Madras Bar Association v. Union of India & Anr.
Background
This writ petition by the Madras Bar Association followed an earlier Constitution Bench ruling (Union of India v. R. Gandhi, 2010) that had upheld the creation of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) in principle, while flagging that certain provisions governing the qualifications, tenure, and composition of these tribunals were constitutionally defective and needed correction. After Parliament re-enacted similar tribunal provisions in the Companies Act, 2013, the Bar Association returned to the Supreme Court arguing that the new provisions (Sections 409, 411, 412, etc.) still suffered from the same separation-of-powers defects, particularly around who could be appointed as "technical members" and how the selection committee was composed.
Decision Breakdown
The Supreme Court held that while the basic scheme of constituting the NCLT and NCLAT was not unconstitutional, several specific provisions were: chiefly the qualification criteria for "technical members" in Section 409(3) and Section 411(3), which the Court found diluted the standards needed for persons exercising judicial-type powers that previously belonged to High Courts, and the composition of the Selection Committee under Section 412(2), which gave the executive excessive control over appointments at the expense of judicial independence. The Court directed Parliament/the Government to amend these provisions to fix the qualification standards and rebalance the Selection Committee's composition, while leaving the rest of the tribunal framework intact. The Court also noted, from the Government's own affidavit, that infrastructure and staffing approvals for NCLT/NCLAT were largely ready and urged the Government to appoint the President, Chairperson and Members and get the tribunals functioning without further delay. The writ petition was accordingly disposed of, partly allowed.
Lesson Learnt
When Parliament creates specialised tribunals to take over powers that courts used to exercise, the people appointed to decide those cases must have qualifications and an appointment process that are genuinely independent of executive control, diluting those safeguards, even through ordinary legislation, can be struck down as unconstitutional.