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SC upholds validity of Company Law Tribunal

May,18,2015: The Supreme Court on Sunday upheld the constitutional validity of the National Company Law Tribunal (NCLT) and its appellate forum under the Companies Act of 2013.

Supreme Court
Supreme Court

A five-judge Constitution Bench, headed by Chief Justice H.L. Dattu, however, quashed Section 409(3)(a) and (c) and Section 411(3) of the Act providing for qualifications of technical members.

It held that for appointment of technical members to NCLT, directions contained in the 2010 judgment should be “scrupulously followed.”

The 2010 decision held that persons below the rank of a Secretary or Additional Secretary should not be appointed as a technical member to NCLT.

Justice A.K. Sikri, who delivered the verdict for the Bench, said the provision should not be “tinkered” with as it would dilute standards “so zealously sought to be secure[d].”

It also held as invalid Section 412 of the new Act, which contemplates selection by a committee consisting of two Judges and three secretaries.

The court directed the Centre to ensure that the bodies are adequately manned and start functioning at the earliest.

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