To set up a Company Law Tribunal without further delay, the Ministry of Corporate Affairs has begun consultations to make the necessary amendments in the Companies Act. The move comes in the backdrop of the Supreme Court judgment recommending changes in the existing Act to accommodate the tribunal within the constitutional framework.
The tribunal is planned as an integrated body for speedy disposal of all disputes and complaints that are at present handled by the Company Law Board, the Board for Industrial and Financial Reconstruction and company courts attached to high courts across the country.
“The judgment has just come and the law ministry has to examine the matter. The whole process of amending the law will take at least six to eight months,” said Corporate Affairs Minister Salman Khurshid.
The matter had been pending in the Supreme Court for over six years after the Centre appealed against a Madras High Court verdict that set aside the constitution of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), recommending changes in certain clauses of the Companies (Second Amendment) Act 2002.
“This is an important piece of legislation which seeks to institutionalise a new framework for rehabilitation and working of companies. It has implications for the governance of the corporate sector as well as investment decisions taken by foreign entities on a long-term basis”, said a law expert from a New Delhi-based company.
He said the government might not attempt an amendment to the existing Act as a comprehensive revision of the Act was already on the cards. “It may try to incorporate the changes prescribed by the SC in the Companies Bill, 2009, that is being examined by the parliamentary committee on finance.”
The five-bench Constitutional bench of the SC had on May 11 ruled that the establishment of NCLT and NCLAT was constitutional, provided some amendments were made to certain clauses in the Companies Act.
