Fri. Sep 18th, 2020

Sections 409(3)(a), 409(3)(c), 411(3) and 412(2) of the Companies Act, 2013 invalidated

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Supreme
Court: Considering various provisions regarding the
National Company Law Tribunal (NCLT) and National Company Law
Appellate Tribunal (NCLAT) formed under the Companies
Act, 2013, the Constitution Bench comprising of
H.L. Dattu, CJ, Dr. A.K. Sikri, Arun Mishra, R.F. Nariman and Amitava Roy, JJ
held the provisions on qualifications for appointment of a technical member and
also the provisions
relating to the constitution of the Selection Committee to be invalid, while establishing the validity of the NCLT
and NCLAT.

The present case which was represented by A.P. Datar was
in reference to the striking down of certain provisions
of Companies Act, 2013 which were same as that of the Companies Act, 1956, with
particular emphasis on Chapter XXVII i.e. Sections 408, 409, 411(3), 412, 413,
425, 431 and 434, which were enacted without incorporating the amendments
suggested by this Court in Union of India
v. R. Gandhi,
(2010) 11 SCC 1.

The Court while
reiterating the 2010 judgment clearly upheld the validity of the constitution
of the NCLT and the NCLAT. While striking down the provisions dealing with
qualifications for  appointment of a technical member, the Court stated
that a Technical Member is supposed to possess experience in the field to which
the Tribunal relates to, and since members of Indian Company Law Service are not
experts of their field, they are not qualified to be technical members. The Court also held that the number of the members of the
Selection Committee should be reduced from five to four and a casting vote
should be provided to the Chairperson to remove the predominance of the
bureaucracy. [Madras Bar Association v Union
of India, 2015 SCC OnLine SC 484, decided on 14.05.2015].
Source: Legal news India

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