The Hindu Business Line : Centre moves SC on company law tribunal

THE Supreme Court on Thursday admitted an appeal filed by the Centre challenging a Madras High Court order on the formation of a National Company Law Tribunal (NCLT).

The Centre has approached the apex court against the High Court order issuing a host of directions to it on the implementation of the Companies (Second Amendment) Act, 2002, which envisaged setting up of the NCLT and the National Company Law Appellate Tribunal (NCLAT).

The apex court also issued a notice to Mr R. Gandhi, President, Madras Bar Association, on the Centre's plea to stay the High Court order.

The Bar Association had filed a writ petition in the High Court challenging the formation of these tribunals. The High Court, while declaring the formation of these tribunals as unconstitutional, had also raised certain queries on the provisions under various sections of the Companies (Amendment) Act, 2002.

The High Court had also ruled that the three-year term of office provided for members of the NCLT was short and it was a disincentive for competent people to join. Competent professionals could not be expected to give up their practices for a limited term of three years, the Bench had said. It had also identified certain other infirmities in the process of selection of members of the tribunals.

In its special leave petition (SLP), the Centre sought a stay against the High Court order. Seeking interim relief, the Centre, in its application, said the process of selection of tribunal members has already been initiated based on directions of the selection committee headed by the Chief Justice of India.

More than 600 people had applied for the posts. The selection procedure may get vitiated unless the judgement of the High Court was stayed, it said.

Further, the Sick Industrial Companies (Special Provisions) Act, 1985, had been repealed and various posts of the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) had not been filled. Moreover, certain posts in the Company Law Board (CLB) had also not been filled because the functions of the BIFR and CLB were to be discharged by NCLT and the Appellate Tribunal.

According to experts, this would mean that the setting up of the NCLT— a tribunal being set up to take over the functions hitherto performed by BIFR, AAIFR, CLB as well as the high courts in winding up of companies— may take some time.

More Stories on : Courts/Legal Issues | Company Law

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