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Why in the News
On 29 October 2026 the Supreme Court made serious observations on the staff appointment system of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). A bench led by Chief Justice Suryakant, which included Justice Joymalya Bagchi and Justice V. Mohana, said the system has been "completely hijacked by the Ministry of Corporate Affairs (MCA)". The bench said, "The Ministry wants a complete grip over the institution; this is most unfortunate." These remarks came during the hearing of a matter related to contract staff of the NCLT/NCLAT. The court issued notice in the matter and said the notice was being issued in the "larger public interest".
What the court said
Autonomy should rest with the President: The bench said the power to appoint staff should remain with the President of the NCLT - "complete autonomy must lie with the Presidents of both the NCLT and the NCLAT" - and there should be an employer-employee relationship between the staff and the tribunal.
Interim and permanent arrangement: The Chief Justice suggested, as an interim arrangement, bringing experienced officers from departments on deputation, followed by phased regular recruitment in which the Union Public Service Commission (UPSC) or the Staff Selection Commission (SSC) could assist.
Objection to the contract system: Senior advocate Meenakshi Arora submitted that the appointments have been outsourced to a private company, many staff members have been working for six years, they do not get HRA/DA, and they could be removed in early November. To this the Chief Justice said, "I know how contractors work... you too are people who have come through the back door." The court did not accept the request that staff not be removed without the President's approval, saying the President cannot be bound.
Proposals in four weeks: The court directed the Presidents of both the NCLT and the NCLAT to present comprehensive proposals on infrastructure, buildings and staff requirements within four weeks. Attorney General R. Venkataramani proposed a joint meeting on tribunal policy with the Bar, which the court accepted.
Background of the crisis
The hearing was told that the infrastructure of the NCLT's Principal Bench is "crumbling" - two floors are closed and courts are running at half capacity. According to the NCLT Bar Association, 18 benches are holding half-day hearings because of a shortage of members; the sanctioned strength of members is 62, while as of 30 June 2026 there are only 26 judicial members and 25 technical members (including the President). All 246 administrative staff are temporary/contract-based.
Earlier, the Ministry had clarified that its role in the appointment process of the NCLT's judicial and technical members is only administrative.
NCLT and NCLAT: the structure
The NCLT was constituted under Section 408 of the Companies Act, 2013 and has been functioning since June 2016. Besides company-law matters, its remit has expanded considerably after the Insolvency and Bankruptcy Code (IBC), 2016 came into force. The NCLAT (Section 410) hears appeals against the orders of the NCLT; appeals against some orders of the Competition Commission and the IBBI also come here. The Supreme Court has earlier too - including in Madras Bar Association v. Union of India (2021) and several other decisions - raised direct questions on the appointment, tenure and administrative control of tribunal members.
Prelims points: NCLT constitution - Section 408 of the Companies Act, 2013 (functioning since June 2016); NCLAT - Section 410; the bench - CJI Suryakant, Joymalya Bagchi, V. Mohana (29 October 2026); direction - proposals within four weeks; sanctioned member strength 62.
Mains Practice Question
"The administrative autonomy of tribunals is inseparable from their judicial independence." Examine this statement with reference to the Supreme Court's recent observations on the NCLT's appointment system. (Answer in 250 words. 15 marks)
Answer Outline
Introduction: Frame the question with reference to the 29 October 2026 hearing and the "completely hijacked" remark.
Main Body: The meaning of administrative autonomy - control over appointments, staff and infrastructure; the effect of ministerial control on institutional trust. The court's suggestions - full appointment power with the President, deputation as an interim arrangement, phased recruitment through UPSC/SSC, infrastructure proposals in four weeks. Figures of the crisis - 26 judicial + 25 technical members against 62 sanctioned posts, 18 benches on half-day hearings, 246 staff temporary. The history of conflict in earlier decisions (Madras Bar Association, 2021).
Conclusion: Both resources and autonomy are necessary in proportion to the workload that has grown after the IBC; the long-term solution lies in a regular recruitment system, not merely verbal assurances.
Prelims Practice Questions
Question 1. With reference to the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), consider the following statements:
Statement-I: The NCLT has been constituted under the Companies Act, 2013.
Statement-II: The NCLAT is the appellate body that hears appeals against the orders of the NCLT.
Which of the above statements is/are correct?
(a) Both Statement-I and Statement-II are correct
(b) Statement-I is correct, but Statement-II is not correct
(c) Statement-I is not correct, but Statement-II is correct
(d) Neither Statement-I nor Statement-II is correct
Answer and explanation
Answer: (a) Both Statement-I and Statement-II are correct. The NCLT was constituted under Section 408 of the Companies Act, 2013 and has been functioning since June 2016 (Statement-I correct). The NCLAT, constituted under Section 410, hears appeals against NCLT orders (Statement-II correct).
Question 2. Consider the following statements:
1. The Supreme Court has issued notice in the NCLT staff-appointment matter.
2. The court has asked the Presidents of the NCLT and the NCLAT for infrastructure proposals within two weeks.
3. The court has suggested the assistance of the UPSC/SSC for phased regular recruitment.
Which of the above statements are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer and explanation
Answer: (b) 1 and 3 only. The bench issued notice in the matter (statement 1 correct). The time limit for the proposals is four weeks, not two (statement 2 wrong). The Chief Justice suggested phased regular recruitment with the assistance of UPSC/SSC, along with an interim deputation arrangement (statement 3 correct).
Sources
- The Hindu: "Corporate Affairs Ministry has 'hijacked' staff appointments in NCLT: Supreme Court" (29 October 2026)
- Indian Express: "NCLT completely hijacked by Ministry of Corporate Affairs: Supreme Court" (29 October 2026)
- LiveLaw: "NCLT, NCLAT Staff Recruitment System 'Completely Hijacked' By MCA: Supreme Court" (29 October 2026)
- CNBC-TV18: CJI's remarks on NCLT/NCLAT; Presidents directed to submit proposals in four weeks (29 October 2026)
- India Code portal (indiacode.nic.in): Section 408 (NCLT) and Section 410 (NCLAT) of the Companies Act, 2013.
Note: The bench's observations are oral; this article will be amended when the written order is published.