The ministry of corporate affairs has begun discussions with the law ministry to incorporate the suggestions made by the Supreme Court when it cleared the National Companies Law Tribunal (NCLT) in the Companies Bill that is with a Parliamentary Standing Committee.
“The idea is to consult the law ministry from the outset so that the changes could be put in place quickly and the bill passed at the earliest,” said an official in the ministry of corporate affairs.
The Supreme Court recently upheld the validity of the NCLT but suggested key changes in its composition and selection of members — which it says should be primarily from the judiciary — so as to maintain the independence of the tribunal. Incorporating these suggestions would requires substantial changes to the provisions on the constitution of the NCLT, as envisaged in the original bill.
Therefore, the ministry of corporate affairs wants the law ministry’s opinion to ensure that the suggestions made by the Supreme Court is well incorporated and brought in form of provisions in the new law. Law ministry’s input will also serve as an informal vetting even while drafting the new provisions into the existing Bill.
Once the recommendations of the Parliamentary Standing Committee are available, ministry of corporate affairs will consider necessary changes in the bill. The ministry could then incorporate the changes suggested in the constitution of the NCLT based upon the Supreme Court’s ruling, but they will have to be vetted by the law ministry. The law ministry took almost a year to vet the new companies bill.
The Bill, which was first introduced in 2008 during the UPA’s tenure could have been introduced much before had there not been the delay, the official said, requesting anonymity. The ministry of corporate affairs wants to avoid such a delay this time.
The Companies Bill, which was introduced in 2008 had to be subsequently introduced in 2009 because parliament was dissolved before the bill could be passed. NCLT was first mooted in the Companies Act, 2002 to take over the functions of Board for Industrial and Financial Reconstruction, the appellate authority for Industrial and Financial Reconstruction and the Company Law Board in winding up of companies.
It is expected to bring about key changes in the resolving corporate disputes. The constitution of the NCLT was thereafter challenged in the Madras High Court.