The Narendra Modi government has begun the process to constitute National Company Law Tribunals (NCLT), an overarching body for resolving corporate insolvencies. The Tribunal will replace the Company Law Board and the Board for Industrial and Financial Reconstruction.
The government has initiated the process-of constitution of the Tribunals in a “phased” manner. As per available information, nearly a dozen Tribunals will set up in various states including Ahmedabad, Allahabad, Madras, Mumbai, Delhi and Chandigarh.
The Ministry of Corporate Affairs has already advertised for posts of judicial and technical members to preside over the Tribunals. While eighteen posts have been advertised for judicial members, ten have been advertised for technical members. Applications for filling up two posts for technical members of the appellate authority-National Company Law Appellate Tribunal (NCLAT) have also been invited by the Ministry.
Efforts are on to make the Tribunals functioning before the end of this year. Of the 18 posts for judicial members (ten are unreserved, three reserved for SCs, one reserved for Scheduled Tribes and four reserved for OBCs). Of the total ten posts for technical members seven are unreserved, one reserved for SC and two reserved for OBCs. A serving or retired High Court Judge; a Judge who has remained a District Judge for at least five years or a lawyer who has ten years of practice is eligible for the post of judicial member whose tenure will be five years.
To qualify for the post of a technical member, the candidate has to have remained a member of the Indian Corporate Law for 15 years or have held the rank of Secretary or Additional Secretary to Government of India. A Cost accountant or a company secretary with 15 years of service. Sources told ET that a four member Committee will select the candidates.
The Committee will be headed by two Supreme Court Judges. Earlier this May, the Supreme Court had upheld the constitutional validity of the National Company Law Tribunal (NCLT) clearing the way for a significant reform in the framework for resolving corporate insolvency. It will be the main component of the proposed bankruptcy code as well.
The Apex Court’s go ahead for the Tribunal-a quasi-judicial body-could help significantly improve India’s ranking up in the World Bank’s ease of doing business as it will speed up rehabilitation and winding up of sick companies, according to the department of industrial policy and promotion (DIPP).
At present, for company-related disputes there are four different bodies-Company Law Board (CLB), Official Liquidator (OL), Board for Industrial & Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). NCLT will subsume all these bodies. Dispute over constitution of NCLT was hanging fire in the Supreme Court for over six years. The Madras Bar Council had challenged the provisions pertaining appointment process, eligibility and powers of NCLT members in Companies Act 2013.