Gujarat HC: NCLT Chief Can’t Alter Bench Jurisdiction

Gujarat High Court Rules: NCLT President Cannot Change Bench Jurisdiction While Transferring Cases

Court quashes transfer of Essar Steel-related cases from Ahmedabad to Mumbai Bench

Judges clarify that NCLT President’s powers are limited to transfers within same territorial limits

By Our Legal Correspondent

New Delhi: October 24, 2025: In a landmark judgment, the Gujarat High Court has ruled that the President of the National Company Law Tribunal (NCLT) does not have the administrative power to alter or extend the territorial jurisdiction of NCLT Benches while transferring cases. The ruling came in connection with the transfer of Essar Steel-related cases from the Ahmedabad Bench to the Mumbai Bench, which the court found to be beyond the President’s authority.

Justice Niral R. Mehta, delivering the judgment, emphasized that the President’s powers under Rule 16(d) of the NCLT Rules, 2016 are confined to transfers within the same territorial jurisdiction. The decision is expected to have far-reaching implications for corporate litigation and insolvency proceedings across India.

Background of the Case

The dispute arose when ArcelorMittal Nippon Steel India Limited (formerly Essar Steel India Ltd.) challenged the transfer of certain cases from the Ahmedabad Bench of the NCLT to the Mumbai Bench. The transfer was ordered by the NCLT President, citing administrative convenience.

ArcelorMittal argued that the President had exceeded his powers by altering the territorial jurisdiction of the cases, which were originally within the Ahmedabad Bench’s authority. The company filed a petition before the Gujarat High Court, seeking to quash the transfer.

Court’s Observations

Justice Mehta made several important observations in the ruling:

Limited powers of NCLT President: The President can transfer cases only within the same territorial jurisdiction. He cannot shift cases from one state to another or from one Bench’s jurisdiction to another.
Jurisdiction is statutory: The territorial jurisdiction of NCLT Benches is defined by law and cannot be changed through administrative orders.
Checks on administrative discretion: Allowing the President to alter jurisdiction would amount to rewriting the law, which only Parliament can do.
Judicial discipline: The court also cautioned that NCLT Benches should not recuse themselves from cases merely because of the conduct of lawyers or litigants.

The High Court thus quashed the transfer order and restored the cases to the Ahmedabad Bench.

Significance of the Ruling

This judgment is significant for several reasons:

Clarifies limits of administrative powers: It draws a clear line between judicial and administrative functions within the NCLT.
Protects statutory jurisdiction: The ruling ensures that jurisdictional boundaries set by law cannot be altered casually.
Strengthens corporate litigation framework: By preventing arbitrary transfers, the judgment provides certainty to litigants and companies.
Impacts insolvency proceedings: Since NCLT is the primary forum for insolvency and bankruptcy cases, the ruling will influence how such cases are allocated and heard.

The Essar Steel Connection

The case is particularly important because it is linked to the long-running Essar Steel insolvency proceedings, one of India’s largest and most high-profile bankruptcy cases.

Essar Steel was acquired by ArcelorMittal Nippon Steel India after a protracted legal battle under the Insolvency and Bankruptcy Code (IBC), 2016.
Several disputes related to the resolution process continued before the NCLT Ahmedabad Bench.
The transfer of these cases to Mumbai raised concerns about forum shopping and administrative overreach.

By restoring the cases to Ahmedabad, the Gujarat High Court has reinforced the principle that insolvency matters must be heard in the jurisdiction originally assigned by law.

Legal Basis of the Judgment

The court relied on the following legal provisions:

NCLT Rules, 2016: Rule 16(d) allows the President to transfer cases, but only within the same territorial jurisdiction.
Companies Act, 2013: Defines the structure and jurisdiction of NCLT Benches.
Insolvency and Bankruptcy Code, 2016: Establishes NCLT as the adjudicating authority for corporate insolvency.

Justice Mehta clarified that while the President has administrative powers, these cannot override statutory provisions.

Reactions from Legal Experts

The judgment has been widely discussed in legal circles.

Corporate lawyers welcomed the decision, saying it will prevent arbitrary transfers and ensure consistency in case handling.
Insolvency professionals noted that the ruling will bring stability to the IBC process, which often involves high-stakes litigation.
Critics, however, argued that the decision could limit the flexibility of the NCLT President to manage caseloads efficiently.

Implications for Future Cases

The Gujarat High Court’s ruling sets a precedent that will guide future disputes over the powers of the NCLT President. Key implications include:

Administrative convenience vs. statutory limits: The judgment makes it clear that convenience cannot override law.
Forum shopping concerns: Companies will have less scope to seek transfers to more favourable Benches.
Judicial oversight: High Courts are likely to play a stronger role in reviewing administrative decisions of the NCLT.

Conclusion

The Gujarat High Court’s ruling that the NCLT President cannot alter territorial jurisdiction while transferring cases is a landmark in corporate and insolvency law. By quashing the transfer of Essar Steel-related cases from Ahmedabad to Mumbai, the court has reaffirmed the principle that jurisdiction is a matter of law, not administrative discretion.

This decision strengthens the integrity of the NCLT system, ensures fairness for litigants, and provides much-needed clarity on the limits of administrative powers. As India continues to rely on the NCLT for resolving complex corporate disputes, this judgment will serve as a guiding precedent for years to come.