Apex court sets conditions for company law tribunal

A five-judge Constitution bench of Chief Justice K G Balakrishnan, Justices S H Kapadia, R V Raveendran, D K Jain, P Sathasivam and J M Panchal said the tenure of the tribunal members should be 5 to 7 years and with a scope for one more term.

The law enacted by the government was tailor-made as a post-retirement heaven for retired bureaucrats, said Justice Raveendran who read out the judgement for the bench.
The tribunal should be headed by a person who has worked as district judge for 5 years or practiced as a lawyer for 10 years and qualifies to be a High Court Judge.  The other members of the tribunal would be technical and financial experts so that such cases would be disposed of with clarity and speed.

All corporate and company disputes will be transferred to the NCLT which would reduce the burden from the high courts.

NCLT was proposed in the Companies (Second Amendment) Act, 2002. It was envisaged to take over the functions hitherto performed by the Board for Industrial and Financial Reconstruction, the Appellate Authority for Industrial and Financial Reconstruction and the Company Law Board, as well as the high courts, in matters relating to company disputes, winding up of companies, mergers, demergers, contracts etc.

Its formation will introduce revolutionary changes in the dispute resolution process. As soon as the amendment was passed, the idea was caught in litigation. The Madras High Court, on a petition moved by R Gandhi had set aside the amendment on several grounds. The centre had moved the Supreme Court challenging the High Court decision.