The Hindu Business Line : Amendments to remove glitches in setting up law tribunals

THE Ministry of Company Affairs is all set to clear the glitches insetting up the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) by proposing suitable amendments to the Companies (Second Amendment) Act, 2002.

"We propose to resolve all the issues," the Minister for Company Affairs, Mr Prem Chand Gupta, said. To overcome the deadlock, the Government has now proposed that the President of the NCLT will be either a retired or serving High Court Judge. Currently, the Act provides that the Central Government shall appoint a person who has been or is qualified to be a judge of the High Court.

The Government has also proposed that the existing three-year term of office for members of the Tribunal be extended to five years. The three-year term, according to professionals, was extremely short and a disincentive for competent people to join. Professionals could not be expected to give up their practice for a limited term of three years, they had argued.

Yet, another infirmity pointed out in the Companies (Second Amendment) Act was the stipulation that members who come from the civil services can retain a lien on their jobs indefinitely. The Government now proposes to restrict the lien period to three years.

Further, the Government also plans to do away with the post of a member administration. Currently, the Act envisages that the Central Government shall designate any judicial member or technical member as the member administration who shall exercise such financial and administrative powers as may be vested in him under the rules to be prescribed by the Central Government.

As per the Act, the tribunal was to consist of a president and 62 members and would take over virtually all the powers of the High Courts and the Company Law Board (CLB) relating to company law and the Board of Industrial and Financial Reconstruction (BIFR). It was proposed to constitute 10 benches of tribunals throughout the country. The amendment also provided for formation of a NCLAT presided over by a Supreme Court judge or a retired high court chief justice and two other members.

The need to review the provisions of Companies (Second Amendment) Act, 2002, which envisaged setting up of the NCLT and NCLAT arose due to a Madras High Court directive declaring the constitution of the Tribunal as unconstitutional. The Centre has approached the apex court against the High Court order.