Supreme Court to Define the Scope of NCLT President's Power to Transfer Cases Administratively

The Supreme Court of India has agreed to examine a significant question of law that affects the procedural functioning of corporate litigation: Does the President of the National Company Law Tribunal (NCLT) have the power to transfer cases from one State to another through an administrative order?

A Bench comprising CJI Surya Kant and Justice Joymalya Bagchi issued notice on a plea challenging a Gujarat High Court judgment. The High Court had previously ruled that the NCLT President lacks the authority to transfer cases across states administratively, especially when judicial challenges regarding the transfer are already pending.

The controversy stems from the high-profile Corporate Insolvency Resolution Process (CIRP) of Essar Steel, which concluded in 2019. However, the legal battles didn't end there.

1. Several contempt and recall petitions were filed alleging non-compliance with the resolution plan.
2. In early 2024, proceedings at the NCLT Ahmedabad took a dramatic turn when Members of two separate benches recused themselves, citing "intimidation" by the counsel of certain parties.
3. Amidst this turmoil, the NCLT President (sitting in New Delhi) issued administrative orders in June 2024 and February 2025, transferring these pending matters from Ahmedabad to Mumbai.

The High Court's Stand: In the impugned order, the Gujarat High Court quashed the transfer. It held that transferring a case from one bench to another (inter-state) affects the rights of the litigants and must be done through a judicial process where parties are heard, not through a unilateral administrative order. It directed that the cases be heard by a virtual bench at Ahmedabad instead.

The Supreme Court's Prima Facie View: While issuing notice, the Supreme Court bench expressed prima facie doubt regarding the correctness of the High Court's restrictive view on the President's administrative powers. The Apex Court is now set to determine:

1. Scope of Power: Can the President, as the administrative head of the Tribunal, transfer cases to ensure the "ends of justice" or primarily for administrative convenience?
2. Rule 16 vs. Rule 155: The conflict often revolves around Rule 16 of the NCLT Rules (powers of the President) versus Rule 155 (judicial power to transfer).

This decision will have far-reaching implications for the administration of justice in Tribunals.

1. If the SC upholds the President's power: It streamlines case management, allowing the President to swiftly move cases from overburdened or conflicted benches.
2. If the SC upholds the HC view: It reinforces the principle of Natural Justice, ensuring that litigants are not forced to travel to a different state without a proper judicial hearing.

In a connected observation, the Supreme Court also came down heavily on "forum shopping" tactics, noting that parties cannot seek transfers merely because a judge makes unfavorable observations. "Proceedings cannot be transferred merely because the Presiding Officer... has made certain observations," the Court remarked.