Administrative Overreach or Judicial Necessity? Supreme Court Examines NCLT Transfer Powers

The Supreme Court has issued notice to ArcelorMittal Nippon Steel India in a high-stakes challenge by the Centre over the NCLT President’s authority to move cases across state lines.

The power to shift a legal battle from one city to another may sound like a routine administrative choice, but in the corridors of the National Company Law Tribunal (NCLT), it has triggered a constitutional tussle. On Monday, a Supreme Court bench comprising Chief Justice of India Surya Kant and Justice V Mohana stepped into this fray, issuing notice to ArcelorMittal Nippon Steel India Private Limited. At the heart of the matter is a challenge by the Centre against a Gujarat High Court ruling that clipped the wings of the NCLT President regarding the transfer of cases.

The dispute stems from the NCLT President’s decision to move matters involving the steel giant from the Ahmedabad bench to the Mumbai bench. When two separate benches in Ahmedabad recused themselves from the case in 2024, the President invoked Rule 16(d) of the NCLT Rules, 2016, to reassign the litigation to Mumbai. However, the Gujarat High Court, in a decision later upheld by a division bench, struck down these transfers. The High Court reasoned that Rule 16(d) does not grant the President an unfettered right to bypass territorial jurisdiction.

The Centre’s Argument

The Centre is now urging the Supreme Court to overturn that interpretation. Government lawyers argue that the High Court erred by reading artificial geographical constraints into the rules. The Union’s stance is that the NCLT functions as a singular, unified judicial body across India, not as a collection of independent regional fiefdoms.

From the government’s perspective, the benches are merely an arrangement for administrative convenience and accessibility for litigants. They contend that if the NCLT President cannot transfer a case—especially in scenarios involving recusal or vacancies—the tribunal's ability to deliver timely justice would be effectively paralyzed. If every recusal forced a standoff, the wheels of corporate insolvency resolution would grind to a halt.

Why it matters

This case is a bellwether for how India’s specialised tribunals function. If the Supreme Court upholds the Gujarat High Court’s view, it could set a rigid precedent, forcing the NCLT to maintain strict territorial silos. This might ensure local accountability but could also lead to massive judicial bottlenecks when local benches are overwhelmed or, as in this case, disqualified from hearing a specific matter.

For the business community and legal observers—often tracking these developments via platforms like LiveLawBiz—this is about the balance between judicial independence and the administrative efficiency of a tribunal designed to resolve disputes quickly. The Supreme Court's eventual verdict will determine whether the NCLT President acts as a central coordinator capable of ensuring the system stays fluid, or if their administrative powers are strictly confined by the geography of their benches. As the apex court weighs these arguments, the insolvency resolution process for high-value corporate accounts hangs in the balance.