Validity Of NCLT & NCLAT Under Companies Act 2013 To Be Examined By SC Constitution Bench Tomorrow

The Supreme Court Constitution Bench hear tomorrow the petition filed by Madras Bar Association challenging the creation of National Company Law Tribunal and National Company Law Appellate Tribunal under the Companies Act 2013.

The the constitutional validity of Chapter XXVII comprising Sections 407 to 434 of the Companies Act 2013 which constitute NCLT and NCLAT is the issue before the five judges' bench comprising CJI Ranjan Gogoi, and Justices N V Ramana, D Y Chandrachud, Deepak Gupta and Sanjiv Khanna will examine 

According to the petitioner, the creation of NCLT and NCLAT impinges on the basic structure of constitution by affecting judicial independence. It argues that the members of these Tribunals, which are to exercise powers otherwise enjoyed by the High Courts, can be easily removed by the central executive and therefore judicial independence is heavily compromised.

This issue was referred to larger bench by a three judges' bench of Justices T S Thakur(later CJI), R F Nariman and P C Pant on February 18, 2015, expressing that "substantial points of law involving interpretation of constitution falls for determination". That bench also noted that a similar challenge by Madras Bar Association against National Tax Tribunal was dealt with by a constitution bench. Accepting that challenge, a Constitution Bench had declared National Tax Tribunal unconstitutional on September 25, 2014..

The National Tax Tribunal judgment authored by Justice Nariman and Justice Chelameshwar dealt in detail with the emergence of tribunalization in India and how the judicial power of courts has been curbed by transferring cases to tribunals under direct supervision of the executive. The judgment also dealt in detail Article 323A & 323B along with the doctrine of separation of powers.