Background of nclt constitution and sc approval
Legislature proposed NCLT and NCLAT through Companies Second Amendment Act 2002. Madras Bar challenged it before Madras HC. Justice Jayasimha Babu delivered considered judgment. Senior Advocate Shri Aravind P Datar argued history of tribunalization. HC did not declare constitution illegal but pointed vital defects in appointment of presiding officers and stressed independence and efficiency. Matter went to Supreme Court. SC upheld HC order and declared NCLT NCLAT legal. No compromise on independence of dispute redressal mechanism. Before this, HC and CLB handled company matters. This background makes NCLT story unique.
Why nclt is not like drt or tax tribunals
Tribunals are not new. Tax tribunals and DRTs were discussed by Constitutional Courts while testing NCLT validity. But NCLT cannot be compared to them. Tax disputes rarely threaten company’s existence. Finding may be about payment, not survival. DRT deals with secured loans where banks have documents and security. Borrowers delay, but issues are narrower. NCLT under Companies Act 1956 handles winding up, mergers under 391-394, oppression under 397/398. These affect entire company, employees, creditors and shareholders. One wrong order can shut business. So stakes are far higher.
Problems with clb that nclt must fix
Company disputes are not civil disputes. Company Law is technical. Corporates feel they lack effective redressal. CLB handled 397/398 but with limitations. Proposition that "disputed facts cannot be decided by CLB" created dilemma. Corporates fear civil courts due to delay and lack of expertise. Difference between Company Court and CLB is glaring. HC orders were implemented. CLB orders were taken lightly. Contempt power was complicated. HC was speedy despite load. My opinion is based on observation. If NCLT repeats CLB problems, object of single specialist forum will be defeated.
What nclt must deliver to avoid turning clock back
NCLT must provide speedy and effective redressal. Express bar on CLB in proposed Bill shows legislature commitment. Committees have given reports. But merit of NCLT depends on functioning. It needs independent, knowledgeable presiding officers. It needs contempt power and implementation mechanism. It must decide facts, not avoid them. It must understand company law deeply. If not, corporates will lose faith and growth will suffer. Turning clock back to HC for everything will be difficult after bar is created.
Conclusion
National company law tribunal nclat functioning 2010 is interesting because stakes are highest. Unlike tax or DRT, NCLT decides fate of companies. SC and Madras HC have protected independence. Now MCA must ensure quality and speed. If NCLT works as intended, it will be landmark. If not, corporate sector will pay price.
