NCLT recusal and case transfers after counsel emails and allegations, Rule 62 and Rule 16(d) orders quashed

Recusal by the Ahmedabad Benches of NCLT was examined against Rule 62 of the NCLT Rules, 2016. The HC held the orders disclosed no Rule 62 ground; the first recusal appeared prompted by an email from counsel, and the second by counsel's allegations and courtroom conduct, which could not justify recusal or permit pressure-driven forum shopping; the recusal orders were quashed. Transfer of matters from NCLT Ahmedabad to NCLT Mumbai was tested under Rule 16(d). The HC held the NCLT President's administrative power to transfer does not extend to altering territorial jurisdiction, and administrative transfer while judicial transfer objections were pending was improper; the administrative transfer orders were set aside. Petition partly allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the recusal orders passed by the Ahmedabad Benches of the Tribunal were legal and justified under Rule 62 of the National Company Law Tribunal Rules, 2016.

(ii) Whether the administrative transfer orders issued from Delhi, purporting to act under Rule 16(d) of the National Company Law Tribunal Rules, 2016, could validly transfer matters from the Ahmedabad Bench to the Mumbai Bench, particularly when transfer applications on the judicial side were pending.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Legality of recusal orders under Rule 62 of the NCLT Rules, 2016

Legal framework: The Court examined Rule 62, which specifies circumstances for recusal (personal/familial/professional relationship; prior involvement in another capacity; or other circumstances making participation seem inappropriate). The Court also noted that Rule 62(2) uses "may" for recording reasons and the proviso denies parties a right to know reasons, indicating discretion on recording reasons, but not an unfettered discretion to recuse outside Rule 62 circumstances.

Interpretation and reasoning: The Court held that where the legislature has prescribed circumstances in which recusal is permissible, recusal beyond those circumstances is open to judicial scrutiny. On the first recusal order, the Members gave no reasons; the Court found the timing-immediately after an email sent by counsel-made it difficult to discern any other basis, and inferred the recusal was influenced by that act rather than Rule 62 circumstances. On the later recusal orders, the Court found the recusal was based on counsel's courtroom conduct and allegations against the Bench and Registry, and the Tribunal's perception of intimidation and loss of faith by counsel; this, in the Court's view, did not fall within the enumerated Rule 62 grounds. The Court emphasized that yielding to such conduct would embolden "browbeating", "forum shopping", and attempts to influence the Bench, and that the "principle of necessity" required the last available forum within the territorial jurisdiction to continue rather than recuse for such reasons.

Conclusions: The Court conclusively held that the recusal orders dated 9 January 2024, 23 April 2024, and 24 April 2024 were not legal or justified under Rule 62 and therefore were quashed and set aside.

Issue (ii): Validity of administrative transfer from Ahmedabad to Mumbai under Rule 16(d), and effect on pending judicial transfer proceedings

Legal framework: The Court examined Rule 16(d), which empowers the President to "transfer any case from one Bench to other Bench when the circumstances so warrant." The Court treated the scope of this administrative power as confined by territorial limits of Benches.

Interpretation and reasoning: The Court held that Rule 16(d) authorizes transfer between Benches but does not confer power to transfer matters beyond the territorial jurisdiction of the concerned Bench; the President has no administrative power to alter or extend territorial jurisdiction. Accordingly, transferring matters from Ahmedabad to Mumbai was held to be a "serious error" and "without any legal authority," making the administrative transfer orders subject to judicial review. The Court further treated it as improper that, while transfer applications were pending before the Tribunal on the judicial side, the administrative transfer rendered those proceedings ineffective, which reinforced the illegality/impropriety of the administrative action.

Conclusions: The Court held that the administrative transfer orders dated 6 June 2024 and 10 February 2025 were ultra vires Rule 16(d) and were quashed and set aside. The Court directed the President, exercising administrative powers, to allot the matters to any Bench at Ahmedabad and/or, if circumstances so warrant and otherwise permissible, to constitute a virtual Bench for expeditious adjudication.

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