NCLT: Still Awaiting a Verdict

Although the establishment of the National Company Law Tribunal (NCLT) was envisaged through an amendment to the Companies Act nearly 7 years ago, it is yet to see the light of day. The NCLT is expected to take over the role of the High Court and the Company Law Board pertaining to various matters under the Companies Act, such as sanctioning of schemes of arrangement, ordering winding up of companies, dealing with petitions for oppression and mismanagement and the like. It is also expected to take over the functions of the Board of Industrial and Financial Reconstruction (BIFR) in relation to sick industrial companies.

The establishment of the NCLT has been the subject-matter of litigation and recent reports suggest that there has been an enormous delay in the resolution of disputes relating to its establishment. A column by M.J. Antony in today’s Business Standard details the issue:

Some important cases heard by the Constitution benches [of the Supreme Court of India] months ago are still awaiting judgement, stalling reforms in the law. The most prominent among them is the appeal of the Central government against the Madras High Court judgment, casting doubts on the legislative competence of establishing the proposed National Company Law Tribunal. The tribunal was proposed to take over the functions that are now being performed by the Company Law Board (CLB), Board for Industrial & Financial Reconstruction (BIFR), Appellate Authority for Industrial and Financial Reconstruction (AAIFR) as well as by the high courts in winding-up companies.

Recently there has been intense debate on the trend of ‘tribunalisation’. The question is whether the power of the judiciary can be transferred wholly to the tribunals, often packed with retired bureaucrats. The controversy delayed the establishment of the Competition Commission of India for years. The Company Law Tribunal is facing a similar impediment. The case against it started in the Madras High Court in 2003 and wound its way up to the Supreme Court where the hearing was concluded in January this year.

The Constitution bench felt that the issues involved are seminal as they are likely to have a serious impact on the very structure and independence of the judicial system. Having said so and heard all parties, the judgment is yet to be written. This delay in delivering judgments is something which the Supreme Court itself has criticised in the case of high courts.

As the column notes, this is the second instance in recent years (after the episode involving the Competition Commission) where establishment of an authority to deal with corporate and commercial matters has been significantly delayed due to litigation that has been appealed all the way to the Supreme Court.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.


  • What happened to this judgment ? Is the verdict pending for pronouncement of judgment for over 8 months ? That does not seem possible. Maybe, your blog has missed the judgment.

  • It appears that the Supreme Court is yet to pronounce its judgment. A search on the Supreme Court's website indicates that the last order of the court is on Jan. 28, 2009 reserving judgment.

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