Sections 417, 417A and 418 of Companies Act 2013: Removal of Members and Staff of NCLT and NCLAT
Sections 417, 417A and 418 form part of the statutory framework governing the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). They address removal safeguards for specified members, the service framework applicable to the NCLAT Chairperson and Members, and the provision and control of Tribunal staff.
Key definitions and context
Under the Companies Act, 2013, the expression Tribunal refers to the National Company Law Tribunal constituted under Section 408, while Appellate Tribunal refers to the National Company Law Appellate Tribunal constituted under Section 410. These bodies exercise the jurisdiction and appellate functions assigned to them under the Companies Act and other applicable enactments.
| Provision | Subject | Core purpose |
|---|---|---|
| Section 417 | Removal of Members | Sets out statutory grounds, hearing safeguards, inquiry requirements and suspension provisions relating to removal. |
| Section 417A | Qualifications and service conditions | Connects the service framework of specified NCLAT appointees with the Tribunals Reforms Act, 2021. |
| Section 418 | Staff of NCLT and NCLAT | Provides for officers and employees, administrative supervision, and prescribed service conditions. |
Section 417 - Removal of Members
Section 417 provides the removal framework for the President, Chairperson or a Member covered by the provision. It combines specified statutory grounds with procedural protections, including an opportunity of hearing in the situations stated in the section.
Section 417(1): Grounds for removal
The Central Government may, after consultation with the Chief Justice of India, remove from office the President, Chairperson or any Member who:
(a) has been adjudged an insolvent;
(b) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude;
(c) has become physically or mentally incapable of acting as such President, Chairperson or Member;
(d) has acquired such financial or other interest as is likely to prejudicially affect the discharge of functions; or
(e) has so abused the position as to render continuance in office prejudicial to the public interest.
For the grounds in clauses (b) to (e), the provision requires a reasonable opportunity of being heard before removal.
Section 417(2): Proved misbehaviour or incapacity
Without prejudice to sub-section (1), removal on the ground of proved misbehaviour or incapacity requires an order of the Central Government following an inquiry by a Judge of the Supreme Court nominated by the Chief Justice of India on a reference made by the Central Government. The person concerned must be informed of the charges and given a reasonable opportunity of being heard.
Section 417(3): Suspension during inquiry
The Central Government may, with the concurrence of the Chief Justice of India, suspend the President, Chairperson or Member in respect of whom a reference has been made under sub-section (2), pending the Central Government's order after receipt of the Judge's report.
Section 417(4): Procedure for inquiry
The provision requires rules regulating the procedure for an inquiry into proved misbehaviour or incapacity referred to in sub-section (2).
Section 417A - Qualifications, terms and conditions of service of Chairperson and Member
Section 417A is a non-obstante provision. For the Chairperson and other Members of the Appellate Tribunal appointed after commencement of the Tribunals Reforms Act, 2021, matters including qualifications, appointment, term of office, salaries and allowances, resignation, removal and other service conditions are governed by Chapter II of that Act.
The saving in Section 417A preserves the earlier statutory regime for the Chairperson and Members appointed before the commencement of Part XIV of Chapter VI of the Finance Act, 2017, in the manner stated in the proviso.
Section 418 - Staff of Tribunal and Appellate Tribunal
Section 418 concerns the administrative staff necessary for the functioning of NCLT and NCLAT.
Section 418(1): Provision of officers and employees
The Central Government, in consultation with the Tribunal and the Appellate Tribunal, is to provide such officers and other employees as may be necessary for the exercise of their powers and discharge of their functions.
Section 418(2): Superintendence and control
Officers and other employees discharge their functions under the general superintendence and control of the President or, as the case may be, the Chairperson, or another Member to whom the relevant powers have been delegated.
Section 418(3): Salaries and service conditions
The salaries, allowances and other conditions of service of officers and other employees are to be prescribed under the applicable legal framework.
For administration under Section 418, the Central Government has also used its delegation power under the Companies Act in relation to providing officers and employees to the Tribunal and Appellate Tribunal, subject to the applicable recruitment rules. Recruitment and service rules for NCLT and NCLAT staff should therefore be checked for the post and period concerned.
Practical legal effect of Sections 417, 417A and 418
These provisions separate two related but distinct subjects. Sections 417 and 417A concern the office and service framework of Tribunal or Appellate Tribunal members, while Section 418 concerns the officers and employees who support the institutions. In a dispute concerning removal or service conditions of a member, the applicable appointment regime and later tribunal legislation must be identified. In a staff matter, the applicable recruitment and service rules under Section 418 are relevant.
Official resources
For the current statutory text and subordinate legislation, verify the Companies Act, 2013 on the official India Code portal and consult the Ministry of Corporate Affairs. For institutional information, orders and cause lists, use the official NCLT and NCLAT portals.
This article is intended as a statutory reference and general legal information. Amendments, commencement notifications, rules and judicial decisions should be checked for the date and facts of a particular matter.