The government is likely to get delayed in notifying the provisions concerning the National Company Law Tribunal (NCLT) and its appellate body (NCLAT).
Till date, around 60 per cent of the Companies Act, 2013 ” which has a total of 470 sections and seven schedules ” has been notified and enforced. Most of the remaining provisions of the Act are related to NCLT, a body which would replace the existing Company Law Board (CLB), the Board for Industrial and Financial Reconstruction (BIFR) and assume the high court™s power on clearing mergers and acquisition (M&As) and amalgamation.
On May 14, the Supreme Court, in a case filed by the Madras Bar Association, upheld the constitutional validity of NCLT and NCLAT under the Companies Act, 2013. However, the court deemed the selection process of the members of NCLT and NCLAT under the applicable provisions of the new Companies Act as unconstitutional. As a result, the government will need to align the Companies Act, 2013, with the decision of the Supreme Court.
The government requires parliamentary approval to make necessary amendments or it can do the same by exercising the powers vested in it under Section 470 of passing the Removal of Difficulty Orders as per the process laid down therein.
In view of the above procedure, the actual constitution of NCLT, NCLAT may get delayed.