Upholding the validity of amendments made to the Companies Act in 2002, the Supreme Court on Tuesday paved the way for the establishment of the National Company Law Tribunal (NCLT) to deal with matters related to companies.
Once the tribunal is established, all company-related matters pending with the Company Law Board, Board for Industrial and Financial Reconstruction (BIFR) and different high courts across the country will be transferred to the NCLT.
Ruling on a petition filed by the government against an order of the Madras High Court, a five-judge Constitution Bench headed by Chief Justice K. G. Balakrishnan today upheld the validity of the 2002 amendment with certain conditions.
The Bench, which included Justices R. V. Raveendran, D. K. Jain, P. Sathasivam and J. M. Panchal, delivered the judgement on an appeal filed by the Centre against the Madras High Court verdict.
Earlier, the amendment to the Companies Act 1956 to set up the NCLT was rendered unconstitutional by the Madras High Court on several counts.
The NCLT, which was to take over the functions hitherto performed by the Board for Industrial and Financial Reconstruction, the Appellate Authority for Industrial and Financial Reconstruction and the Company Law Board, was proposed in the Companies (Second Amendment) Act, 2002.
As per the proposal, all company-related matters pending in different high courts were to be transferred to the NCLT.
The Central Government had moved the Supreme Court against the Madras High Court ruling six years ago. The apex court had completed hearings in the case more than a year ago.
Keywords: Company affairs