Decks have been cleared for the creation of the National Company Law Appellate Tribunal (NCLAT) by the ministry of corporate affairs (MCA) after it notified creation of the National Company Law Tribunal (NCLT) on Tuesday. Decisions made by NCLT, which would replace the Company Law Board, can be appealed before the NCLAT.
According to sources, NCLT and the NCLAT are expected to be up and running before the end of March. FE had reported in October that the process for the creation of both NCLT and NCLAT will be finalised within the next four months.
The creation of NCLT has been the top priority for corporate affairs minister Sachin Pilot because between CLB and BIFR, there are around 3,000 pending cases while the total numbers of companies under liquidation as on March 31, 2012 stood at 5,727 in various High Courts. Of these, 1,046 cases have been pending for over 20 years.
The MCA has now finalised the rules pertaining to the salaries, allowances and other terms and conditions of the services of the heads and other members of NCLAT. The rules will now get ready to be published in the official gazette post, after which they will come into effect.
As per the rules, the president of NCLT will get a monthly salary of R80,000, comparable to a secretary rank official whereas the chairperson of the appellate tribunal will draw a salary of R90,000 per month plus fixed allowances as admissible to a Cabinet Secretary-ranked official.
The members of NCLT will draw a salary in the pay scale of R67,000-79,000 whereas the members of NCLAT will have a monthly salary of R80,000 fixed.
NCLT is envisaged to replace the Company Law Board (CLB), the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). NCLT will be a one-stop establishment for approvals of mergers, winding up, corporate reorganisation, capital reduction, extension of financial year, and other matters related to companies that are currently executed through multiple agencies including High Courts, CLB, BIFR, AAIFR. This is likely to reduce the burden on High Courts.
?Once NCLT is in place, BIFR and AAIFR will be dissolved,? an official said.
As per the provisions of the new company law, NCLT will be the sole authority for all cases pending across High Courts, CLB, BIFR or any other tribunal. “Each bench will be required to draw up a calendar for the hearing of transferred cases. NCLT will also have the powers to re-hear matters which could not be decided in CLB, BIFR or any other tribunal/court,” said a senior corporate lawyer.
A person who has been a high court judge for a period of five years will be eligible to be the president of NCLT.
According to the latest data released by MCA in October, nearly 22% of the 13.45 lakh companies registered in India have either closed down or are in the process of closing down. While 2.57 lakh companies have been closed, another 30,127 are in process of being shut down.
