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SC Reserves Verdict on Validity of NCLT, NCLAT

The Supreme Court on Wednesday reserved its verdict on the challenge to the validity of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

Published: 06th May 2015 08:19 PM  |   Last Updated: 06th May 2015 08:19 PM   |  A+A-

NEW DELHI: The Supreme Court on Wednesday reserved its verdict on the challenge to the validity of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

As the apex court's constitution bench comprising Chief Justice H.L. Dattu, Justice A.K. Sikri, Justice Arun Mishra, Justice Rohinton Fali Nariman and Justice Amitava Roy reserved the verdict, senior counsel Arvind Dattar told the court that "if the NCLT becomes operational, the high court would be left with virtually no matter under the Companies Act, 2013".

Appearing for the Madras Bar Association, Dattar contested the government claim that the matter relating to the companies law were not being taken up by the high courts and they were pending for long time. Having disputed the government position, Dattar said that in his assessment both the high courts and the Company Law Board are functioning smoothly and the cases under the companies law were being taken up.

Pointing out that NCLT was leaning on the ministry of corporate affairs, the court was told that the tribunal should not only be functioning independently but should also seem to be functioning so. Having said this, the court was told that how a tribunal which is leaning on the ministry of corporate affairs could also hear cases against.

The petitioner Madras Bar Association has also raised the question of judicial members comprising the CJI and a senior judges of the apex court getting outnumbered by the three non-judicial members in the selection committee that includes secretaries of ministry of law and justice, ministry of corporate affairs and ministry of finance.

The five-member committee would select judicial and technical members to man the NCLT. The court was told that earlier it was four-member body where besides law secretary there was either secretary of ministry of corporate affairs or the secretary ministry of finance. The petitioner too had red-flagged the technical members being represented by the joint-secretary-level officers.

The government informed the court that the infrastructure for the NCLT was ready and the same could be operationalised in a short duration. The government will also inform the court as to what steps it had taken in the direction of operationalising the NCLT.

Meeting the objections on the presence of technical members of the rank of joint secretary, the court was told that they were the officers belonging to Indian Corporate Law Service and India Law Service and were competent and possessed significant expertise in the area of corporate law.

Telling the court that there were not enough additional secretary level officers to fill the slot of technical members in the tribunal, the government told the court that officers belonging to Indian Corporate Law Service and India Law Service get to the position of Joint Secretary after ten to twelve years of experience.

The constitution bench held the day-long hearing after a bench of the apex court had referred to the larger bench the challenge to the constitutional validity of the provisions in Chapter XXVII of the Companies Act, 2013, that deals with the manner and terms of the National Company Law Tribunal and the National Company Law Appellate Tribunal.

The petitioner Madras Bar Association has assailed the constitutional validity of Chapter XXVII comprising Sections 407 to 434.



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