Court rules NCLT Member terms, upholds extensions for those under 65.

The Court held that the notification prescribing a three-year term for National Company Law Tribunal (NCLT) Members was inconsistent with the Companies Act 2013, which mandates a five-year term. Despite this, the Court declined to extend the tenure of Members who did not challenge the term, as new appointments were in progress. The Court upheld the extension of tenure for eight Members until they reach 65 years. The petition was disposed of, and pending applications were dismissed.

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Issues Involved:
1. Locus standi of the petitioner Bar Association.
2. Validity of the impugned notification prescribing a three-year tenure for NCLT members.
3. Right of the appointees to continue beyond the three-year term.
4. Supervening developments and their impact on the relief sought.
5. Compliance with Section 413 of the Companies Act 2013 in future appointments.

Issue-wise Detailed Analysis:

1. Locus Standi of the Petitioner Bar Association:
The Court examined whether the National Company Law Tribunal Bar Association had the standing to challenge the notification dated 20 September 2019. The Union government argued that since the Members of the NCLT accepted their appointments for three years without raising any grievances, the Bar Association lacked the locus standi to question the term of appointment. The Court noted that the issue of locus standi needed to be resolved before addressing the substantive claims.

2. Validity of the Impugned Notification Prescribing a Three-Year Tenure:
The petitioner contended that the notification issued by the Ministry of Corporate Affairs, which appointed 28 candidates as Members of the NCLT for a tenure of three years, was contrary to Section 413(1) of the Companies Act 2013. Section 413(1) stipulates a five-year term for NCLT Members. The Court acknowledged that the notification prescribing a three-year term was inconsistent with the statutory provision.

3. Right of the Appointees to Continue Beyond the Three-Year Term:
The petitioner sought a modification of the tenure from three years to five years for the Members appointed under the impugned notification. The Court noted that none of the appointees had challenged the three-year term, and some had even applied for reappointment. The Court found it inappropriate to entertain the petitioner's plea for extending the tenure, especially since it would involve evaluating the suitability and performance of individual Members who were not parties to the proceedings.

4. Supervening Developments and Their Impact on the Relief Sought:
The Court considered the supervening developments, including the ongoing selection process for new NCLT Members. The Selection Committee, chaired by the Chief Justice of India, had initiated the process of filling vacancies, including those arising from the end of the three-year term of the Members appointed on 20 September 2019. The Union government had also issued a notification on 14 June 2022, extending the tenure of two Judicial Members and six Technical Members for five years or until they attain the age of 65. The Court held that granting relief to the petitioner would interfere with the ongoing selection process.

5. Compliance with Section 413 of the Companies Act 2013 in Future Appointments:
The Court directed that future appointments to the NCLT must comply with the statutory provisions of Section 413 of the Companies Act 2013, which prescribes a five-year term for Members. The Court emphasized that administrative notifications must align with the governing statute.

Conclusion:
The Court concluded that while the notification prescribing a three-year term was not in consonance with Section 413 of the Companies Act 2013, the Members did not challenge it, and the selection process for new appointments was already underway. The Court decided not to extend the tenure of the 23 Members appointed on 20 September 2019. However, the notification extending the tenure of eight Members until they attain the age of 65 years was upheld. The petition was accordingly disposed of, and pending applications were dismissed.

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