Madras hc and sc judgment on nclt
I am very happy with Supreme Court judgment upholding Madras High Court view on National Company Law Tribunal. Madras HC in writ by Madras Bar Association stayed certain provisions of Companies Second Amendment Act 2002. Argument was that executive was taking away traditional jurisdiction of High Court. HC could have stayed constitution itself, but it upheld power to constitute tribunal and focused on independence, impartiality and quality of presiding officers. SC affirmed this with elaborate observations. Logically there is no much difference between Tribunal and Court. Both must follow basic structure principles. Special enactment and procedure does not mean compromise on quality. This judgment is laudable because without it, corporate world would face irreparable damage.
Why company law board was not effective After CLB was constituted, experience showed remedy was not effective. Many companies and shareholders felt so. High Court as Company Court was doing better despite work pressure because it laid down wonderful principles of interpretation. CLB had same powers in wording but lacked effectiveness. Reasons are many: implementation of orders, lack of contempt power, procedural delays. Before moving to NCLT, Ministry should have done complete assessment of why CLB failed. If same provisions are repeated with only bar on civil court jurisdiction, how will NCLT be different? This question is important for 2010 corporate reforms.
Key doubts on companies bill and icls
Ministry of Corporate Affairs wants review on ICLS members not being allowed as presiding officers. They say ICLS members are talented and suited for company matters. With respect, issue is not intelligence. Doubts remain: Why introduce Companies Bill knowing SC proceeding is pending? Was there assessment of CLB failure? Is MCA convinced CLB achieved object? How will NCLT implement orders when CLB orders were violated directly? Was there discussion with Law Ministry on contempt power for NCLT under Contempt of Courts Act? Will one Appellate Tribunal only in Delhi cause hardship to companies across India? Did MCA note problem of fictitious forms filed with ROC and procedure to remove them? These are practical issues.
Implementation and contempt challenge
Constitution of NCLT is important, but functioning is bigger challenge. Orders of CLB were often violated because enforcement was weak. If NCLT also lacks effective contempt and execution mechanism, it will be same story. Basic structure demands independence and impartiality, but also authority to enforce. Without contempt power and proper infrastructure, NCLT will be toothless. Ministry must coordinate with Law Ministry on this. Otherwise corporates will lose faith again.
Conclusion
Nclt supreme court judgment 2010 independence impartiality is cornerstone. SC and Madras HC protected basic structure. Now ball is in MCA court. Bill must be redrafted with SC observations. Assessment of CLB, contempt power, appellate structure, and ICLS issue must be addressed. Corporate world needs effective tribunal, not just new name. 2010 is critical year to get this right.
