Two months after inviting applications for the posts of judicial members in the National Company Law Tribunal, the government has put the process on hold pending a writ petition filed by the Madras Bar Association in the Supreme Court.
The corporate affairs ministry has told the Supreme Court that the process of recruiting judicial and technical members will be deferred till the time the matter is resolved. This would mean further delay in setting up of NCLT which found its way into the Companies Act, 2013 after almost a decade of legal tussle.
The setting up of NCLT was made possible by a Supreme Court order in May 2010 which affirmed Parliament?s power to create such a tribunal which would subsume the company law board (CLB), BIFR and winding up cases in high courts.
The apex court had ruled that the formation of the NCLT and National Company Law Appellate Tribunal (NCLAT) was constitutional but certain amendments were required in the composition before they were set up.
?There are examples of blatant circumvention of SC?s order and therefore the ministry has put the appointment procedure on hold till the issue is resolved,? a source said.
The Madras Bar Association had earlier challenged the move and filed a writ petition in the SC saying that the rules and the Act are in variance with the apex courts? order in 2010. The petition says that while the SC had said that persons below the rank of a secretary or an additional secretary should not be appointed as technical member of the NCLT, the Companies Act allows for it.
Section 409 of the Act provides that among others any person who has been on the rank of joint secretary or above for at least three years, is from the Indian Corporate Law Service (ICLS), or in the Indian Legal Service for at least fifteen years, can become technical member.
Further, as regard to the selection committee while the SC had said that it must consist of four members including a senior SC judge, law secretary, and MCA or finance ministry secretary with the Chief Justice of India having a casting vote, the Companies Act provides for five members including senior Supreme Court judge, secretaries of MCA, law and finance ministry and CJI.
NCLT was expected to be operational by April this year with the principal bench based in the national capital.
* This would mean further delay in setting up of NCLT which found its way into the Companies Act 2013 after almost a decade of legal tussle
* The setting up of NCLT was made possible by a Supreme Court order which affirmed Parliament?s power to create such a tribunal that would subsume the company law board and winding up cases in high courts
* The Madras Bar Association had earlier challenged the move and filed a writ petition in the SC saying that the rules and the Act are in variance with the apex courts? order in 2010