Supreme Court says Corporate Affairs Ministry 'completely hijacked' NCLT; wants president to control hiring

Arora said that the employees had worked at the tribunal for years, with one account giving nearly eight years and another six, and that as contractual hires they receive no house rent allowance or dearness allowance. She argued that the tribunal's recruitment rules and the advertisement under which they were hired provide for regularisation, and that terminating them without the approval of the tribunal's president would be arbitrary and would violate Articles 14 and 16 of the Constitution on equality and equality in public employment.

What the Chief Justice said

The Chief Justice said that the ministry "wants to have complete grip over the institution," which he called most unfortunate. He said the ministry had completely hijacked the tribunal and that this affected its autonomy, and he said that the entire power of appointment must lie with the tribunal's president alone.

He also criticised the contractual system. He said he did not approve of appointments on a contract basis, and he described the contractual staff as "backdoor entrants" who should not be regularised without the prescribed process. He said that contractual employees were harassing judicial members and that technical members were manipulating certain matters, and he declined to elaborate in open court. He cited an instance in Bombay in which contractual employees allegedly ran away with an original report, which led to the registration of first information reports.

Justice Bagchi said that recruitment can be outsourced, but that the relationship of employer and employee should stay with the tribunal.

The solutions he suggested

The Chief Justice suggested short-term and long-term solutions. For the interim, he suggested deputation, bringing in experienced people from government departments. For the long term, he suggested phased regular recruitment through the Union Public Service Commission or the Staff Selection Commission. He said the court would not tie the hands of the tribunal's president.

Arora asked the court to bar terminations without the president's approval, but the Chief Justice declined to grant that protection. He also said that the court would not hear the plea on behalf of employees who have a personal stake, and would consider the matter if the tribunal's president raised concerns. The court said it would take up the matter after receiving a report.

The reports do not name the private company, give the number of employees affected, or set out the ministry's own position. They give no date for the next hearing and do not say whether the court stopped the transition to the new arrangement. The remarks were made orally during a hearing and are not part of a written order.

The National Company Law Tribunal hears company law and insolvency cases, and its appellate body hears appeals from it. Tribunals of this kind are meant to work independently of the government, which is a frequent litigant before them, and the question of who appoints and controls their staff has been a recurring issue before the Supreme Court. The Chief Justice's remarks signal that the court wants administrative control over tribunal staff to rest with the tribunal and not with a ministry.