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The Corporate Affairs Ministry has termed the Supreme Court verdict disallowing civil servants belonging to the Indian Corporate Law Service (ICLS) from being members of the proposed National Company Law Tribunal (NCLT) as “disappointing.” The Ministry indicated that the matter may go back to a Constitution Bench of the apex court for a review.

A Constitution Bench of the apex court, in its judgement on the case regarding the constitution of NCLT, had expressed its reservations regarding bureaucrats manning specialized quasi-judicial bodies from the point of view of their functional independence.

The court also said only officers who are holding the ranks of Secretaries or Additional Secretaries can be considered for appointment as technical members of NCLT.

Terming the setting up of NCLT as his Ministry’s biggest challenge, the Corporate Affairs Minister, Mr. Salman Khurshid, told Business Line, “It is disappointing if ICLS officers are not allowed to be technical members.”

“ICLS officers are the most experienced regarding company laws and its administration. We will seek further clarifications on their exclusion, whether it was conscious, or if it just happened to come in by chance,” Mr. Khurshid said.

He said his Ministry has asked the Law Ministry to look into the matter.

Stating that the matter can go back to the Constitution Bench, Mr. Khurshid, himself a lawyer, said, “There can be a judicial review.” However, he said the difficulty is to get the matter to be heard once again by a Constitution Bench.

“Four of those (who decided the matter) are still sitting judges and only the Chief Justice (Mr. K.G. Balakrishnan) is retired. We will need at least those four to be on a Bench that can take up this matter again. It is a tricky thing. That’s why we have asked the Law Minister’s opinion,” the Minister said.

Asked whether the matter will go to the GoM, the Minister replied in the negative. The Corporate Affairs Ministry sources said they prefer experienced civil servants over professionals like lawyers and chartered accountants to be NCLT members.

Earlier this month, the apex court had cleared the decks for setting up the NCLT by upholding the validity amendments made in the Companies (Second Amendment) Act, 2002.

NCLT is to take over the functions of the Board for Industrial and Financial Reconstruction, the Appellate Authority for Industrial and Financial Reconstruction and the Company Law Board, besides that of the High Courts in cases relating to winding up of companies.



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July 2024