MADRAS BAR ASSOCIATION versus UNION OF INDIA & ANR.
[2015] 6 S.C.R. 638, Supreme Court of India, 2015
Outcome: Disposed off
Segment: Issues
A 
B 
c 
(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
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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 
as res judicata. The setting up of NC LAT was challenged 
on the ground that insofar as this appellate forum is 
concerned, there are no reasons given in the said 
F judgment and thereafter this aspect was dealt with in 
more detail in the NTT judgment wherein formation of 
National Tax Tribunal was held to be unconstitutional. 
This adventurism on the
part of the petitioner is totally 
unfounded. In the first instance, the validity of NCLAT 
G has already been upheld and this issue cannot be 
reopened. Judgment in the 2010 case is of a Constitution 
Bench and that judgment of a co-ordinate Bench binds 
this Bench as well. [Para 13, 14] [665-A-G] 
H 
1.3 Reading of the Constitution Bench judgment in
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
641 
the matter of National Tax Tribunal would manifest that A 
not only was the 2010 judgment taken note of but 
followed as well. The Court spelled out the distinguishing 
features between NCLT/NCLAT on one hand and NTT 
on other hand in arriving at a different conclusion. [Para 
15][665-G-H; 666-A] 
B 
1.4 The NTT was a matter where power of judicial 
review hitherto exercised by the High Court in deciding 
the pure substantial question of law was sought to be 
take.n away to be vested in NTT which was held to be C 
impermissible. In the instant case, there is no such 
situation. On the contrary, NCL T is the first forum in the 
hierarchy of quasi-judicial fora set up in the Companies 
Act, 2013. The NCLT, thus, would not only deal with 
question of law in a given case coming before it but would D 
be called upon to thrash outthe factual disputes/aspects 
as well. NCLATwhich is the first appellate forum provided 
under the Act, 2013 to examine the validity of the orders 
passed by NCLT, will have to revisit the factual as well 
as legal issues. Therefore, situation is not akin to NTT. 
E 
Jurisdiction of the Appellate Tribunal is mentioned in 
Section 410 itself which stipulates that NCLAT shall be 
constituted 'for hearing appeals against the orders of 
the Tribunal'. This jurisdiction is not circumscribed by F 
any limitations of any nature whatsoever and the 
implication thereof is that appeal would lie both on the 
questions
of facts as well as questions of law. Likewise, 
under sub-section (4) of Section 421, which provision 
deals with 'appeal from orders of Tribunal', it is provided G 
that the NCLAT, after giving reasonable opportunity of 
being heard, 'pass such orders thereon as it thinks fit, 
forming, modifying or set aside the order appealed 
against'. It is thereafter, further appeal is provided from 
the order of the NCLAT to the Supreme Court under H
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SUPREME COURT REPORTS 
[2015) 6 S.C.R. 
A Section 423 of the Act. The scope of the appeal to the 
Supreme Court is restricted only 'to question of law 
arising out of such order'. [Para 16] [666-B-G] 
1.5 It is a common feature/practice to provide one 
8 appellate forum wherever an enactment is a complete 
Code for providing judicial remedies. Providing one right 
to appeal before an appellate forum is a well accepted 
norm which is perceived as a healthy tradition. Thus, 
there is no merit in the issue. [Para 17, 18] [666-H; 667-A-
C B] 
2.1 In the 2010 judgment, the Constitution Bench 
took the view that since the NCLT would now be 
undertaking the work which is being performed, inter 
alia, by High Court, the technical Members of the NCLT/ 
D NCLAT should be selected from amongst only those 
officers who hold rank of Secretaries or Additional 
Secretaries and have technical expertise. Parts 1C and 
10 of the Act, 1956 as they existed were treated as invalid 
and in order to bring t~ese provisions within the realm 
E of constitutionality, the f.ourt pointed out the corrections 
which were required· to be made to remove those 
anamolies. [Para 20, 21] [670-C, D; 673-F] 
2.2 The provisions contained in claus.::.s (c) and (d) 
F of sub-section (2) and Clause (a) and (b) of sub-section 
(3) of Section 10FD which made Joint Secretaries with 
certain experience as eligible, were specifically declared 
as invalid. Notwithstanding the same, Section 409(3) of 
the Act, 2013
again makes Joint Secretary to the 
G Government of India or equivalent officer eligible for 
appointment, if he has 15 years experience as member 
of Indian Corporate Law Service or Indian Legal Service, 
out of which at least 3 years experience in the pay scale 
of Joint Secretary. This is clearly in the teeth of dicta 
H pronounced in 2010 judgment. [Para 22] [677-G-H; 678-
A]
MADRAS BARASSOCIATION v. UNION OF INDIA 
643 
2.3 In the counter affidavit, the respondents A 
endeavored to justify this provision by stating that this . 
variation was made in view of the lack of available officers 
at Additional Secretary level in Indian Companies Law 
Service. It is further mentioned that functionally the levels 
of Additional Secretary and Joint Secretary are similar. B 
These officers have knowledge of specific issues 
concerning operations and working of companies and 
their expertise in company law which is expected to 
benefit NCLT. Such an explanation is not legally 
sustainable, having regard to the clear mandate of 2010 C 
judgment. For limiting the consideration for such posts 
to Secretary and Additional Secretary, there was one 
very compelling factor in the mind of the Court viz. 
gradual erosion of independence of judiciary, which was 0 
perceived as a matter of concern. [Para 23] [678-B-E] 
2.4 Having regard to the said clear and categorical 
dicta in 2010 judgment, tinkering therewith would 
evidently have the potential of compromising with 
standards which 2010 judgment sought to achieve, nay, E 
so zealously sought to secure. Thus, it is held that 
Section 409(3)(a) and (e) are invalid as these provisions 
suffer from same vice. Likewise, Section 411(3) as 
worded, providing for qualifications of technical F 
Members, is also held to be invalid. For appointment of 
technical Members to the NCLT, directions containeci in 
the para of 2010
judgment would be scrupulously 
followed and these corrections are required to be made 
in Section 409(3) to set right the defects contained G 
therein. [Para 24] [682-F-H; 683-A] 
3.1 The provision with regard to Selection 
Committee was contained in Section 10FX, validity 
thereof was questioned in 2010 judgment. The said H
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SUPREME COURT REPORTS 
(2015] 6 S.C.R. 
A structure of the Selection Committee was found fault 
with by the Constitution Bench in 2010 judgment. The 
Court specifically remarked that instead of 5 members 
Selection Committee, it should be 4 members Selection 
Committee and even the composition of such a Selection 
B Committee was mandated in the judgment. 
Notwithstanding the above, there is a deviation in the 
composition of Selection Committee that is prescribed 
under Section 412 (2) of the Act, 2013. Effect of this 
composition is to make it a five members Selection 
C Committee which was not found to be valid in 2010 
judgment. Out of these five Members, three are from the 
administrative branch/bureaucracv as against two from 
judiciary which would result in predominant say of the 
0 
members belonging to the administrative branch, is a 
situation that was specifically diverted from. [Para 25, 
26] [684-C-D; 685-A-F] 
3.2 The prime consideration in the mind of the Bench 
was that it is the Chairperson, viz. Chief Justice of India, 
E or his nominee who is to be given the final say in the 
matter of selection with right to have a casting vote. That 
is the ratio of the judgment and reasons for providing 
such a composition are not far to seek. In the face of the 
F all pervading prescript available on this very issue in the 
form of a binding precedent, there is no scope for any 
relaxation as sought to be achieved through the 
impugned provision and it is
incompatible with the 
mandatory dicta of 201 O judgment. Therefore, the 
G provisions of Section 412(2) of the Act, 2013 are not valid 
and direction is issued to remove the defect by bringing 
this provision in accord with the para of 2010 judgment. 
[Para 28] [686-E-G] 
H 
4. There is hardly any legal strength in the
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
645 
submission that power to punish for contempt as given A 
to the NCLT and NCLAT under Section 425 of the Act is 
not healthy and should be done away with; and that 
power given to the Central Government to constitute the 
Benches is again impermissible as such power should 
rest with President, NCLT or Chairman, NCLAT. It has to B 
be kept in mind that these provisions are contained in a 
statute enacted by the Parliament and the petitioner 
could not point out as to hpw such provisions are 
unconstitutional. [Para 29] [687-A-C] 
c 
5. The respondents have filed affidavits mentioning 
therein the steps that have been taken till date towards 
setting up of NCLT and NCLAT. Since, the functioning of 
NCLT and NC LAT has not started so far and its high time 
that these Tribunals start functioning now, there is a hope D 
that the respondents would take remedial measures as 
per the directions contained in this judgment at the 
earliest, so that the NCLT & NCLAT are adequately 
manned and start functioning in near future. [Para 31, 
33] [687-D; 688-F] 
E 
Union of India v. R. Gandhi, President, Madras Bar 
Association 2010 (6) SCR 857: (2010) 11SCC1 -followed. 
Madras Bar Association v. Union oflndia (2014) 10 SCC F 
1 - referred to. 
Case Law Reference 
2010 (6) SCR 857 
followed. 
Para 11,13,14,24,27,28 
(2014) 10 SCC 1 
Referred to. Para 10 
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No. 
1072of2013 
[Under Article 32 of the
Constitution of India] 
G 
H
646 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A 
Arvind P. Datar, Nikhi: Nayyar, Dhanajay Baijal N. Sai 
Vi nod, for the Petitioner. 
P. S. Patwalia PinkyAnand,ASG, K. Radhakrishna, Binu 
Tamta, Dhruv Tamta, Madhavi Diwan, Rekha Pandey, A. K. 
B Srivastava, Sushma Suri, B. V. Bairam Das, Kartik Sachdeva, 
Karan Sethi, Prabal Bag hi, Dhruv Sheron, Archit Upadhyay, 
Natasha Vinayak, Naina Pachnanda, Rajat Singh, for the 
Respondents. 
c 
The Judgment dated 14.05.2015 of the Court was 
delivered by 
A.K. SIKRI, J. This writ petition filed by the petitioner, 
namely, the Madras Bar Assoc1aiion, 1s se4uel to the earlier 
proceedings which culminated in the judgment rendered by 
D the Constitution Bench of this Court in Union of India v. R. 
