Wednesday, May 12, 2010

SC okays national company law tribunal

New Delhi: The Supreme Court today cleared the decks for setting up of the national company law tribunal (NCLT) to deal with disputes related to companies by upholding the validity of the 2002 amendments to the Companies Act with certain conditions.

Once the Tribunal is established, all company-related matters pending with the company law board, the board for industrial and financial reconstruction (BIFR) and different high courts will be transferred to the various benches of the proposed NCLT.
While upholding the validity the amendments to the Companies Act of 1956, a fivemember Constitutional Bench headed by chief justice KG Balakrishnan said the Tribunal should be manned by judicial persons only.
“This Tribunal is going to take over the functions of the high courts... so the NCLT should have persons equal in competence as high court judges,” the bench said while fixing the selection criteria for the proposed Tribunal. Curtailing the role of the bureaucracy, the bench further said the NCLT should not become a “post-retirement heaven” for them.
The bench, which included justices RV Raveendran, DK Jain, P Sathasivam and JM Panchal, set aside the judgement of the Madras High Court which had declared the 2002 amendments in regard to NCLT as unconstitutional.
Following this, the Centre had challenged HC order in the Supreme Court six years ago. The apex court had completed hearings in the case more than a year ago.
The NCLT, which would take over the functions hitherto performed by the BIFR, the Appellate Authority for Industrial and Financial Reconstruction and the Company Law Board, was proposed in the Companies (second amendment) Act of 2002.
As per the proposal, all company-related matters pending in different high courts are to be transferred to the NCLT. Referring to the establishment of the National Tax Tribunal (NTT) to deal exclusively with the tax disputes, the apex court said it is a separate issue and should be heard separately.
“The validity of the National Tax Tribunal required to be heard separately and it should be delinked from this matter,” the court said and directed to list the matter for hearing.The government's proposal to set up an NTT to expedite adjudication of tax disputes is also locked in legal battle.

No comments:

Post a Comment