## Facts

- Parliament created the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) to assume specified company-law jurisdiction previously exercised by High Courts and the Company Law Board.
- In earlier litigation concerning similar provisions, the Court upheld tribunal substitution in principle but required structural safeguards on composition, appointments, tenure, and service conditions to preserve judicial independence.
- The Companies Act 2013 (Chapter XXVII, §§ 407–434) re-established NCLT/NCLAT with revised provisions on member qualifications, selection, and service conditions.
- A bar association petitioned for constitutional review, alleging the 2013 scheme repeated or diluted standards previously mandated for tribunals exercising transferred High Court functions.
- A larger bench was constituted to decide substantial constitutional questions about tribunal structure, executive influence, and compliance with prior directions.

## Issues

1. Whether the statutory creation of NCLT and NCLAT under the Companies Act 2013 is constitutionally valid when they replace identified High Court functions.
2. Whether provisions governing qualifications and eligibility of tribunal members—particularly Technical Members—and the resulting balance between judicial and non-judicial members satisfy constitutional requirements of independence and competence.
3. Whether the Selection Committee framework is constitutionally valid where executive participation could dominate appointments to tribunals exercising core judicial functions.
4. Whether provisions on tenure, reappointment, and administrative control (including postings and transfers) create impermissible executive dependence.
5. Whether conferring contempt powers on the tribunals is constitutionally permissible.

## Decision

- The petition was partly allowed.
- The Court upheld the constitutional permissibility of establishing NCLT and NCLAT and transferring defined company-law jurisdiction to them.
- The Court declined to invalidate Chapter XXVII in full, but struck down, modified, or read down multiple provisions to conform to constitutional requirements and prior binding standards for tribunalization.
- The Court required a judicially dominant appointments process by restructuring the Selection Committee to prevent executive control over selections.
- The Court curtailed statutory arrangements that enabled short tenures or executive-controlled renewals that could compromise decisional independence.
- The Court upheld the tribunals’ contempt jurisdiction.
- The Court directed the government to implement amendments and constitute the tribunals consistent with the Court-mandated safeguards.

## Legal Principles

- Parliament may transfer certain adjudicatory functions from constitutional courts to tribunals, but the substitute forum must maintain independence, competence, and a judicial character comparable to the displaced jurisdiction.
- Prior constitutional standards governing tribunal composition, selection, tenure, and service conditions operate as binding minima when substantially similar tribunal schemes are re-enacted.
- Where a tribunal replaces High Court adjudication, appointments must be insulated from executive dominance; the selection mechanism must ensure the judiciary has a decisive role.
- Technical expertise may be included, but technical membership cannot dilute the judicial core; eligibility criteria must require demonstrated seniority and specialized competence aligned with the tribunal’s adjudicatory role.
- Short terms and executive-controlled reappointment mechanisms are inconsistent with independence where they create incentives for members to seek executive favor.
- Administrative powers affecting bench constitution, postings, transfers, and discipline must be structured to avoid uncanalized executive control over adjudicators.
- Conferring contempt powers on tribunals may be constitutionally permissible as part of ensuring effective adjudication and institutional authority, provided overall independence is preserved.

## Conclusion

The Court sustained the tribunal system for company-law adjudication but required strict structural safeguards—especially judicial dominance in appointments, robust eligibility standards, and protections against executive control over tenure and administration—invalidating or reading down inconsistent statutory provisions and directing corrective amendments.


Madras Bar Ass’n v. Union of India, Writ Petition (C) No. 1072 of 2013 (India May 14, 2015)