Gandhi, President, Madras Bar Association' (hereinafter 
referred to as the '2010 judgment'). In the earlier round of 
litigation, the petitioner had challenged the constitutional validity 
E of creation of National Company Law Tribunal ('NCL T' for short) 
and National Company Law Appellate Tribunal ('NCLAT' for 
short), along with certain other provisions pertaining thereto 
which were incorporated by the Legislature in Parts 1 B and 
1 C of the CompaniesAct, 1956 (hereinafter referred to as the 
F 'Act, 1956') by Companies (Second Amendment) Act, 2002. 
2) Writ petition, in this behalf, was filed by the petitioner in 
the High Court of Madras which culminated into the judgment 
dated 30.03.2004. The High Court held that creation of NCLT 
G
and vesting the powers hitherto exercised by the High Court 
and the Company Law Board ('CLB' for short) in the said 
Tribunal was not unconstitutional. However, at the same time, 
the High Court pointed out certain defects in various provisions 
of Part 1 B and Part 1 '.:of the Act, 1956 and, in particular, in 
H
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
647 
[A.K. SIKRI, J.] 
Sections 1 OFD(3)(f)(g)(h), 1 OFE, 1 OFF, 1 OFL(2), 1 OFR(3), A 
10FT. Declaring that those provisions as existed offended 
the basic Constitutional scheme of separation of powers, it 
was held that unless these provisions are appropriately 
amended by removing the defects which were also specifically 
spelled out, it would be unconstitutional to constitute NCLT and B 
NCLAT to exercise the jurisdiction which is being exercised 
by the High Court or the CLB. The petitioner felt aggrieved by 
that part of the judgment vide which establishments of NCL T 
and NCLATwas held to be Constitutional. On the other hand, 
Union of India felt dissatisfied with the other part of the judgment C 
whereby aforesaid provisions contained in Parts 1 Fl a11d 1 C 
of the Act, 1956 were perceived as suffering from various legal 
and Constitutional infirmities. Thus, both Union of India as well 
as the petitioner filed appeals against that judgment of the D 
Madras High Court. Those appeals were decided by the 
Constitution Bench, as mentioned above. 
3) The Constitution Bench vide the said judgment put its 
stamp of approval insofar as Constitutional validity of NCLT 
and NCLAT is concerned. It also undertook the exercise of E 
going through the aforesaid provisions contained in Parts 1 B 
and 1 C of the Act, 1956 and in substantial measure agreed 
with the Madras High Court finding various defects in these 
provisions. These
defects were listed by the Court in para F 
120 of the judgment which reads as under: 
"120. We may tabulate the corrections required to set 
right the defects in Parts 1-B and 1-C of the Act: 
(i) Only Judges and advocates can be considered G 
for appointment as judicial members of the Tribunal. 
Only High Court Judges, or Judges who have served in 
the rank of a District Judge for at least five years or a 
person who has practiced as a Lawyer for ten years can 
be considered for appointment as a Judicial Member. 
H
648 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
Persons who have held a Group A or equivalent 
post under the Central or State Government with 
experience in the Indian Company Law Service (Legal 
Branch) and Indian Legal Service (Grade-1) cannot be 
considered for appointment as 
judicial members 
as provided in sub-section 2(c) and (d) of Section 
1 OFD. The expertise in Company Law service or Indian 
Legal service will at best enable them to be considered 
for appointment as technical members. 
(ii) As the NCLT takes over the functions of High 
Court, the members should as nearly as possible have 
the same position and status as High Court Judges. This 
can be achieved, not by giving the salary and perks of a· 
High Court Judge to the members, but by ensuring that 
persons who are as nearly equal in rank, experience or 
competence to High Court Judges are appointed as 
members. Therefore, only officers who are holding 
the ranks of Secretaries or Additional Secretaries 
alone 
can 
be 
considered 
for appointment as 
Technical members of the National Company Law 
Tribunal. Clauses (c) and (d) of sub-section (2) and 
Clauses (a) and (b) of sub-section (3) of section 10FD 
which provide for persons with 15 years experience in 
Group A post or persons holding the post of Joint 
Secretary or equivalent post in 
Central or State 
Government, being qualified for appointment as 
Members of Tribunal is invalid. 
(iii) A "technical member" presupposes an
experience 
in the field to which the Tribunal relates. Amember of the 
Indian Company Law Service who has worked with 
Accounts Branch or officers in other departments who 
might have incidentally dealt with some aspect of 
company law cannot be considered as "experts" qualified
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
649 
[AK SIKRI, J.] 
to be appointed as technical members. Therefore A 
clauses (a) and (b) of sub-section (3) are not valid." 
(iv) A 'Technical 
Member' 
presupposes 
an 
experience in the field to which the Tribunal relates. 
A member of Indian Company Law Service who has B 
worked with Accounts Branch or officers in other 
departments who might have incidentally dealt with 
some aspect of Company Law cannot be considered 
as 'experts: qualified to be appointed as Technical 
Members. Therefore Clauses (a) and (b) of sub-section C 
(3) are not valid. (v) The first part of clause (f) of sub-
section (3) providing that any person having special 
knowledge or professional experience of 15 years in 
science, technology, economics, banking, industry could 
be considered to be persons with expertise in company D 
law, for being appointed as Technical Members in 
Company Law Tribunal, is invalid. 
(v) Persons having ability, integrity, standing and special 
knowledge and professional experience of not less than 
E 
fifteen years,in industrial finance, industrial management, 
industrial reconstruction, investment and accountancy, 
may however be considered as persons having expertise 
in rehabilitation/revival of companies ar.d therefore, 
eligible for being considered for appointment as technical 
F 
members. 
(vi) 
In regard to category of persons referred in clause 
(g) of sub-section (3) at least five years experience should 
be
specified. 
G 
(vii) Only clauses (c), (d), (e), (g), (h), and latter part of 
clause (f) in sue-section (3) of section 10-FD and officers 
of civil services of the rank of the Secretary or Additional 
Secretary in Indian Company Law Service and Indian H
650 
SUPREME COURT REPORTS 
(2015] 6 S.C.R. 
A 
Legal Service can be considered for purposes of 
appointment as technical members of the Tribunal. 
(viii) Instead of a five-member Selection Committee with 
Chief Justice of India (or his nominee) as Chairperson 
s 
and two Secretaries from the Ministry of Finance and 
Company Affairs and the Secretary in the Ministry of 
Labour and Secretary in the Ministry of Law and Justice 
as members mentioned in section 1 OFX, the Selection 
c 
D 
Committee should broadly be on the following lines: 
(a) Chief Justice of India or his nominee - Chairperson 
(with a casting vote); 
(b)Asenior Judge of the Supreme Court or Chief Justice 
of High Court- Member; 
(c) Secretary in the Ministry of Finance and Company 
Affairs - Member; and 
(d) Secretary in the Ministry of Law and Justice -
E 
Member. 
(ix) The term of office of three years shall be changed to 
a term of seven or five years subject to eligibility for 
appointment for one more term. This is because 
F 
considerable time is required to achieve expertise in the 
concerned field. A term of three years is very 
short and by the time the members achieve the 
required knowledge, expertise and efficiency, one term 
will be over. Further the said term of three years with the 
G 
retirement age of 65 years is perceived as having 
been tailor-made for persons who have retired or 
shortly to retire and encourages these Tribunals to 
be treated as post-retirement havens. If these 
Tribunals
are to function effectively and efficiently 
H 
they should be able to attract younger members who will
MADRAS BARASSOCIATION v. UNION OF INDIA 
651 
[AK. SIKRI, J.] 
have a reasonable period of service. 
A 
(x) The second proviso to Section 1 OFE enabling 
the President and members to retain lien with 
their parent cadre/ministry/department while holding 
office as 
President or Members will 
not be 
B 
conducive for the independence of members. Any 
person appointed as members should be prepared 
to totally disassociate himself from the Executive. The 
lien cannot therefore exceed a period of on_e year. 
(xi) To maintain independence and security in service, 
sub-section (3) of section 1 OFJ and Section 1 OFV 
should provide that suspension of the PresidenU 
Chairman or member of a Tribunal can be only 
c 
with the concurrence of the Chief Justice of India. 
o 
(xii) The administrative support for aii Tribunals 
should be from the Ministry of Law & Justice. Neither 
the Tribunals nor its members shall seek or be provided 
with facilities from the respective sponsoring or E 
parent Ministries or concerned Department. 
(xiii) Two-Member Benches of the Tribunal should always 
have a judicial member. Whenever any larger or 
special benches are constituted, the number of 
Technical Members shall not exceed the Judicial F 
Members." 
4) On the basis of the aforesaid, partly allowing the 
appeals, the same were disposed of in the following terms: 
"57. We therefore dispose of these appeals, partly 
allowing them, as follows: 
G 
(i) We uphold the decision of the High Court that the
creation of National Company Law Tribunal and National H
652 
SUPREME COURT REPORTS 
(2015) 6 S.C.R. 
A 
Company Law Appellate Tribunal and vesting in them, 
the powers and jurisdiction exercised by the High Court 
in regard to company law matters, are not 
unconstitutional. 
-
B 
(ii) We declare that Parts 1 B and 1 C of the Act as 
presently structured, are unconst•t• 1tional for the reasons 
stated in the preceding para. However, Parts IB and IC 
of the Act, may be made operational by making 
suitable amendments, as indicated above, in addition 
C 
to what the Union Government has already agreed in 
pursuance of the impugned order of the High Court." 
