Tribunals should not yield to pressure or intimidation by litigants: Gujarat HC

In a judgment dated October 16, Justice N R Mehta quashed and set aside the orders of recusal of the Ahmedabad NCLT-I and NCLT-II as well as the subsequent administrative order of NCLT Delhi to transfer the case to NCLT Mumbai.

The court was hearing petitions filed by ArcelorMittal Nippon Steel India (formerly Essar Steel India Ltd), concerning a series of proceedings pending before NCLT Ahmedabad in cases of resolution of Essar Steel India Ltd.

Two Ahmedabad tribunals, NCLT-I and NCLT-II, recused themselves (in April 2024) and consequently, NCLT Delhi “in its administrative capacity”, transferred the recused cases out of the territorial jurisdiction of Ahmedabad bench to the Mumbai bench.

Citing Article 226 of the Constitution, the lawyers for ArcelorMittal submitted that the recusal and transfers, were “illegal, inasmuch as the same involves bench hunting and forum shopping to the extent of probity… it is the most appropriate case where the court should come down heavily on those litigants and its lawyers…”

The counsel appearing for four private respondents in the case submitted that the court could direct the NCLT Delhi to form a virtual bench comprising members from different parts of the country, as has been done in other cases.

In its judgment dated October 16, the Gujarat High Court held that the members of NCLT-I, Ahmedbad had “not assigned any reason for their recusal… it becomes relevant to take note of the immediate preceding event – namely the Email addressed by the learned advocate appearing for the respondents to the Members of NCLT-I… this court finds it difficult to discern any other apparent reason for the recusal… it appears that the recusal by NCLT-I was influenced by the act of sending the Email…”

The court order notes that NCLT Delhi, vide an administrative order dated January 2024, transferred the petitions and applications to another bench NCLT-II in Ahmedabad. The order states, “… it appears that the learned members (NCLT-II) recused themselves mainly due to the conduct of the learned counsel, who had made allegations against the members of the Tribunal and the Registry…”

The court order adds that NCLT too “ought not to have recused itself or yielded to such conduct of parties” and that “if courts and 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. Courts and Tribunals are expected to be magnanimous, but such magnanimity should never be at the cost of judicial dignity or independence…”

The order states, “Ordinarily, orders of recusal are not open to judicial review. However, where the legislature has specifically prescribed the circumstances in which recusal is permissible, any order passed beyond those circumstances can certainly be scrutinized in judicial review. While recusal may be a matter of individual conscience, but at the same time, it is equally an aspect of institutional responsibility.”

The court said NCLT-II should have continued with the matter rather than recusing on account of the conduct of the parties as “judges and members are bound by their oath to decide cases impartially, without fear or favour, affection or ill will…”

The court said that the recusal orders passed by NCLT-I and NCLT-II “cannot be said to be legal or justified”. In regard with the orders of NCLT Delhi in June 2024 and February 2025, which transferred all matters to NCLT Mumbai, “beyond the territory of the State of Gujarat”, the HC cited NCLT Rules, 2016, and said, “Under this provision, the President has the authority to transfer cases from one Bench to another within the same Tribunal when circumstances so require. However, the Rule does not confer any power to transfer a case beyond the territorial jurisdiction of a particular Bench. In other words, the President’s authority to transfer matters is confined to Benches falling within the same territorial limits. In the present case, the NCLT, New Delhi, while acting on the administrative side, has committed a serious error by transferring the cases from the NCLT, Ahmedabad, to the NCLT, Mumbai… The President of the NCLT has no administrative power to alter or extend the territorial jurisdiction of any Bench.”

The court quashed and set aside the orders of recusal of the NCLT-I and NCLT-II of Ahmedabad dated 9th January 9, 2024, April 23, 2024 and April 24, 2024, respectively as well as the orders dated June 6, 2024 and February 10, 2025 passed by the NCLT, Delhi which are “on the administrative side, are without any legal authority”.

The order further directs the President of NCLT Delhi to decide under its administrative powers to allot the cases to any of the Bench at NCLT, Ahmedabad or, if circumstances so warrant, to constitute a virtual Bench for the “expeditious adjudication.”

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