Govt mulls increasing NCLAT's strength to speed up corporate case disposal

The Centre is considering increasing the member strength of NCLAT to 20 from 12, and NCLT from 63 to 163

The government is considering a crucial proposal to increase the National Company Law Appellate Tribunal's (NCLAT) member strength to 20 from the current 12, according to a report by The Economic Times (ET). The aim of this is to help accelerate the resolution of appeals in cases ranging from insolvency to mergers.

The move also aligns with the need for an efficient dispute-resolution system amid the rapidly expanding economy. The member expansion from 12 to 20 will also include the chairman. The NCLAT consists of a chairperson, three judicial members, and two technical members. As the rules currently stand, the appellate tribunal can consist of no more than 11 members in total (not including the chairman). In October, after the resignation of judicial member Rakesh Kumar, the NCLAT had two judicial members and six technical ones, along with its Chairman Ashok Bhushan.

This proposal follows another plan to raise the number of members at the National Company Law Tribunal (NCLT) to 163 (including the president) from the sanctioned 63. This proposal also aims to enhance the speed of case clearances.

This news also comes after the Chief Justice of India D Y Chandrachud had claimed that both tribunals had got "rot," when looking over an appeal in the Finolex case. This situation arose when Rakesh Kumar and Alok Srivastava of the appellate tribunal delivered a judgement despite the Supreme Court having put out a status-quo order on the case. The Supreme Court responded with the issue of a show-cause notice to the two NCLAT members.

ALSO READ: What are NCLT and NCLAT? Why has the Supreme Court accused them of 'rot'?

The NCLT and NCLAT are quasi-judicial bodies that hear cases related to Indian companies. They exercise power granted under the new Companies Act, 2013 to resolve corporate civil disputes. While the NCLT was established to ensure speedy judgment of cases, parties dissatisfied with the tribunal's judgement can appeal to NCLAT and then to the Supreme Court for further legal recourse.

The final decision will be subject to Cabinet approval. According to the ET report, expansion of the NCLAT and NCLT will require cooperation with the judiciary. Moreover, selecting members will require thorough background checks to ensure the right people become NCLAT or NCLT judges.