MADRAS BAR ASSOCIATION versus UNION OF INDIA & ANR.

Citation: [2015] 6 S.C.R. 638 · Decided: 14-05-2015 · Supreme Court of India · Bench: H.L. DATTU · Disposal: Disposed off

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Judgment (excerpt)

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B 
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(2015] 6 S.C.R. 638 
MADRAS BAR ASSOCIATION 
v. 
UNION OF INDIA&ANR. 
(Writ Petition (Civil) No.1072 of 2013) 
MAY 14, 2015 
[H.L. DATTU, CJI, A.K. SIKRI, ARUN MISHRA, 
ROHINTON FALi NARIMAN AND AMITAVA ROY, JJ.] 
Companies Act, 2013: 
ss. 408, 410, 421 and 423 - Constitution of National 
Company Law Tribunal-NCL T and National Company Law 
Appellate T ribunal-NCLA T - Validity of- Held: Constitutional 
D validity of NCLT and NCLAT is upheld - NCLT is the first 
forum in the hierarchy of quasi-judicial fora set up in the Act, 
2013- Thus, NCL T, would not only deal with question of/aw 
in a given case coming before it but would be called upon to 
defeat the factual disputes/aspects as well- NCLAT which is 
E the first appellate forum provided under the Act, 2013 to 
examine the validity of the orders passed by NCL T, would 
revisit the factual as well as legal issues. 
ss. 409, 411- President and Members of the NCLT 
F and Chairman and Members of the NCLAT - Prescription of 
qualifications including term of their office and salary 
allowances etc. -
Challenge to, as regards technical 
members of the tribunal and the appellate tribunal - Held: 
As pers. 409(3)(a) to (e) ands. 411 prescribing qualifications 
G for appointment of technical member of the tribunal and 
appellate tribunal respectively, the technical Members should 
be selected from amongst only those officers who hold rank 
of Secretaries or Additional Secretaries and have technical 
H 
638 
MADRAS BARASSOCIATION v. UNION OF INDIA 
639 
expertise- This is against the R. Gandhi, President, Madras A 
Bar Association's case - Thus, s. 409(3)(a) and (e) ands. 
411(3) is held to be invalid - For appointment of technical 
Members to the NCLT, directions contained in R. Gandhi, 
President, Madras Bar Association's case to be scrupulously 
followed and these corrections to be carried out in s. 409(3) B 
to set it right. 
s. 412 - Selection of members of NCL T and NCLAT -
Structure of the Selection Committee uls. 412-Composition 
of five member Committee, three from administrative branch/ C 
bureaucracy and two from judiciary - Challenge to - Held: 
Provisions of s. 412(2) is not valid - Direction issued to 
remove the defect by bringing the provision in accord with R. 
Gandhi, President, Madras Bar Association's case wherein it 
should be four member Committee-two from administrative D 
branch/bureaucracy and two from judiciary. 
Disposing of the writ petition, the Court 
HELD: 1.1 The creation of Constitution of NCLAT E 
was specifically upheld in R. Gandhi, President, Madras 
Bar Association's case-2010 judgment. It cannot be 
denied that the instant petitioner had specifically 
questioned the Constitutional validity of NCLAT in the 
earlier writ petition and even advanced the arguments F 
on this very issue. The provision pertaining to the 
constitution of the Appellate Tribunal i.e. Section 1 OFR 
of the Companies Act, 1956 was duly taken note of. 
Challenge was laid to the establishments of NCLT as well 
as NCLAT on the ground that the Parliament had G 
resorted to tribunalisation by taking away the powers 
from the normal courts which was essentially a judicial 
function and this move of the Legislature impinged upon 
the impartiality, fairness and reasonableness of the 
decision making which was the hallmark of judiciary and H 
640 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A essentially a judicial function; and that it amounted to 
negating the Rule of Law and trampling of the Doctrine 
of Separation of Powers which was the basic feature of 
the Constitution of India. The petitions spearheaded the 
attack on the constitutional validity of both NCLT as well 
B as NCLAT on these common grounds. The Court 
specifically went into the gamut of all those arguments 
and emphatically repelled the same. The Court rejected 
the contention that transferring judicial function, 
traditionally performed by the Courts, to the Tribunals 
C offended the basic structure of the Constitution. [Para 
11, 12] [662-G-H; 663-A-E] 
1.2 The Constitution Bench categorically dealt with 
the constitutional validity of NCLT and NC LAT under the 
D caption "whether the constitution of NCLT and NCLAT 
under Parts 1B & 1C of Companies Act are valid". The 
Court specifically affirmed the decision of the High Court 
which held that creation of NCLT and NCLAT was not 
unconstitutional. In view of this, it is not open to the 
E petitioner even to argue this issue as it clearly operate 

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