SC clears National Company Law Tribunal
While giving the nod for the setting up NCLT, the SC, however, underlined the importance of maintaining its judicial flavour, and suggested changes in the structure of the tribunal for this.
NCLT would help expedite the approval process for M&As in the private sector, a function of high courts. The tribunal would also allow timely unlocking of the value of distressed corporate assets, as it would take over the process of liquidation of companies, now performed by official liquidators attached to high courts.
According to World Bank, liquidation of assets in India fetches the investor just 16 cents against a dollar invested, whereas the average return is 65-70 cents in Japan and 35-40 cents in most European countries. Further, it takes about 12 years to liquidate a company in India, via the lengthy and cumbersome process involving the BIFR, the appellate authority over it, and the high courts.
In contrast, most developed countries are able to complete the winding-up of companies 1-3 years.