5) Though the verdict came in the year 2010, upholding 
the creation of NCLTand NCLAT, these two bodies could not 
o be created and made functional immediately thereafter and 
the matter got stuck in imbroglio of one kind or the other. It is 
not necessary to trace out those factors as some of those are 
the subject matter of Writ Petition No.267/2012 which writ 
petition is also filed by this very petitioner and is pending 
E consideration. Said writ petition was listed before this Bench 
along with the present writ petition and arguments to some 
extent were heard in petition as well. However, since the issues 
raised in the said petition necessitate further response from 
the Union of India, with the consent of the parties, it was deemed 
F proper to defer the hearing in that petition, awaiting the 
response. Insofar as the present writ petition is concerned, 
though somewhat
connected with writ petition No.267 /2012, 
prayers made in this writ petition are entirely different and tt-i:;~ c 
was no handicap or obstruction in proceeding with the hearing 
G of the instant writ petition. Forth is reason, the arguments were 
finally heard in this case. 
6) Adverting to the present writ petition, it so happened 
that the Parliament has passed new company law in the form 
H of Indian Companies Act, 2013 (hereinafter referred to.as the
MADRAS BARASSOCIATION v. UNION OF INDIA 
653 
[A.K. SIKRI, J.] 
'Act, 2013') which replaces the earlier Act, 1956. In this Act; A 
again substantive provisions have been made with regard to 
the establishment of NCL T and NCLA T. It is obvious that with 
the constitution of NCLT and NCLAT, the provisions relating to 
the structure and constitution of NCLT and NCLAT, the 
provisions relating to qualifications for appointment of B 
President/Chairperson and Members Uudicial as well as 
technical) of both NCLT and NCLAT, and also provisions relating 
to the constitution of the Selection Committee for selection of 
the said Members have also been incorporated in the Act, 
2013. These are analogous to Section 1 OFD, 1 OFE, 1 OFF, 
C 
10FL, 10FR and 10FTwhich were introduced in the Act, 1956 
by Companies (Amendment) Act, 2002. The cause for filing 
the present petition by the petitioner is the allegation of the 
petitioner that notwithstanding various directions given in 2010 D 
judgment, the new provisions in the Act, 2013 are almost on 
the same lines as were incorporated in the Act, 1956 and, 
therefore, these provisions suffer from the vice of 
unconstitutionality as well on the application of the ratio in 2010 
judgment. It is, thus, emphasized by the petitioner that these E 
provisions which are contained in Sections 408, 409, 411(3), 
412, 413, 425, 431and434 of the Act, 2013 are ultra vires 
the provisions of Article 14 of the Constitution and, therefore, 
warrant to be
struck down as unconstitutional. The precise 
prayer contained in the writ petition reads as under: 
F 
"(i) a WRIT, ORDER OR DIRECTION more particularly in 
the nature of WRIT OF DECLARATION declaring that the 
provisions of Chapter XXVll of the Companies Act, 2013, more 
particularly Sections408, 409, 411(3), 412, 413, 425, 431 and G 
434 of the Act as ultra vires the provisions of Article 14 of the 
Constitution and accordingly striking down the said provisions 
as unconstitutional; 
{ii) Pass any order or such further order or orders as may H
654 
SUPREME COURT REPORTS 
[2015) 6 S.C.R. 
A 
be deemed fit and proper in the facts and circumstances of 
the present case." 
7) Before we proceed further, we would like to set down 
the aforesaid provisions of the Act, 2013 along with Section 
B 2(4), Section 2(90) and Section 407 which contained certain 
definitions that are relevant in the context ;:if controversy raised 
in the present petition: 
"2(4) "Appellate Tribunal" means the National Company 
c 
Law Appellate Tribunal constituted under section 41 O; 
"2(90) "T~ibunal" means the National Company Law 
Tribunal constituted under section 408; 
407. In this Chapter, unless the context otherwise 
D 
requires,-
E 
F 
(a) "Chairperson" means the Chairperson of the 
Appellate Tribunal; 
(b) "Judicial Member" means a member of the Tribunal 
or the Appellate Tribunal appointed as such and includes 
the President or the Chairperson, as the case may be; 
(c) "Member" means a member, whether Judicial or 
Technical of the Tribunal or the Appellate Tribunal and 
includes the President or the Chairperson, as the case 
maybe; 
(d) "President" means the President of the TritJunal; 
G 
(e) "Technical Member'' means a member of the Tribunal 
H 
or the Appellate Tribunal appointed as such. 
408. Constitution of National Company Law Tribunal 
The Central Government shall, by notification, constitute,
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
655 
[A.K. SIKRI, J.] 
with effect from such date as may be specified therein, a A 
Tribunal to be known as the National Company Law Tribunal 
consisting of a President and such number of Judicial and 
Technical members, as the Central Government may deem 
necessary, to be appointed by it by notification, to exercise 
and discharge such powers and functions as are, or may be, 
B 
conferred on it by or under this Act or any other law for the time 
being in force. 
409. Qualification of President and Members of 
Tribunal 
(1) The President shall be a person who is or has been a 
Judge of a High Court for five years. 
c 
(2) A person shall not be qualified for appointment as a 0 
Judicial Member unless he-
(a) is, or has been, a judge of a High Court; or 
(b) is, or has been, a District Judge for at least five years; 
or 
(c) has, for at least ten years been an advocate of a court. 
E 
Explanation.-For the purposes of clause (c), in 
computing the period during which a person has been 
F 
an advocate of a court, there shall be included any period 
during which the person has held judicial office or the 
office of a member of a tribunal or any post, under the 
Union or a State, rGquiring special knowledge of law after 
he become an advocate. 
(3) A person shall not be qualified for appointment as a 
Technical Member unless he -
G 
(a) has, for at least fifteen years been a member of the 
Indian Corporate Law Service or Indian Legal
Service 
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A 
out of which at least three years shall be in the pay scale 
of Joint Secretary to the Government of India or equivalent 
or above in that service; or 
(b) is, or has been, in practice as a chartered accountant 
B 
for at least fifteen years; or 
c 
D 
E 
F 
G 
H 
(c) is, or has been, in practice as a cost accountant for at 
least fifteen years; or 
(d) is, or has been, in practice as a company secretary 
for at least fifteen years; or 
(e) is a person of proven ability, integrity and standing 
having special knowledge and experience, of not less 
than fifteen years, in law, industrial finance, industrial 
management or administration, industrial reconstruction, 
investment, accountancy, labour matters, or such other 
disciplines related to management, conduct of affairs, 
revival, rehabilitation and winding up of companies; or 
(f) is, or has been, for at least five years, a presiding 
officer of a Labour Court, Tribunal or National Tribunal 
,,.. 
constituted under the Industrial DisputesAct, 1947. 
410. Constitution of Appellate Tribunal 
The Central Government shall, by notification, constitute, 
with effect from such date as may be specified therein, 
an Appellate Tribunal to be known as the National 
Company Law Appellate Tribunal consisting of a 
chairperson and such number of Judicial and Technical 
Members, not exceeding eleven, as the Central 
Government may deem fit, to be appointed by it by 
notification, for
hearing appeals against the orders of the 
Tribunal. 
411. Qualifications of chairperson and Members of
MADRAS BARASSOCIATION v. UNION OF INDIA 
657 
[A.K. SIKRI, J.] 
Appellate Tribunal 
A 
( 1) The chairperson shall be a person who is or has been 
a Judge of the Supreme Court or the Chief Justice of a 
High Court. 
B 
(2) A Judicial Member shall be a person who is or has 
been a Judge of a High Court or is a Judicial Member of 
the Tribunal for five years. 
(3)ATechnical Member shall be a person of proven ability, 
integrity and standing having special knowledge and C 
experience, of not less than twenty-five years, in law, 
industrial finance, industrial management or 
administration, industrial reconstruction, investment, 
accountancy, labour matters, or such other disciplines 0 
related to management, conduct of affairs, revival, 
rehabilitation and winding up of companies. 
412. Selection of Members of Tribunal and 
Appellate Tribunal 
( 1) The President of the Tribunal and the chairperson and 
Judicial Members of the Appellate Tribunal, shall be· 
appointed after consultation with the Chief Justice of India. 
E 
(2) The Members of the Tribunal and the Technical F 
Members of the Appellate Tribunal shall be appointed 
on the recommendation of a Selection Committee 
consisting of-
(a) Chief Justice of India or his nominee-Chairperson; G 
(b) a senior Judge of the Supreme Court or a Chief 
Justice of High Court-Member; 
(c) Secretary in the Ministry of Corporate Affairs-
Member; 
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A 
(d) Secretary in the Ministry of Law and Justice-
Member; and 
B 
c 
D 
E 
F 
(e) Secretary in the Department of Financial Services in 
the Ministry of Finance-Member. 
(3) The Secretary, Ministry of Corporate Affairs shall be 
the Convener of the Selection Committee. 
(4) The Selection Committee shall determine its 
procedure for recommending persons under sub-section 
(2). 
(5) No appointment of the Members of the Tribunal or 
the Appellate Tribunal shall be invalid merely by reason 
of any vacancy or any defect in the constitution of the 
Selection Committee. 
413. Term of office of President, chairperson and 
other Members 
( 1) The President and every other Member of the Tribunal 
shall hold office as such for a term of five years from the 
date on which he enters upon his office, but shall be 
eligible for re-appointment for another term of five years. 
(2) A Member of the Tribunal shall hold office as such 
until he attains,-
(a) in the case of the President, the age of sixty-seven 
years; 
G 
(b) in the case of any other Member, the age of sixty-five 
years: 
H 
Provided that a person who has not completed fifty years 
of age shall not be eligible for appointment as Member: 
Provided further that the Member may retain his lien with
MADRAS BARASSOCIATION v. UNION OF INDIA 
659 
[A.K. SIKRI, J.] 
his parent cadre or Ministry or Department, as the case A 
may be, while holding office as such for a period not 
exceeding one year. 
(3) The chairperson or a Member of the Appellate Tribunal 
shall hold office as such for a term of five years from the B 
date on which he enters upon his office, but shall be 
eligible for re-appointment for anonther term of five years. 
(4) A Member of the Appellate Tribunal shall hold office 
as such until he attains,-
c 
(a) in the case of the Chairperson, the age of seventy 
years; 
(b) in the case of any other Member, the age of sixty-
seven years: 
Provided that a person who has not completed fifty years 
of age shall not be eligible for appointment as Member: 
D 
Provided further that the Member may retain his lien with 
E 
his parent cadre or Ministry or Department, as the case 
may be, while holding office as such for a period not 
exceeding one year. 
