Ozg Sarfaesi / DRT Lawyer
Ahmedabad | Pune |
Kolkata | Bangalore | Delhi | Mumbai
VoIP Text / Phone
# 09811415837-61-72-84-92-94
Website: http://sarfaesi.ozg.in
Email: debt@liaisoning.com
Everybody knows that the
legislature has proposed to constitute a special tribunal to deal with the
issues under the Companies Act, 1956 through Companies (Second Amendment) Act,
2002. The constitution of National Company Law Tribunal and Appellate Tribunal
is challenged by the Madras Bar before the High Court of Madras. Justice
Jayasimha Babu of Madras High Court has passed a considered and laudable
judgment while disposing of the Writ Petition filed by the Madras Bar
challenging Companies (Second Amendment) Act, 2002. Senior Advocate Sri Aravind
P.Datar has appeared for the Petitioner before Madras High Court in the Writ
Petition referred to and placed all the material and the history of
constituting Special Tribunals in India. Though, there was lot of discussion on
tribunalization as the High Court has referred, the validity of the
constitution of National Company Law Tribunal has not been declared illegal by
the Madras High Court as such, but, has pointed-out vital defects in appointing
of presiding officers to the Tribunal etc. Every effort has been made by the
Madras High Court to preserve the independence and efficiency of the Tribunal
laudably. The order passed by the Madras High Court challenging the Companies
(Second Amendment) Act, 2002 and especially the constitution of National
Company Law Tribunal and the Appellate Tribunal, went to Supreme Court and the
Supreme Court has upheld the order of the Madras High Court and declared that
the constitution of NCLT and NCLAT is legal. The order of the Apex Court is on
expected lines and there should not be any compromise with the independence and
efficiently of the Dispute Redressel Mechanism. Before the proposed amendment
to the Companies Act, 1956 proposing to constitute National Company Law
Tribunal, the High Court and the Company Law Board used to entertain Company
Petitions under the Companies Act, 1956.
Constituting Tribunals with the
intention of providing a specialist mechanism aiming at speedier justice is not
a new phenomenon in India and it has started even before independence as
pointed out in the Judgment of Madras High Court while disposing of the Writ
Petition filed by the Madras Bar.
All issues connected to
constitution of Tribunals were looked into and the constitution and functioning
of Tax Tribunals and Debt Recovery Tribunals etc. have also been discussed at
length by the Constitutional Courts while looking into the issue of validity of
constitution of National Company Law Tribunal and Appellate Tribunal.
A finding on a Tax dispute may not, in many cases, threaten the functioning of
the Company or the assesses. When it comes to the adjudication by the Debt
Recovery Tribunals, Banks are supposed to be very careful while granting loans
and they will get all the required documents and security from the borrower.
Usually, the borrower tries to prolong a dispute before the Debt Recovery
Tribunal while it is also true that there can be a genuine litigation before
the Debt Recovery Tribunals at times.
When it comes to the functioning
of the NCLT and NCLAT under the Companies Act, 1956, the proposed Tribunal
discharges very complicated responsibilities. Despite the Complications, the
High Court while exercising Company Jurisdiction could deal with the Winding-up
Petitions and the Petitions for grant of sanction under section 391 and 394 of
the Companies Act etc. well. The Company Law Board too discharges very
complicated responsibilities under the Companies Act, 1956 and especially the
Petitions under section 397/398 of the Companies Act, 1956.
A Company dispute can not be seen
at par with a civil dispute and Company Law is very complicated. Many corporates
feel that they lack an effective redressel mechanism to get their corporate
rights protected under the Companies Act, 1956. When we look at the functioning
of the Company Law Board and especially the proceedings under section 397/398
of the Companies Act, 1956, we can find lot of interesting things. There are
propositions like “disputed facts can not be decided by the Company Law Board”
and the Company Law Board has certain limitations on its power under section
397/398 of the Act and it makes a corporate or a shareholders to be in dilemma
as to where they should go to get their corporate rights protected. The
corporates really scare to approach a Civil Court for getting their corporate
rights protected as it will take lot of time and also as the Civil Court lacks
the needed expertise in understanding the complications and the subject of
Company Law. These are all practical problems and the proposed NCLT and NCLAT
should address all these issues, as otherwise, the object constituting a single
specialistic forum under the Companies Act, 1956 will get defeated and turning
the clock back will definitely be a difficult thing to think of.
With a logical analysis, we can
find the glaring difference between the functioning of Company Court and the
Company Law Board now. While the litigants or the corporates effectively
implement the orders of the Company Court, the Company Law Board is taken for
granted and the power of contempt of the orders of the Board has been a
complicated issue to deal with. Again, High Court, while exercising the powers
under the Companies Act, 1956, used to be very effective and speedy given the
complications and I am not exaggerating the situation and my opinion is based
on my personal observation and facts which can not be denied as I feel.
But, it can be seen from the
express bar on the jurisdiction of the Company Law Board in the proposed
Companies Bill, that the legislature is committed to establish a single and
effective forum to deal with all issues under the Companies Act, 1956 and we
are also aware of the background of constituting a special tribunal called
National Company Law Tribunal and everyone is aware of the report of the
Committees.
Nobody can deny the merits of the
constitution of National Company Law Tribunal provided that it functions well
as intended by the legislature.
Ozg Sarfaesi / DRT Lawyer
Ahmedabad | Pune |
Kolkata | Bangalore | Delhi | Mumbai
VoIP Text / Phone
# 09811415837-61-72-84-92-94
Website: http://sarfaesi.ozg.in
Email: debt@liaisoning.com
