New National Company Law Tribunal Will Minimise Delays

Posted: Monday, Mar 24, 2003 at 0000 hrs IST
Updated: Monday, Mar 24, 2003 at 0000 hrs IST

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: The Companies Second Amendment Act 2002 has brought it a major change in the manner which certain very important functions are administered. This is aimed at and it is certainly hoped so that it will reduce delays and tedious procedures for carrying out many acts under the Companies Act, 1956. These group of amendments relate to the setting up of the National Company Law Tribunal (“Tribunal”) which will also see the simultaneous dissolution of the Company Law Board. (“CLB). Essentially, the Tribunal will, to start with, replace the CLB in all respects. For all practical purposes, therefore, the functions that were hitherto carried out by the CLB will be now carried out by the Tribunal except for certain matters. However, very importantly, matters that till now required the sanction of the court or were otherwise carried out by the Court will also be carried out by the Tribunal. Consider some of the very important powers so carried out by the Court - power to sanction reduction of capital, power to approve schemes of arrangements and compromises including mergers and demergers and above all, winding up of companies. Also, the Tribunal will carry out the totally new function of restructuring of and other functions relating to sick companies. In essence, it will also thereby be a successor body to BIFR.

Let us consider the scheme of these provisions. However, before that, the reader is once again reminded that though the Companies Second Amendment Act 2002 has been duly enacted, it has not been brought into effect. It is only when a notification is issued under section 1(2) of this Act the amendment provisions will be brought into effect. It appears that the amendments made are so significant and will require so much backing up through amendments in the rules and Guidelines, that there is so much delay in bringing them into effect. To start with the CLB will be dissolved. All matters pending therein will be passed on to the Tribunal. The National Company Law Tribunal will be set up. It will consist of a President and 62 other members. The members shall be judicial members or technical members. Considering also the fact that now the Tribunal will be concerned with 2 special matters, i.e., winding up and restructuring of sick companies, it is required that to qualify to be a technical member, a person may have been a Presiding Officer of...

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