414. Salary, allowances and other terms and 
F 
conditions of service of Members 
The salary, allowances and other terms and conditions 
of service of the Members of the Tribunal and the 
Appellate Tribunal shall be such as may be prescribed: 
Provided that neither the salary and allowances nor the 
other terms and conditions of service of the Members 
shall be varied to their disadvantage after their 
appointment. 
G 
H
660 
A 
B 
c 
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[2015) 6 S.C.R. 
425. Power to punish for contempt 
The Tribunal and the Appellate Tribunal shall have the 
same jurisdiction, powers and authority in respect of 
contempt of themselves as the High Court has and may 
exercise, for this purpose, the powers under the 
provisions of the Contempt of Courts Act, 1971, which 
shall have the effect subject to modifications that-
( a) the reference therein to ? High Court shall be 
construed as including a reference to the Tribunal and 
the Appellate Tribunal; and 
(b) the reference to Advocate-General ir. section 15 of 
the said Act shall be co11stru~ci a5 a reference to such 
Law Officers as the Central Government may, specify in 
this behalf." 
8) In the prayer clause, constitutional validity of Sections 
415, 418, 424, 426, 431and434 have also been questioned. 
At the time of hearing, no arguments were addressed by Mr. 
E 
Datar, learned senior counsel for the petitioner on the aforesaid 
provisions. Therefore, in respect of these provisions, we are 
eschewing our discussion. 
9) On the reading of the aforesaid provisions and having 
F 
regard to the arguments advanced at the Bar, we can 
conveniently categorise the challenge in three compartments, 
as under: 
(i) Challenge to the validity of the constitution of NCT and 
G NCLAT; 
(ii) Challenge to the prescription of qualifications 
including term of their office and salary allowances etc. of 
President and MelT'hers of the NCL T and as
well as Chainnan 
H andMembersoftheNGLAT;
MADRAS BARASSOCIATION v. UNION OF INDIA 
661 
[A.K. SIKRI, J.] 
(iii) Challenge to the structure of the Selection Committee A 
for appointment of PresidenUMembers of the NCL T and 
Chairperson/ Members of the NCLAT. 
Incidental issues pertaining to the power given to these 
bodies to punish for contempt as mentioned in Section 425 B 
and giving power to Central Government to constitute the 
Benches are also raised by the petitioner. 
As would be discussed hereinafter, all these issues stand 
covered by Madras Bar Association (supra) and answer to c 
these questions is available therein. In fact, after detailed 
discussion on each issue, the Court pronounced the verdict. 
Therefore, while doing a diagnostic of sorts of the issues 
raised, we shall be administering the treatment that is 
prescribed in that judgment. 
D 
ISSUE N0.1 
Re.: Constitutional validity of NCT and NC LAT 
Section 408 of the Act, 2013 deals with the constitution of E 
NCLT. 
By virtue of this Section, Central Government is 
empowered to issue notification for constituting a Tribunal to 
be known as 'National Company Law Tribunal'. This Tribunal 
would consist of President and such number of Judicial and 
Technical members, as the Central Government may deem 
F 
necessary, to be appointed by it. 
By Notification dated 
12.09.2013, the Central Government has constituted the NCL T. 
Likewise, Section 410 of the Act, 2013 arms the Central 
Government with power to constitute NC LAT by notification. 
This NC
LAT is also to consist of a Chairman and such number G 
of Judicial and Technical Members, not exceeding eleven, as 
the Central Government may deem fit, to be appointed by it by 
notification. By the aforesaid Notification dated 12.09.2013, 
NC LAT has also been constituted by the Central Government. 
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A 
10) It is pertinent to point out that in the prayer clause, 
though challenge is laid to the vires of Section 408, it 
conspicuously omits Section 41 O and, thus, in essence, there 
is no challenge to the constitution of NCLAT insofar as relief 
claimed is concerned. Moreover, as pointed out above, the 
B entire writ petition takes umbrage under the Constitution Bench 
judgment in 201 O judgment. However, at the time of arguments, 
Mr. Datar primarily challenged the Constitutional validity of 
NCLAT without making any serious efforts to challenge the 
constitution of NCL T. As far as NCLT is concerned, he almost 
C conceded that validity thereof stands upheld in 2010 judgment 
and there is not much to argue. In respect of NC LAT, though 
he conceded that validity thereof is also upheld in the aforesaid 
judgment, his endeavour was le> rlernnn<:!~3te that there is no 
0 
discussion in the entire judgment insofar as NCLAT is 
concerned and, therefore, conclusion which is mentioned in 
the said judgment atthe end, should not be treated as binding 
or to be taken as having decided this issue. His submission 
was that in view of the subsequent Constitution Bench judgment 
E of this Court in Madras Bar Association v. Union of lndia2, 
wherein establishment of National Tax Tribunal has been held 
to be unconstitutional, Section 410 should also be meted out 
the same treatment for the reasons recorded in the said 
judgment pertaining
to National Tax Tribunal. It is difficult to 
F digest this argument for various reasons, which we record in 
the discussion hereafter. 
11) First of all the creation of Constitution of NC LAT has 
been specifically upheld in 201 O judgment. It cannot be denied 
G that this very petitioner had specifically questioned the 
Constitutional validity of NC LAT in the earlier writ petition and 
even advanced the arguments on this very issue. This fact is 
specifically noted in the said judgment. The provision 
pertaining to the constitution of the Appellate Tribunal i.e. 
H Section 1 OFR of the Corr;:ianies Act, 1956 was duly takt-;·,
MADRAS BARASSOCIATION v. UNION OF INDIA 
663 
[A.K. SIKRI, J.] 
note of. Challenge was laid to the establishments of NCLT as A 
well as NC LAT on the ground that the Parliament had 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 
B 
of judiciary and essentially a judicial function. Argument went 
to the extent 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. What we are 
emphasising is that the petitions spearheaded the attack on C 
the constitutional validity of both NCLT as well as ~!~LAT on 
these common grounds. The Court specifically went into the 
gamut of all those arguments raised and emphatically repelled 
the same. 
D 
12) The Court specifically rejected the contention that 
transferring judicial function, traditionally performed by the 
Courts, to the Tribunals offended the basic structure of the 
Constitution and summarised the position in this behalf as 
under: 
E 
"We may summarize the position as follows: 
(a) A legislature can enact a law transferring the 
jurisdiction exercised by courts in regard to any specified 
F 
subject (other than those which are vested in courts by 
express provisions of the Constitution) to any tribunal. 
(b) All
courts are tribunals. Any tribunal to which 
any existing jurisdiction of courts is transferred should G 
also be a Judicial Tribunal. This means that such Tribunal 
should have as members, persons of a rank, 
capacity and status as nearly as possible equal 
to the rank, status and capacity of the court which 
was till then dealing with such matters and the members H
664 
A 
B 
c 
D 
E 
F 
G 
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SUPREME COURT REPORTS 
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of the Tribunal should have the 
independence and 
security of tenure associated with Judicial Tribunals. 
(c) Whenever there is need for 'Tribunals', there is no 
presumption that there should be technical members in 
the Tribunals. When any jurisdiction is shifted from courts 
to Tribunals, on the ground of pendency and delay in 
courts, and the jurisdiction so 
transferred does not 
involve any technical aspects requiring the assistance 
of experts, 
the Tribunals should normally have only 
judicial members. Only where the exercise of jurisdiction 
involves inquiry and decisions into technical or special 
aspects, where presence of technical members will be 
useful and necessary, Tribunals should have technical 
members. Indiscriminate appointment of technical 
members in all Tribunals will dilute and adversely affect 
the independence of the Judiciary. 
(d) The Legislature can re-organize the jurisdictions of 
Judicial Tribunals. For example, it can provide that a 
specified category of cases tried by a higher court can 
be tried by a lower court or vice versa (A standard 
example is the variation of pecuniary limits of courts). 
Similarly while constituting Tribunals, the Legislature can 
prescribe the qualifications/ eligibility criteria. The same 
is however subject to Judicial Review. If the court in 
exercise of judicial review is of the view that such 
tribunalisation would adversely affect the
independence 
of judiciary or the standards of judiciary, the court may 
interfere to preserve the independence and standards 
of judiciary. Such an exercise will be part of the checks 
and balances measures to maintain the separation of 
powers and to prevent any encroachment, intentional 
or unintentional, by either the legislature or by the 
executive."
MADRAS BARASSOCIATION v. UNION OF INDIA 
665 
[A.K. SIKRI, J.] 
13) Thereafter, the Constitution Bench categorically dealt A 
with the Constitutional validity of NCL T and NC LAT under the 
caption "Whether the constitution of NCLT and NCLAT under 
Parts 1 B & 1 C of Companies Act are valid", and embarked 
upon the detailed discussion on this topic. It becomes manifest 
from the above that the question of validity of NCLAT was B 
directly and squarely in issue. Various facets of the challenge 
laid to the validity of these two fora were thoroughly thrashed 
out. No doubt, most of the discussion contained in paras 107 
to 119 refers to NCL T. However, on an insight into the said 
discussion contained in these paragraphs, would eloquently C 
bear it out that it is inclusive of NC LAT as well. In para 121 of 
the judgment, which is already extracted above, the Court 
specifically affirmed the decision of the High Court which held 
that creation of NCLT and NC LAT was not unconstitutional. In D 
view of this, it is not open to the petitioner even to argue this 
issue as it clearly operate as res judicata. 
14) Frankly, Mr. Datar was conscious of the aforesaid 
limitation. He still ventured to attack the setting up of NCLAT 
on the ground that insofar as this appellate forum is concerned, E 
there are no reasons given in the said judgment and thereafter 
this aspect has been dealt with in more details in the NTT 
judgment wherein formation of National Tax Tribunal has been 
held
to be unconstitutional. This adventurism on the part of the F 
petitioner is totally unfounded. In the first instance, as mentioned 
above, insofar as NC LAT is concerned, its validity has already 
been upheld and this issue cannot be reopened. Judgment in 
the case of2010 judgment is of a Constitution Bench and that 
judgment of a co-ordinate Bench binds this Bench as well. 
