neeraj Kishan Kaul.