INTRODUCTION
Company Law Board in India was an entity that was given the power of adjudication of company law case. After the amendment in Companies Act in year 2013, this power was given to National Company Law Tribunal.
This power came by the notification from Ministry of Corporate Affairs. The basis of this notification was section 408 of the Companies Act, 2013. Another notification came wherein there was transfer of matters from CLB to NCLT.
NEED FOR NCLT
In the year 1999, a committee was set up in order to evaluate the winding procedures of the company. Also, to make changes so that the procedures can come in line with the changes in the corporate law.
Also, it was set up so that there can be better insolvency proceedings. This committee was under the chairmanship of Justice Balakrishna Eradi. It was therefore known as Eradi Committee.
RECOMMENDATIONS OF ERADI COMMITTEE
(a) The tribunal must be vested with the powers currently held by CLB under Companies Act, 1956.
(b) To reconsider the authorities given to Board for Industrial and Financial Reconstruction under SICA in order to consider rehabilitation and revival of companies.
(c) Also, the changes must be made in power given to High Courts in winding up procedures.
IMPACT OF RECOMMENDATION
After the recommendations made, there were amendments made to Companies Act in 2002 wherein Part1B and 1C were inserted. Part 1B was related to NCLT and Part 1C was related to NCLAT. All the powers under the Companies Act of High Court, BIFR and CLB were transferred to NCLT.
After the said amendment, there as a writ petition filed by Madras Bar Association wherein the constitutionality of NCLT and NCLAT were questioned. The High Court rejected the arguments and upheld the constitutionality.
Also, an appeal was made to the Supreme Court wherein the court reinstated the decision of Madras Bar Association and the constitutionality of NCLT and NCLAT was upheld.
But the government was unable to set up NCLT between the years 2010 to 2013 and waited for the amendment.
SITUATION AFTER THE AMENDMENT
Initially, the provision related to investigation of account, freezing of assets, conversion of public to private company and class action suits was governed by NCLT. Now, instead of High Court the appeal would lie to NCLAT.
The provisions related to amalgamation and compromise was initially restored with High Courts only.
PRESENT SCENARIO
Now, the provisions relating to reduction of share capital, winding up procedures, provisions relating to merger/demerger has also been transferred from the High Court to NCLT as per the notification from Ministry of Corporate Affairs.
Also, now there are eleven benches of NCLT. Two of them are established in New Delhi, another at Ahmedabad, Bangalore, Allahabad, Chandigarh, Guwahati, Chennai, Kolkata, Mumbai and Hyderabad.
MAJOR CHANGES
(a) Now, the jurisdiction of High Court, Company Law Board, Board of Industrial and Financial Reconstruction and its Appellate Authority is with NCLT.
(b) Appointment of Amicus Curiae in special cases.
(c) CLB only had five benches but NCLT would have eleven benches allaround India.
(d) The powers have been given to other professional also to argue and represent their clients before NCLT. Before only company secretaries, chartered accountant and cost accountant were allowed to represent in CLB.
(e) The appeals from NCLT would go to NCLAT and from there to Supreme Court and there would be no role of High Courts.
SEE ALSO: http://lawyersgyan.com/blog/securities-and-exchange-board-of-india-its-role-in-regulating-primary-market/
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