G 
15) Secondly, reading of the Constitution Bench judgment 
in the matter of National Tax Tribunal would manifest that not 
only 2010 judgment was taken note of but followed as well. 
The Court spelled out the distinguishing features between H
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A 
NCLT/NCLAT on the one hand and NTT on the other hand in 
arriving at a different conclusion. 
16) Thirdly, the NTTwas a matter where power of judicial 
review hitherto exercised by the High Court in deciding the 
B pure substantial question of law was sought to be taken away 
to be vested in NTT which was held to be impermissible. In 
the instant case, there is no such situation. On the contrary, 
NCLT is the first forum in the hierarchy of quasi-judicial fora 
set up in the Act, 2013. The NCL T, thus, would not only deal 
C with question of law in a given case coming before it but would 
be called upon to thrash out the factual disputes/aspects as 
well. In this scenario, NCLATwhich is the first appellate forum 
provided under the Act, 2013 to examine the validity of the 
orders passed by NCL T, will have to revisit the factual as well 
D as legal issues. Therefore, situation is not akin to NTT. 
Jurisdiction of the Appellate Tribunal is mentioned in Section 
410 itself which stipulates that NC LAT shall be constituted 'for 
hearing appeals against the orders of the Tribunal'. This 
jurisdiction is not circumscribed by any limitations of any nature 
E whatsoever and the implication thereof is that appeal would 
lie both on the questions of facts as well as questions of law. 
Likewise, under sub-section (4) of Section 421, which 
provision deals with 'appeal from orders of Tribunal', it is 
F provided that the NCLAT, after
giving reasonable opportunity 
of being heard, 'pass such orders thereon as it thinks fit, 
forming, modifying or set aside the order appealed against'. 
It is thereafter further appeal is provided from the order of the 
NC LAT to the Supreme Court under Section 423 of the Act, 
G 2013. Here, the scope of the appeal to the Supreme Court is 
restricted only 'to question of law arising out of such order'. 
17) Fourthly, it is not unknown rather a common feature/ 
practice to provide one appellate forum wherever an enactment 
H is a complete Code for providing judicial remedies. Providing
MADRAS BARASSOCIATION v. UNION OF INDIA 
667 
[A.K. SIKRI, J.] 
one right to appeal before an appellate forum is a well accepted A 
norm which is perceived as a healthy tradition. 
18) For all these reasons, we hold that there is no merit in 
this issue. 
ISSUE N0.2 
B 
19) Qualifications of President and Members of NCLT are 
mentioned in Section 409 of the Act, 2013 and that of 
Chairperson and Members of NC LAT are stipulated in Section 
411 of the Act, 2013. The petitioner has no quarrel about the C 
qualifications mentioned for the President and Judicial 
Members of the Tribunal as well as Chairperson and Judicial 
Members of the Appellate Tribunal. However, it is argued that 
insofar as technical Members of NCLT/NCLAT are concerned, 
D 
the provision is almost the same which was inserted by way of 
an amendment in the Act, 1956 and challenge to those 
provisions was specifically upheld finding fault therewith. In 
order to appreciate this argument, we show the comparative 
provisions contained in Act, 1956 as well as in the Act, 2013: E 
ACT 1956 
ACT 3>13 
(1) 10.fD (3) (a) (b) (c) and (d) 
(1) Section 4W (3) 
(3) A pa-son shall not re qualified 
fer 
appoirtment 
as 
Technical 
Mernl:er unless he-
(a) has l"eld for at least fifteen 
yeas a Gro..ip 'A' post 
or 
an 
equivaert post 1.11der the Caitral 
Gc:werrment or a State Governmert 
[indudirg at least three years ct 
service as a Merrber of tl"e Indian 
Ccmpmy Law Service (Accourts 
Branch) in Sericr Admiristrative
Grade in that Service]; er 
(3) A person st-all not be qualifi~ F 
for ai:poirtmerit as a Technical 
lllember unless he-
(a) has, for at least fifteen years 
teen a member of tl"e Indian 
Corporate Laiv Service er Indian G 
Legal Service out of IM"lich ct least 
three years shall re in the pay 
scale ct Joint Secretary to tl"e 
Gm.emment ct Inda er eqL.ivalent 
er al:Jm.e in that service; or 
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A 
(b) is, 
or has reen, 
a ..birt 
Secretary to the G01.emrrert cf 
ln::lia Ulda- the Caltral Staffing 
Scha-ne, or any otha- pest un::ler 
the Central Govemrrent er a State 
Gc:wemrrent caryi rg a scale cf pay 
B 
wlich is not less than that cf a Joirt 
Secretary to the Go1.emrrert cf 
I n::lia for at 
least f1Ve years 
and 
has 
ad3qwte knoWetj;Je 
of, and eiq:erience in, dealing with 
c 
prollars relating to company law, 
or 
( c) is, or has reen, for ct least 
fifteen years in practice as a 
chartere:t aocountant 
un::ler the 
D 
Chartered .A=urtants Pd, 1949 
(38 cf 1949); or 
(d) is, er has been, for ct least 
E 
fifteen years in p-actice 
as 
a 
F 
G 
H 
cost aocountant under, the Costs 
and W:rks .A.c:cruntarts /ld., 1959 
(23 cf 1959); or 
(b) is, er has been, in practire as a 
chartera::J aocountant fer ct least 
fifteen ~ars; or 
(c) is, or has been, in pra::tice as a 
cost aocourtant for at least fifteen 
~ars; or 
(d) is, er has been, in practire as a 
comparlf secretary for ct least 
fifteen ~ars; or 
(e) is a person cf p-oven al:ilfty, 
integrity 
and 
standing 
havirg 
specia kmwetj;Je and eiq:erience, 
cf not less than fifteen yecrs, in 
law, industrial finanre, 
i~11o;tria 
management or adrrinistrction, 
industrial 
reconstruction, 
investrrert, aocountancy, labrur 
mctters or such otha- dscipires 
related to rnanaga-nert, cond.Jct of 
affcirs, revival, rehabiritation an::l 
wn::lirg up of companies; or
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
669 
[A.K. SIKRI, J.] 
(2) 1().fR 
10FR C.onstitution d AJ:pellate 
Trio.ma: 
(1) 
The 
Caitral 
Gcwerrrrent shal, by notificaion 
in the aficial 
<?azette, constitute 
with effect from sl.dl date as may 
be ~cified therein, an AJ:pellate 
Trib.ina to be called tte "Natioral 
Canµ;my Law App:lllate Triblilar' 
consisting of a Chairperscn aid 
not m:re than tv..o ll/lerTiJers, 
to 
be app:iirted 1:1{ that Go1oemrrent, 
ftr hearing appeals against the 
orders d tte Triblilal urder this 
M. 
(2) 
The 
Chairp:lrson 
of 
the 
Appellcte Trib.ina shall be a person 
wl"o has been a Ju:lge d the 
Supreme Court or the Chief Justice 
of a Hgh Court. 
-
(3) A Member of the AJ:pellate 
Tri run a shall be a person d 
abilfty, 
irtegrity 
and 
standing 
ha\.ing special mowectie of, and 
prdessioral experience of nd less 
than tv.enty-five years in, science, 
tEmnology, eoonarics, banjqng, 
industry, law, rratters relaing to 
labour, industrial firance, indu&rial 
(f) is, or has been, for at least five A 
years, a presiding dfioer of a 
Labour Court, Triblilal or Naiona 
Triblilal oonstituted lilder tte 
lndustria Disp.Jtes M, 1947. 
B 
(2) Section 411(3) 
411 (3) A T fillnical f\/13mber shall • 
te a person of pro1en al::ilfty, 
integity and 
standing 
having C 
Sp:lcia knJvlletj;ie and e)(p:lrience, 
d nd less than twerty-five years, 
in laiv, industrial finance, irdustria 
management 
or adrrinistraion, 
indLStrial 
reoonstrudion, D 
investrrert,
aooollltancy, labo.Jr 
raters, or sudl other dscipines 
related to managernert, conduct of 
afars, revival, rehabilitation ard 
wrdi ng up of corrpanies. 
E 
F 
G 
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(2015] 6 S.C.R. 
A 
reC01struction, 
a:tnilistraticn. 
irnestrnen~ a=llltarcy, marketing cr 
any 
other 
mctter, the special 
knOJVle::lge 
of, 
or 
prdessional 
eiq::erience in wlich, woud t:e in the 
B op nion of the c.ertra Gm.ernment 
usefu to the ft.wellate Triruna. 
20) It was pointed out that in the 2010 judgment, the 
Constitution Bench took the view that since the NCLT would 
now be undertaking the work which is being performed, inter 
C 
a/ia, by High Court, the technical Members of the NCLT/NCLAT 
should be selected from amongst only those officers who hold 
rank of Secretaries or Additional Secretaries and have 
technical expertise. These aspects are discussed by the Court 
D 
E 
F 
G 
H 
in the following paragraphs: 
"108. The legislature is presumed not to legislate 
contrary to the rule of law and therefore know that where 
disputes are to be adjudicated by a Judicial Body other 
than Courts, its standards should approximately be the 
same as to what is expected of main stream Judiciary. 
Rule of law can be meaningful only if there 
is 
an 
independent and impartial judiciary to render justice. 
An independent judiciary can exist only when persons 
with competence, ability and 
independence 
with 
impeccable character man the judicial institutions. 
