The government is likely to notify provisions concerning National Company Law Tribunal (NCLT) and its appellate body (NCLAT) in phases.
The timeline for such notifications, however, has not yet been decided.
Till date, around 60% of the Companies Act, 2013 – which has total 470 sections and seven schedules – have been notified and enforced. Most of the remaining provisions for the Act are related to NCLT.
On 14 May, Supreme Court, in a case filed by Madras Bar Association, upheld constitutional validity of NCLT and NCLAT under the Companies Act, 2013.
The court, however, deemed the selection process of members of NCLT and NCLAT under the applicable provisions of the new Companies Act as unconstitutional. Further, it held the constitution of the selection committee - which is empowered to select members of NCLT and NCLAT - as constitutionally invalid.
As a result, the government has been left with no option but to align the Companies Act, 2013 with the decision of the Supreme Court.
“This can be through an amendment in the Act which requires Parliament approval or 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, the actual constitution of NCLT / NCLAT may take a longer time, “said Mehul Modi, Senior Director, Deloitte India.
According to a senior government official, who did not wish to be named, the Centre is planning to use the powers of section 470, in order to implement NCLT provisions in phases.
At present, for merger, de-merger, amalgamations etc. the applicable provisions of Companies Act 1956 and Companies Court Rules are in force. Companies have to approach the jurisdictional High Court for sanctioning the scheme of merger / amalgamation etc. However, post NCLT being brought in force, the powers of High Court will be exercised by NCLT.
“We expect material changes in procedural aspects aligned with the requirements of Companies Act 2013 which cannot be ascertained presently,”
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