New Delhi: In its bid to institute a strong company law tribunal, the ministry of corporate affairs (MCA) has begun the process to appoint three more members to the Company Law Board to strengthen the quasi-judicial body.
CLB has been running short of staff for around five years and has at least 2,500 pending cases related to various aspects of company law.
Once the Companies Bill, 2011, to be passed by Parliament, is enacted, MCA will constitute a National Company Law Tribunal (NCLT) that will not only replace CLB, but also handle cases currently with the high courts, the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction. It will have 62 members and 22 benches.
Issues related to mergers and acquisitions, reduction in capital, and winding up of companies are currently handled by high courts and cases of revival and rehabilitation by BIFR. All these will be transferred to NCLT.
“The Company Law Board has been running with only five members whereas the requirement is that of at least nine posts. The ministry, therefore, advertised for three posts of members, the interviews for which were held on Saturday,” said an official at MCA, who did not want to be identified.
MCA wants CLB to dispose of a maximum number of cases so it doesn’t transfer too many cases to NCLT when it starts functioning, he added. “NCLT will have many more cases to handle as it will be a much wider body.”
M Veerappa Moily, minister for corporate affairs. Pradeep Gaur/Mint
He also said newly appointed members of CLB can continue to be a part of NCLT.
With its principal bench in Delhi, CLB has four regional benches in Delhi, Mumbai, Kolkata and Chennai.
Multiplicity of authorities is causing inordinate delays in matters relating to corporate disputes, said Pavan Kumar Vijay, managing director, Corporate Professionals Group, which advises professionals and companies on company law issues. “NCLT will act like a single window to deal with all kinds of corporate matters—from mergers to dispute resolution,” he said.
The Indian Companies Act needs to match the expectations of foreign investors and for that a strong and single grievance redressal body should be there, added Vijay.
CLB is handling a case related to the managing and funding of Unitech Wireless Ltd, a joint venture between Unitech Ltd and Norway’s Telenor ASA that offers telecom services under the Uninor brand.
While Telenor holds a 67.25% stake in Unitech Wireless, Unitech holds 32.75%.
Appeals from NCLT will go to the National Company Law Appellate Tribunal and then to the Supreme Court, bypassing the high courts. Currently, appeals from CLB go to high courts.
“While the concept of NCLT is for speedy redressal of disputes, which will help corporates, the government should act fast in constituting NCLT,” said O.P. Dua, a senior Supreme Court advocate. “Otherwise, the purpose will be defeated.”