When the legislature proposes to substitute a Tribunal in 
place of the High Court to exercise the jurisdiction which 
the High Court is exercising, it goes without "9yi11g thc:1t 
the
standards expected from the Judicial Members of 
the Tribunal and standards applied for appointing such 
members, should be as nearly as possible as applicable 
to High Court Judges, which are apart from a basic 
degree in law, rich experience in the practice of 
law, independent outlook, integrity, character and good 
reputation. It is also implied that only men of standing
MADRAS BARASSOCIATION v. UNION OF INDIA 
671 
[A.K. SIKRI, J.] 
who have special expertise in the field to which A 
the Tribunal relates, will be eligible for appointment 
as Technical members. Therefore, only persons with a 
judicial background, that is, those who have been or 
are Judges of the High Court and lawyers with 
the 
prescribed experience, who are eligible for B 
appointment as High Court Judges, can be considered 
for appointment of Judicial Members. 
109. 
A lifetime of experience in administration may 
make a member of the civil services a good and able C 
administrator, but not a necessarily good, able and 
impartial adjudicator with a judicial temperament capable 
of rendering decisions which have to (i) inform the 
parties about the reasons for the decision; (ii) 
demonstrate 
fairness 
and 
correctness 
of the D 
decision and absence of arbitrariness; and (iii) 
ensure that justice is not only done, but also seem 
to be done. 
xx 
xx 
xx 
E 
111. As far as the technical members are concerned, 
the officer should be of at least Secretary Level 
officer with 
known 
competence 
and 
integrity. 
Reducing the standards, or qualifications for appointment F 
will result in loss of confidence in the Tribunals. We hasten 
to add that our intention is not to say that the persons of 
Joint Secretary level are not competent. Even persons 
of Under Secretary level may be competent to discharge 
the functions. There may be brilliant and competent G 
people even
working as Section Officers or Upper 
Division Clerks but that does not mean that they can be 
appointed as Members. Competence is different 
from experience, maturity and status required for the 
post. As, for example, for the post of a Judge of the High H
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Court, 
10 years' practice as an Advocate is 
prescribed. There may be Advocates who even with 
4 or 5 years' experience, may be more brilliant than 
Advocates with 10 years' standing. Still, it is not 
competence alone but various other factors which 
make a person suitable. Therefore, when the 
legislature substitutes the Judges of the High 
Court with Members of the Tribunal, the standards 
applicable should be as nearly as equal in the case of 
High Court Judges. That means only Secretary Level 
officers (that is those who were Secretaries or Additional 
Secretaries) with specialized knowledge and skills can 
be appointed as Technical Members of the tribunal. 
xx 
xx 
xx 
118. Parts IC and ID of the Companies Act proposes to 
shift the company matters 
from 
the 
courts 
to 
Tribunals, 
where 
a 'Judicial 
Member' and 
a 
'Technical Member' will decide the disputes. If the 
members are selected as contemplated 
in 
section 
10FD, there is every likelihood of most of the 
members, including the so called 'Judicial Members' not 
having any judicial experience or company law 
experience and such members being required to deal 
with and decide complex issues of fact and law. Whether 
the Tribunals should have only judicial members or 
a combination of judicial and technical members is 
for the Legislature to decide. But if there should 
be technical members, they should be persons with 
expertise in company
law or allied subjects and mere 
experience in civil service cannot be treated as 
Technical Expertise in company law. The candidates 
falling under sub-section 2(c) and (d) and sub-sections 
3(a) and (b) of section 10FD have no experience or 
expertise in deciding company matters.
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
673 
[A.K. SIKRI, J.] 
119. There is an erroneous assumption thatcompany A 
law matters require certain specialized skills which 
are lacking in Judges. There is also an equally 
erroneous assumption that members of the civil 
services, (either a Group-A officer or Joint Secretary 
level civil servant who had never handled any company B 
disputes) will have the judicial experience or 
expertise in company law to be appointed either 
as Judicial Member or Technical Member. Nor can 
persons having experience of fifteen years in 
science, technology, medicines, banking, industry C 
can be termed as experts in Company Law for 
being appointed as Technical Members. The practice 
of having experts as Technical Members is suited 
to areas which require the assistance of professional 0 
experts, qualified in medicine, engineering, and 
architecture etc. Lastly, we may refer to the lack of 
security of tenure. The short term of three years, the 
provision for routine suspension pending enquiry and the 
lack of any kind of immunity, are aspects which E 
require to be considered and remedied." 
21) On the basis of the aforesaid discussions, parts 1C 
and 10 of the Act, 1956 as they existed were treated as invalid 
and in order to bring these provisions within the realm of F 
Constitutionality, the Court pointed out the corrections which 
were required to be made to remove those anamolies. Para 
120 of the judgment is most relevant to answer the
issue at 
hand and, therefore, we reproduce the said para in its entirety: 
"120. We may tabulate the corrections required to set G 
rightthe defects in Parts 18 and IC of the Act: 
(i) Only Judges and Advocates can be considered 
for appointment as Judicial Members of the Tribunal. 
Onlythe HighCourtJudges, orJudgeswhohaveserved H
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in the rank of a District Judge for at least five years or a 
person who has practiced as a Lawyer for ten years can 
be considered for appointment as a Judicial Member. 
Persons who have held a Group A or equivalent 
post under the Central or State Government with 
experience in the Indian Company Law Service (Legal 
Branch) and Indian Legal Service (Grade-1) cannot be 
considered for appointment as 
judicial members 
as provided in sub-section 2(c) and (d) of Section 
10FD. The expertise in Company Law service or 
Indian Legal service will at best enable them to be 
considered for appointment as technical members. 
(ii) As NCLT takes over the functions of High 
Court, the members should as nearly as possible have 
the same position and status as High Court Judges. This 
can be achieved, not by giving the salary and perks of a 
High Court Judge to the members, but by ensuring that 
persons who are as nearly equal in rank, experience or 
competence to High Court Judges are appointed as 
members. Therefore, only officers who are holding 
the ranks of Secretaries or Additional Secretaries 
alone 
can 
be 
considered 
for appointment as 
Technical members of the National Company Law 
Tribunal. Clauses (c) and (d) of sub-section (2) and 
Clauses (a) and (b) of sub-section (3) of section 10FD 
which provide for persons with 15 years experience in 
Group A post or persons holding the post of Joint 
Secretary or
equivalent post in 
Central 
or State 
Government, being qualified for appointment as 
Members of Tribunal is invalid. 
(iii) A 
'Technical 
Member' 
presupposes 
an 
experience in the field to which the Tribunal relates. 
A member of Indian Company Law Service who has 
worked with Accounts Branch or officers in other
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
675 
[A.K. SIKRI, J.] 
departments who might have incidentally dealt with A 
some aspect of Company Law cannot be considered 
as 'experts' qualified to be appointed as Technical 
Members. Therefore Clauses (a) and (b) of sub-section 
(3) are not valid. 
B 
(iv) The first part of clause (f) of sub-section (3) providing 
that any person having special knowledge or professional 
experience of 20 years in science, technology, 
economics, banking, industry could be considered to be 
persons with expertise in company law, for being C 
appointed as Technical Members in Company Law 
Tribunal, is invalid. 
(v) Persons having ability, integrity, standing and special 
knowledge and professional experience of not less o 
than fifteen years in industrial finance, industrial 
management, industrial reconstruction, investment and 
accountancy, 
may however be 
considered 
as 
persons having expertise in rehabilitation/ revival of 
companies 
and 
therefore, 
eligible 
for being 
E 
considered for appointment as Technical Members. 
(vi) In regard to category of persons referred in clause 
(g) of sub-section (3) at least five years experience should 
be specified. 
F 
(vii) Only Clauses (c), (d), (e), (g), (h), and later part of 
clause (f) in sub-section (3) of section 1 OFD and officers 
of civil services of the rank of the Secretary or Additional 
Secretary in Indian Company Law Service and G 
Indian 
Legal 
Service 
can 
be 
considered 
for
purposes of appointment as Technical Members of 
the Tribunal. 
(viii) Instead of a five-member Selection Committee with 
H 
Chief Justice of India (or his nominee) as Chairperson
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and two Secretaries from the Ministry of Finance and 
Company Affairs and the Secretary in the Ministry of 
Labour and Secretary in the Ministry of Law and Justice 
as members mentioned in section 1 OFX, the Selection 
Committee should broadly be on the following lines: 
(a) Chief Justice of India or his nominee - Chairperson 
(with a casting vote); 
(b) A senior Judge of the Supreme Court or Chief Justice 
c 
of High Court- Member; 
D 
E 
F 
G 
(c) Secretary in the Ministry of Finance and Company 
Affairs - Member; and 
(d) Secretary in the Ministry of Law and Justice - Member. 
(ix) The term of office of three years shall be changed to 
a term of seven or five years subject to eligibility for 
appointment for one more term. This is because 
considerable time is required to achieve expertise in the 
concerned field. A term of three years is very 
short and by the time the members achieve the 
required knowledge, expertise and efficiency, one term 
will be over. Further the said term of three years with the 
retirement age of 65 years is perceived as having 
been tailor-made for persons who have retired or 
shortly to retire and encourages these Tribunals to 
be treated as post-retirement havens. If these 
Tribunals are to function effectively and efficiently 
they should be able to attract younger members who will 
have a reasonable period of service. 
(x) 
The second proviso to Section 1 OFE enabling 
the President and
members to retain lien with their 
parent cadre/ ministry/department while holding office 
H 
as President or Members will not be conducive
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
677 
[AK. SIKRI, J] 
for the independence of members. Any person A 
appointed as members should be prepared to totally 
disassociate himselffrom the Executive. The lien cannot 
therefore exceed a period of one year. 
(xi) To maintain independence and security in service, 
B 
sub-section (3) of section 1 OF J and Section 1 OFV 
should provide that suspension of the President/ 
Chairman or member of a Tribunal can be only 
with the concurrence of the Chief Justice of India. 
(xii) The administrative support for all Tribunals 
should be from the Ministry of Law & Justice. Neither 
the Tribunals nor its members shall seek or be provided 
with facilities from the respective sponsoring or 
c 
parent Ministries or concerned Department. 
D 
(xiii) Two-Member Benches of the Tribunal should always 
have a judicial member. Whenever any larger or 
- special benches are constituted, the number of 
Technical Members shall not exceed the Judicial E 
Members." 
