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Policy Initiatives: Company Law Board may get powers to revive sick units |
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With the fate of National Company Law Tribunal (NCLT) and its appellate body yet to be decided, the Ministry for Corporate Affairs is likely to strengthen the powers of Company Law Board (CLB). The new company law may suggest that the jurisdiction of the Board for Industrial and Financial Reconstruction be transferred to the CLB.
Speaking to a leading financial daily last week, a senior Corporate Affairs Ministry official said, “As NCLT and its appellate body cannot be constituted till the Supreme Court verdict comes, there is a thinking that powers of CLB could be strengthened to enable it to perform the task of rehabilitating companies, a job which is currently done by BIFR.”
Through the Companies (Second Amendment) Act, 2002, the Ministry had come out with a framework for constituting the NCLT and the appellate tribunal, which proposed to take over the functions being performed by the CLB, BIFR and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) as well as by the High Courts in winding up companies.
However, NCLT and its appellate body have not been set up till date due to a legal challenge. The tribunal can be constituted only after the Supreme Court verdict. In the meantime, the current framework comprising the CLB and BIFR continues to function as before, he said.
Transferring jurisdiction: Regarding the rationale behind giving the BIFR jurisdiction to CLB, he said, though the Act governing BIFR — SICA — has been repealed long ago it could not be notified because the alternative structure, NCLT, was not in place. Besides, industrial sickness is a major cause for concern and needs to be addressed at the earliest, he said.
The Ministry is considering appointing more members for CLB. At present, CLB has five members including the Chairman.
The total strength for CLB under the Companies Act is for nine members, with benches in Delhi, Chennai, Mumbai and Kolkata.
NCLT bench: The NCLT is envisaged to have its principal bench in Delhi and other benches at 15 locations throughout the country, with a total of 62 members, along with the requisite supporting organisation staff. The National Company Law Appellate Tribunal (NCLAT), which will be an appellate body, will have its bench in Delhi.
NCLT was proposed with a view to expediting revival and rehabilitation of sick companies and protection of workers’ interests and where necessary, winding up of companies.
Some of the salient features of the Companies (Second Amendment) Act include: imposition of cess for rehabilitation and revival fund, obligatory for the financial institutions and banks to inform NCLT when they notice sickness, and timely disposal of cases.
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