Companies Act Section 412

Companies Act, Section 412: Selection and Appointment of Members of the Tribunal and Appellate Tribunal

Section 412 of the Companies Act, 2013 establishes a systematic and structured procedure for selecting the President and Members of the National Company Law Tribunal (NCLT) as well as the Chairperson and Members of the National Company Law Appellate Tribunal (NCLAT).

This section ensures that the appointment process is fair, transparent, and involves participation from the highest level of the judiciary, thereby maintaining the independence and integrity of the Tribunals responsible for corporate justice in India.

1. Appointment of President, Chairperson, and Judicial Members

The law mandates that the President of the NCLT, the Chairperson of the NCLAT, and the Judicial Members of the Appellate Tribunal shall be appointed only after consultation with the Chief Justice of India. 

This safeguard ensures that judicial appointments within the Tribunal system reflect high standards of credibility, impartiality, and judicial competence. 

The involvement of the Chief Justice of India reflects respect for judicial autonomy and protects the Tribunals from undue executive influence.

2. Selection Committee for Other Appointments

The Members of the NCLT and the Technical Members of the NCLAT are appointed based on recommendations made by a formally constituted Selection Committee. The composition of this Committee ensures participation from both the judiciary and the executive. 

It consists of the Chief Justice of India or a nominee as the Chairperson of the Committee, along with a senior Judge of the Supreme Court or a Chief Justice of a High Court, the Secretary of the Ministry of Corporate Affairs, and the Secretary of the Ministry of Law and Justice. 

This multi-institutional involvement ensures balanced decision-making and appropriate evaluation of professional qualifications of the candidates.

Further, sub-section (2A) provides that if the members of the Selection Committee are equally divided in their opinion over any matter during the selection process, the Chairperson shall have a casting vote. 

This prevents indecision or deadlock and ensures that the appointment process continues smoothly even when there are differing views among committee members.

3. Administration of the Selection Committee

The Secretary of the Ministry of Corporate Affairs shall act as the Convener of the Committee. 

The Convener is responsible for organizing committee meetings, coordinating appointment procedures, maintaining records, and ensuring that the administrative aspects of the selection process function effectively.

4. Procedure for Selection

The Selection Committee has the authority to determine its own internal procedure for identifying suitable candidates, evaluating their qualifications, and making final recommendations. 

This flexibility allows the Committee to evolve an efficient and reliable method for shortlisting and assessing candidates based on the nature of Tribunal responsibilities.

5. Validity of Appointments

The legal status of appointments by clarifying that no appointment made under this section becomes invalid merely because of any vacancy or defect in the formation of the Selection Committee. 

This provision prevents interruptions to the functioning of Tribunals due to technical challenges or temporary administrative lapses, ensuring continuity in corporate adjudication.