22) What gets revealed from the reading of para 120, 
particularly, sub-para (ii) thereof that only officers who are 
holding the ranks of Secretaries or Additional Secretaries F 
alone art:l to be considered for appointment as technical 
Members of NCLT. Provisions contained in clauses (cl ?rid 
(d) of sub-section (2) and Clause (a) and (b) of sub-section (3) 
of Section 1 OFD which made Joint Secretaries with certain 
experience as eligible, were specifically declared as invalid. G
Notwithstanding the same, Section 409(3) of the Act, 2013 
again makes Joint Secretary to the Government of India or 
equivalent officer eligible for appointment, if he has 15 years 
experience as member of Indian Corporate Law Service or 
Indian Legal Service, out of which at least 3 years experience H
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(2015] 6 S.C.R. 
A 
in the pay scale of Joint Secretary. This is clearly in the teeth 
of dicta pronounced in 2010 judgment. 
23) In the counter affidavit, the respondents have 
endeavored to justify this provision by stating that this variation 
B was made in view of the lack of available officers at Additional 
Secretary level in Indian Companies Law Service. It is further 
mentioned that functionally the levels of Additional Secretary 
and Joint Secretary are similar. These officers have knowledge 
of specific issues concerning operations and working of 
C companies and their expertise in company law which is 
expected to benefit NCL T. Such an explanation is not legally 
sustainable, having regard to the clear mandate of 2010 
judgment. 
D 
We would like to point out that apart from giving other 
reasons for limiting the consideration for such posts to 
Secretary and Additional Secretary, there was one very 
compelling factor in the mind of the Court viz. gradual erosion 
of independence of judiciary, which was perceived as a matter 
E of concern. This aspect was demonstrated with specific 
examples in certain enactments depicting gradual dilution of 
the standards and qualifications prescribed for persons to 
decide cases which were earlier being decided by the High 
Court. We, thus, deem it apposite to reproduce that 
F discussion which provides a complete answer to the aforesaid 
argument taken by the respondents. The said discussion,
contained in para 112, with its sub-paras, reads as under: 
"112. What is a matter of concern is the gradual erosion 
G 
of the independence of the judiciary, and shrinking of 
the space occupied by the Judiciary and gradual 
increase in the number of persons belonging to 
the civil service discharging functions and exercising 
jurisdiction wrir.h was previously exercised by the 
H 
High C0urt. There is also a gradual dilution of me
MADRAS BAR ASSOCIATION v. UNION CF 11\1.JIA 
679 
[A.K. SIKRI, J.) 
standards and qualification prescribed for.persons to A 
decide cases which were earlier being decided by the 
High Courts. Let us take stock. 
112.1 To start with, apart from jurisdiction relating to 
appeals and revisions in 
civil, 
criminal 
and 
tax s 
matters (and original civil jurisdiction in some High 
Courts). The High Courts were exercising original 
jurisdiction in two important areas; one was writ 
jurisdiction under Articles 226 and 227 (including 
original jurisdiction in service matters) and the C 
other was in respect to company matters. 
112.2 After constitution of Administrative Tribunals under 
theAdministrative Tribunals Act, 1985 the jurisdiction 
in regard to original jurisdiction relating to service D 
matters 
was 
shifted 
from 
High 
Courts 
to 
Administrative Tribunals. Section 6 of the said Act deals 
with qualifications for appointment as Chairman, and it 
is evident therefrom that the Chairman has to be a High 
Court Judge either a sitting or a former Judge. For judicial E 
member the qualification was that he should be a judge 
of a High Court or is qualified to be a Judge of the High 
Court (i.e. an advocate of the High Court with ten years 
practice or a holder of a judicial office for ten 
years) or a person who held the post of Secretary, 
F 
Govt. of India in the Department of Legal Affairs or in the 
Legislative Department or Member Secretary, Law 
Commission of India
for a period of two years; or an 
Additional Secretary to Government of India in the 
Department 
of 
Legal 
Affairs 
or 
Legislative G 
Department for a period of five years. 
112.3 For being appointed as Administrative Member, 
the qualification was that the candidate should 
have served as Secretary to the Government of H
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India or any other post of the Central or State 
Government carrying the scale of pay which is not less 
than as of a Secretary of Government of India for atleast 
two years, or should have held the post of Additional 
Secretary to the Government of India or any other 
post of Central or State Government carrying the scale 
of pay which is not less than that of an Additional 
Secretary to the Government of India at least for a period 
of five years. In other words, matters that were decided 
by the High Courts could be decided by a Tribunal whose 
members could be two Secretary level officers with 
two years experience or even two Additional Secretary 
level officers with five years experience. This was 
the first dilution. 
112.4 The members were provided a term 
of 
office of five years and could hold office till 65 years 
and the salary and other perquisites of these members 
were made the same as that of High Court Judges. This 
itself gave room for a comment that these posts were 
virtually created as sinecure for members 
of 
the 
executive to extend their period of service by five 
years from 60 to 65 at a higher pay applicable to High 
Court Judges. Quite a few members of the executive 
thus became members of the "Tribunals exercising 
judicial functions". 
112.5 We may next refer to Information Technology 
Act, 2000 which provided for establishment of Cyber 
Appellate Tribunal with a single member.
Section 50 
of that Act provided that a person who is, or has been, or 
is qualified to be, a Judge of a High Court, or a 
person who is, or has been, a member of the India Legal 
Service and is holding or has held a post in Grade I of 
that service for at least three years could be appointed
MADRAS BARASSOCIATION v. UNION OF INDIA 
681 
[A.K. SIKRI, J.] 
as the Presiding Officer. That is, the requirement of even A 
a Secretary level officer is 
gone. 
Any member of 
Indian Legal Service holding a Grade-I Post for 
three years can be a substitute for a High Court Judge. 
B 
112.6 The next dilution is by insertion of Chapters 
1 B 
in 
the 
Companies Act, 1956 with effect from 
1.4.2003 providing for constitution of a National Company 
Law Tribunal with a President and a large number of C 
Judicial and Technical Members (as many as 62). 
There is a further dilution in the qualifications for 
members of National Company Law Tribunal which is a 
substitute for the High Court, for hearing winding 
up matters and other matters which were earlier heard D 
by High Court. A member need not even be a Secretary 
or Addi. Secretary Level Officer. All Joint Secretary 
level civil servants (that are working under Government 
of India or holding a post under the Central and State 
Government carrying a scale of pay which is not less than 
E 
that of the Joint Secretary to the Government of India) for 
a period of five years are eligible. Further, any person 
who has held a Group-A post for 15 years (which 
means anyone belonging to Indian P&T Accounts 
& Finance Service, 
Indian Audit and Accounts 
F 
Service, Indian Customs & Central Excise Service, 
Indian Defence Accounts Service, Indian Revenue 
Service, Indian Ordnances Factories Service, Indian 
Postal Service, Indian
Civil Accounts Service, Indian 
Railway Traffic Service, Indian Railway Accounts G 
Service, Indian Railway Personal Service, Indian Defence 
Estates Service, Indian Information Service, Indian Trade 
Services, or other Central or State Service) with three 
years' of service as a member of Indian Company H 
Law Service (Account) Branch, or who has 'dealt'
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[2015] 6 S.C.R. 
with any problems relating to Company Law can become 
a Member. This means that the cases which were being 
decided by the Judges of the High Court can be decided 
by two-members of the civil services - Joint Secretary 
level officers or officers holding Group 'A' posts or 
equivalent posts for 15 years, can now discharge 
the functions of High Court. This again has given room 
for comment that qualifications prescribed are tailor 
made to provide sinecure for a large number of Joint 
Secretary level officers or officers holding Group 'Pi posts 
to serve up to 65 years in Tribunals exercising judicial 
functions. 
112.7 The dilution of standards may not end here. The 
proposed Companies Bill, 2008 contemplates that any 
member of Indian Legal Service or Indian Company Law 
Service (Legal Branch) with only ten years service, 
out of which three years should be in the pay scale of 
Joint Secretary, is qualified to be appointed as a Judicial 
Member. The speed at which the qualifications for 
appointment as Members is being diluted is, to say the 
least, a matter of great concern for the independence of 
the Judiciary." 
24) Having regard to the aforesaid clear and categorical 
F dicta in 2010 judgment, tinkering therewith would evidently have 
the potential of compromising with standards which 2010 
judgment sought to achieve, nay, so zealously sought to secure. 
Thus, we hold that Section 409(3)(a) and (c) are
invalid as 
these provisions suffer from same vice. Likewise, Section 
G 411 (3) as worded, providing for qualifications of technical 
Members, is also held to be invalid. For appointment of 
technical Members to the NCL T. directions contained in sub-
para (ii), (iii)" (iv), (v) of para 120 of 2010 judgment will have to 
H be scrupulously followed and these corrections are required
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
683 
[A.K. SIKRI, J.] 
to be made in Section 409(3) to set right the defects contained A 
therein. We order accordingly, while disposing of issue No.2. 
ISSUE N0.3 
25) This issue pertains to the constitution of Selection 
8 
Committee for selecting the Members of NCLT and NCLAT. 
Provision in this respect is contained in Section 412 of the 
Act, 2013. Sub-section (2) thereof provides for the Selection 
Committee consisting of: 
(a) Chief Justice of India or his nominee-Chairperson; 
(b) a senior Judge of the Supreme Court or a Chief Justice 
of High Court-Member; 
c 
(c) Secretary in the Ministry of Corporate Affairs-Mernhe;; o 
(d) Secretary in the Ministry of Law and Justice-Member; 
and (e) Secretary in the Department of Financial 
Services in the Ministry of Finance-Member. 
Provision in this behalf which was contained in Section E 
1 OFX, validity thereof was questioned in 2010 judgment, was 
to the following effect: 
"10FX. Selection Committee: (1) The Chairperson 
and 
Members of the Appellate 
Tribunal 
and F 
President and Members of the Tribunal shall be 
appointed by the Central Government on the 
recommendations of a Selection Committee consisting 
of: 
(a) Chief Justice of India or his nominee Chairperson; 
(b) Secretary 
in 
the 
Ministry of Finance and 
Member; Company Affairs 
(c) Secretary in the Ministry of Labour Member; 
G 
H
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[2015] 6 S.C.R. 
