Govt urges SC to set up separate bench to test Companies law

Government today urged the Supreme Court to constitute a larger bench for deciding on the constitutional validity of certain provisions of the Companies Act, dealing with setting up of National Company Law Tribunal (NCLT) and its appellate panel.
Attorney General Mukul Rohatgi mentioned the matter before a bench headed by Chief Justice H L Dattu and said, "by virtue of the pendency of the lis (dispute), the functioning of the Company Law Board (CLB) and Board for Industrial and Financial Reconstruction (BIFR) is stuck up".
"Give me a day's time," the Chief Justice said.
Earlier on February 18, a three-judge bench headed by Justice T S Thakur had raised questions on some provisions of the 2013 Companies Act and sent the batch of pleas challenging the constitutional validity to a larger bench.

It had said these sections gave power to the government to suspend and sack members and Chairpersons of NCLT and National Company Law Appellate Tribunal (NCLAT).
"You (government) are taking away the power from the High Courts and giving them to the tribunals whose members or chairman can be suspended by you. The fact that they can be suspended raises questions as to how they will be able to function independently while dealing with matters involving the Centre.

"Moreover, suspension is also a stigma. Don't you (Attorney General) think that this should also go to the constitution bench for an authoritative pronouncement," the bench had said.

The UPA government, as per the Act, had proposed setting up the NCLT and NCLAT as specialised quasi-judicial bodies.
The move was aimed at helping reduce pendency of the winding-up cases, shortening the winding-up process and avoiding multiplicity of litigation before high courts, Company Law Board and Board for Industrial and Financial Reconstruction.