Law tribunal hangs fire

Chennai High Court has objected to hiring non-judicial persons for the tribunal

After the Competition Commission of India, it is the turn of the National Company Law Tribunal (NCLT) to be a victim of the tussle between the government and the judiciary.

The Chennai High Court had, in an order this month, objected to non-judicial persons being hired for a law body. The order has jeopardised the chances of the tribunal becoming functional in the near future.

The government, however, has planned to file a special leave petition with the Supreme Court against the order.

"We are in the process of getting advice from legal experts and will be filing the petition after getting the requisite permission," a department of company affairs (DCA) official told Business Standard.

According to the Sick Industrial Companies Repeal Act, 2003, which was passed by Parliament, the NCLT will be headed by a retired high court judge.

However, the tribunal will have both judicial and non-judicial members. In fact, even professionals like company secretaries can argue cases at the tribunal.

The Chennai High Court, in its 152-page order, has objected to aspects, including the tenure of officials. While the Sica Repeal Act specified a three-year tenure for the members, the court said the tenure should be more than that.

The court has also asked the government to appoint the administration officials after consulting the chairman of the tribunal, while the act does not make it mandatory.

The proposed NCLT will take over the functions of the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction.

The tribunal is being set up to expedite the disposal of over 1,000 cases, involving around Rs 2,100 crore, pending with BIFR.

Another entity that has met a similar fate is the Competition Commission of India. This panel has been entangled in a legal deadlock over the case of appointments.

The case of the competition panel over the appointment of a bureaucrat instead of a judicial person as the chairman is still pending at the Supreme Court.

Legal war

• The government has planned to file a petition with the Supreme Court challenging the order.
• According to the Sick Industrial Companies Repeal Act, 2003, the NCLT will be headed by a retired high court judge.
• The court order has said the government should appoint officials only after consulting the chairman of the tribunal.