A 
(d) Secretary in the Ministry of Law and Justice 
(Department 
of 
Legal 
Affairs 
or Legislative 
Department) Member; 
(e) Secretary in the Ministry of Finance and Company 
B 
Affairs (Department of Company Affairs) Member. 
c 
(2) The Joint Secretary in the Ministry or Department 
of the Central Government dealing with this Act shall be 
the Convenor of the Selection Committee." 
26) The aforesaid structure of the Selection Committee 
was found fault with by the Constitution Bench in 201 O judgment. 
The Court specifically remarked that instead of 5 members 
Selection Committee, it should be 4 members Selection 
D Committee and even the composition of such a Selection 
Committee was mandated in Direction No.(viii) of para 120 
and this sub-para we reproduce once again hereinbelow: 
E 
F 
"(viii) Instead of a five-member Selection Committee with 
Chief Justice of India (or his nominee) as Chairperson 
and two Secretaries from the Ministry of Finance and 
Company Affairs ::irid the Secretary in the Ministry of 
Labour and Secretary in the Ministry of Law and Justice 
as members mentioned in section 1 OFX, the Selection 
Committee should broadly be on the following lines: 
(a) Chief Justice of India or his nominee - Chairperson 
(with a casting vote); 
(b)Asenior Judge of the Supreme Court or Chief Justice 
G 
of High Court- Member; 
H 
(c) Secretary in the Ministry of Finance and Company 
Affairs - Member; and 
(d) Secretary in
the Ministry of Law and Justice -
MADRAS BAR ASSOCIATION v. UNION OF INDIA 
685 
[A.K. SIKRI, J ] 
Member." 
A 
27) Notwithstanding the above, there is a deviation in the 
composition of Selection Committee that is prescribed under 
Section 412 (2) of the Act, 2013. The deviations are as under: 
(i) Though the Chief Justice of India or his nominee is 
to act as Chairperson, he is not given the power of a casting 
vote. It is because of the reason that instead of four member 
Committee, the composition of Committee in the impugned 
B 
provision is that of five members. 
c 
(ii) This Court had suggested one Member who could 
be either Secretary in the Ministry of Finance or in Company 
Affairs (we may point out that the word "and" contained in 
Clause (c) of sub-para (viii) of para 120 seems to bP. 
LJ 
typographical mistake and has to be read as "or", as otherwise 
it won't make any sense). 
(iii) Now, from both the Ministries, namely from the 
Ministry of Corporate Affairs as well as Ministry of Finance, 
one Member each is included. Effect of this composition is to E 
make it a five members Selection Committee which was not 
found to be valid in 2010 judgment. Reason is simple, out of 
these five Members, three are from the administrative branch/ 
bureaucracy as against two from judiciary which will result in 
F 
predominant say of the members belonging to the 
administrative branch, is situation that was specifically diverted 
from. 
The composition of Selection Committee contained in 
Section 412(2) of
the Act, 2013 is sought to be justified by the G 
respondents by arguing that the recommended composition 
in the 2010 judgment was in broad terms. It is argued that in 
view of subsuming of BIFR and AAIFR which are in the 
administrative jurisdiction of Department of Financial Services, 
H 
Secretary DFS has been included. No casting vote has been
686 
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[2015] 6 S.C.R. 
A 
provided for the Chairman as over the period of time the 
selection processes in such committees have crystallized in a 
mannerthatthe recommendations have been unanimous and 
there is no instance of voting in such committees in Ministry of 
Corporate Affairs. Moreover other similar statutory bodies/ 
B tribunals also do not provide for 'casting vote' to Chairperson 
of Selection Committee. Further, the Committee will be 
deciding its own modalities as provided in the Act. The 
following argument is also raised to justify this provision: (i) 
Robust and healthy practices have evolved in deliberations of 
C Selection Committees. Till now there is no known case of any 
material disagreement in such committees. (ii) The intention 
is to man the Selection Committee with persons of relevant 
experience and knowledge. 
D 
28) We are of the opinion that this again does not constitute 
any valid or legal justification having regard to the fact that this 
very issue stands concluded by the 2010 judgment which is 
now a binding precedent and, thus, binds the respondent 
equally. The prime consideration in the mind of the Bench 
E was that it is the Chairperson, viz. Chief Justice of India, or his 
nominee who is to be aiven the final say in the matter of 
selection with rightto have a casting vote. That is the ratio of 
the judgment and reasons for providing such a composition 
F are not far to seek. In the face of the all pervading
prescript 
available on this very issue in the form of a binding precedent, 
there is no scope for any relaxation as .:;ought to be achieved 
through the impugned provision and we find it to be 
incompatible with the mandatory dicta of 2010 judgment. 
G Therefore, we hold that provisions of Section 412(2) of the 
Act, 2013 are not valid and direction is issued to remove the 
defect by bringing this provision in accord with sub-para (viii) 
of para 120 of 2010 judgment. 
H 
29) We now deal with some other issues raised in the
MADRAS BARASSOCIATION v. UNION OF INDIA 
687 
[A.K. SIKRI, J.] 
petition. It was feebly argued by Mr. Datarthat power to punish 
A 
for contempt as given to the NCLT and NCLAT under Section 
425 of the Act is not healthy and should be done away with. It 
was also argued that power given to the Central Government 
to constitute the Benches is again impermissible as such 
power should rest with President, NCLT or Chairman, NC LAT. 
B 
However, we hardly find any legal strength in these arguments. 
We have to keep in mind that these provisions are contained 
in a statute enacted by the Parliament and the petitioner could 
not point out as to how such provisions are unconstitutional. 
30) The upshot of the aforesaid discussion is to allow this 
writ petition partly, in the manner mentioned above. 
c 
31) Before we part, we must mention that the affidavit 
dated 07.05.2015 is filed on behalf of the respondents D 
mentioning therein the steps that have been taken till date 
towards setting up of NCLT and NC LAT. It is pointed out that 
the approval for creation of one post of Chairperson and five 
posts of Members of NC LAT as well as one post of President 
and 62 posts of Members of NCLT and two posts of Registrar E 
one each for NCLT and NCLAT and one post of Secretary, 
NCL Twas obtained and the approval was also obtained for 
creation of 246 posts of supporting staff of NCLTand NCLAT. 
It is also mentioned that following draft Rules have already been 
prepared in consultation
with the Legislative Department, 
F 
Ministry of Law: (i) NCLAT (Salaries, Allowances and other 
terms and conditions of service of the Chairperson and other 
Members) Rules, 2014, (ii) NCLT (Salary, Allowances and other 
Terms and Conditions of Service of President and other 
Members) Rules, 2013. Draft Recruitment Rules for the G 
supporting staff were also prepared in consultation with 
Legislative Department, Ministry of Law. It is further mentioned 
that draft Rules with regard to manner of functioning of NCLT/ 
NC LAT etc. were prepared in order to place them before the H 
Chairperson/President of NCLAT/NCLT on their appointment
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[2015] 6 S.C.R. 
A for finalization as per the provisions of the Companies Act, 
2013. These Rules cover provisions with regard to manner of 
functioning of NCLT/NCLAT; manner in which applications for 
various approvals shall be made by applicants and approved; 
and specific procedural requirements with regard to 
B applications/matters relating to compromises/arrangements/ 
amalgamations; 
prevention 
of oppression 
and 
mismanagement; revival and rehabilitation of sick companies; 
winding up and other miscellaneous requirements. Space for 
Principal Bench and other Benches of NCLT, including a 
C special Bench at Delhi to deal with transferred cases of BIFR 
and AAIFR had also been identified. Process initiated for 
renting space in some locations, which was discontinued in 
view of the pending petition, can be restarted at a short notice. 
0 
Budget heads have been created for meeting the expenditure 
for NCLT and NCLAT. Allocated funds for 2014-2015 had to 
be surrendered in view of the delay in settling up the Tribunals. 
32) From the aforesaid, it seems the only step which is 
left to make NCLT and NCLAT functional is to appoint 
E President and Members of NCLT and Chairperson and 
Members of NCLAT. 
33) Since, the functioning of NCLT and NCLAT has not 
started so far and its high time that these Tribunals start 
F functioning now, we hope that the respondents shall take 
remedial measures as per the directions contained in this 
judgment
at the earliest, so that the NCLT & NCLAT are 
adequately manned and start functioning in near future. 
G 
34) Writ petition stands disposed of in the aforesaid 
manner. 
NidhiJain 
Writ Petitions disposed of. 
H

(2015] 6 S.C.R. 689 
MADRAS BAR ASSOCIATION 
v. 
UNION OF INDIA&ANR. 
Writ Petition (Civil) No.1072 of 2013 
MAY20, 2015 
[A.K. SIKRI AND UDAY UMESH LAUT, JJ.] 
A 
B 
Companies Act, 2013 - s. 409 - Clericalltypographica/ 
error in judgment dated 14. 5. 2015 in Writ Petition (Civil) C 
No. 1072 of 2013 -Correction carried out. 
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No. 
1072of2013. 
[Under Article 32 of the Constitution of India] 
P. S. Patwalia, Nikhil Nayyarfor the Petition. 
The Order of the Court was delivered 
ORDER 
Mr. P.S. Patwalia, learned senior counsel has brought to 
our notice the clerical/typographical error which has occurred 
D 
E 
in the judgment dated 14.5.2015 pronounced by the F 
Constitution Bench in the WP(C)No. 1072/2013 authored by 
one of us (A.K.Sikri,J.). It is pointed out that in para 24 of the 
said judgment where this Court has held Section 409 (3)(a) 
and (c) are invalid, clause (c) has been wrongly typed instead 
of clause (e) of Section 409 (3). Submission of Mr Patwalia G 
appears to be correct, as clause ( c) was not even the subject 
matter of challenge. The correction is carried out accordingly. 
Nidhi Jain 
Correction made in earlier Judgment. 
689 
H