The National Company Law Tribunal (NCLT) was expected to take over the role of the High Court (in dealing with company law matters such as sanctioning of schemes of arrangement, ordering winding up of companies, dealing with petitions for oppression and mismanagement and the like), the Company Law Board (CLB) and the Board of Industrial and Financial Reconstruction (BIFR) for speedy disposal of aforesaid matters and avoid multiplicity of litigation before various fora.
However, the establishment of the NCLT has been involved in controversy right from the start. Although the Companies Act, 1956 (Act) was amended as early as 2002 to pave the way for the NCLT, the body is yet to be established (and the relevant provisions of the Amendment Act of 2002 are yet to be notified) as several aspects of its constitution and functioning have been the subject matter of litigation.
Decision of Supreme Court:-In a recent development, a Constitution Bench of the Supreme Court has upheld the creation of NCLT as constitutional. However, the actual establishment and functioning of NCLT shall be only possible after the Union Government bring the amendments to Act as directed by Supreme Court.
Conclusion:-This aforesaid decision of the Supreme Court would pave the way for setting up of the NCLT and lead to effective and timely disposal of company law matters.
Source: Supreme Court (Union of India Vs. R. Gandhi/ Madras Bar Association) (Civil Appeal No. 3067 of 2004 with Civil Appeal No. 3717 of 2005) vide judgement dated May 11, 2010
