Govt moves ahead on company law tribunal despite legal challenge

K. R. Srivats Updated - January 03, 2014 at 03:53 PM.

The Government is moving ahead with the formation of the National Company Law Tribunal (NCLT) even as the outcome of a petition filed before the Supreme Court by the Madras Bar Association is awaited.

NCLT is an overarching body being set up for implementing most provisions of the new company law.

The Madras Bar Association recently filed a writ petition before the apex court challenging the provisions of the new company law as regards NCLT.

This is the second time Madras Bar Association had challenged the provisions of NCLT.

Even as the apex court's decision is awaited, the Corporate Affairs Ministry has now moved forward and finalised the norms for the salaries and allowances to be paid to the NCLT President and members.

However, these norms are yet to be notified.

Recently, the corporate affairs ministry had invited applications for filling up of 16 posts of judicial members in the NCLT.

Applications had also been invited for filling up of 14 posts of technical member in the NCLT.

After more than a decade of legal challenge, NCLT finally made it to the statute book in 2013.

NCLT now forms part of the Companies Act 2013. This was made possible by a Supreme Court order in 2010 affirming Parliament's power to create a tribunal for administration of justice.

Prior to this apex court order, the legislative competence for creation of a tribunal was being questioned.

In its May 2010 order, the Supreme Court had ruled that the formation of NCLT and National Company Law Appellate Tribunal (NCLAT) is constitutional.

But some necessary amendments are required in the composition of NCLT and NCLAT before they are set up, the apex court had ruled.

However, the NCLT provision in the new company is in variance with the apex court order, say company law experts.

“This challenge (recent writ by Madras Bar Association) could have been avoided if the provisions of the new company law were in accordance with the earlier ruling of the Supreme Court,” Lalit Kumar, Partner, J Sagar Associates, a law firm, told Business Line here.

The new Companies Act, 2013 does not contain the provisions as were laid by the Supreme Court in its order of May 2010, he added.

One had thought that the provisions laid down in the Supreme Court order would be incorporated in the new Companies Act, 2013, Kumar said.

srivats.kr@thehindu.co.in

Published on January 3, 2014 10:23