NCLT Members Cannot Recuse Merely Due To Parties’ Intimidating Conduct: Gujarat High Court

The High Court was hearing petitions filed by ArcelorMittal Nippon Steel India Limited (formerly Essar Steel India Limited), challenging multiple orders by the NCLT benches at Ahmedabad and Delhi. These included the recusal of members of the NCLT Ahmedabad and the administrative transfer of cases by the NCLT Delhi to the Mumbai Bench.

A Bench Comprising Justice Niral R. Mehta, while adjudicating the matter, observed that “the learned Members recused themselves mainly due to the conduct of the learned counsel who had made allegations against the Members of the Tribunal and the Registry, and who had also arranged for certain persons to remain present in the courtroom to record the proceedings.”

However, the Bench remarked that in the matter at hand, the NCLT “ought not to have recused itself except under the circumstances clearly provided in Rule 62”, stressing that “Judges and Members are bound by their oath to decide cases impartially, without fear or favour, affection or ill will.”

Senior Advocate Mihir Joshi represented the petitioner, while Advocate P.Y. Divyeshvar appeared on behalf of the respondent. 

Background

The matter arose from a series of proceedings before the NCLT, Ahmedabad, concerning the resolution process of Essar Steel India Limited and related entities.

After the NCLT Ahmedabad approved ArcelorMittal’s resolution plan, several litigations ensued, including contempt petitions and transfer applications by other stakeholders.

Eventually, both members of NCLT-I Ahmedabad recused themselves from hearing pending matters after an email was addressed to them by the counsel for certain respondents. The matters were then transferred to NCLT-II Ahmedabad, which also recused itself, citing allegations made against the Tribunal’s members and registry by the same counsel.

Subsequently, the NCLT, Delhi, acting on the administrative side, transferred all matters to the NCLT, Mumbai, under Rule 16(d) of the NCLT Rules, 2016.

ArcelorMittal challenged these recusals and transfers before the High Court under Article 226 of the Constitution, arguing that such actions were illegal, mala fide, and indicative of forum shopping and bench hunting by opposing parties.

Court’s Observation

The Gujarat High Court examined NCLT Rules, 2016, and observed that “Rule 62 of the NCLT Rules, at the threshold, makes it clear that the legislature has categorically specified the circumstances under which the President or the Member of the Tribunal shall recuse himself from a case allotted to it.”

The High Court held that the recusals by NCLT-I and II, Ahmedabad, “were not on account of any of the circumstances enumerated under Rule 62, but rather on account of the conduct of the advocate appearing before the Tribunal”.

While stating that the NCLT–II ought not to have recused itself or yielded to such conduct of the parties, the Bench underscored that “if Courts and the Tribunals begin to succumb to pressure or intimidation from counsel or litigants, it would only embolden those who seek to manipulate judicial proceedings and promote practices such as browbeating, forum shopping, and attempts to influence the Bench.”

Stressing that judicial officers must not yield to external pressures, and that such conduct by litigants or lawyers, such as intimidation or unfounded allegations, cannot dictate judicial proceedings, the Bench cautioned that even though “Courts and Tribunals are expected to be magnanimous, but such magnanimity should never be at the cost of judicial dignity or independence.”

The Bench concluded that while recusal is a matter of personal conscience and ordinarily not open to judicial review, however, “the recusal was not on account of any of the circumstances enumerated under Rule 62 of the NCLT Rules, 2016, but rather on account of the conduct of the advocate appearing before the Tribunal.”

Conclusion

Holding that “the recusal orders cannot be said to be legal or justified”, the Gujarat High Court allowed the petitions, set aside all recusal and transfer orders and directed that the matters be restored to the NCLT, Ahmedabad.

The Court further directed the President of the NCLT to reassign the cases to an appropriate Bench at Ahmedabad or constitute a virtual bench if necessary for their expeditious disposal.

Cause Title: ArcelorMittal Nippon Steel India Limited v. National Company Law Tribunal

Appearances

Petitioner: Mihir Joshi, Senior Advocate with Advocates Keyur Gandhi, Raheel Patel, Isa Hakim, and Aradhana Jain

Respondents: Advocates P.Y. Divyeshvar, Kshitij Amin, Deepak Khosla and Jaydeep Shukla

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