HC refuses to vacate stay on Centre’s Co Act

CHENNAI: The Madras High Court has declined to vacate the stay on the provisions of Section 10FF of the Companies (Second Amendment) Act, 2002. The section gives the central government powers to appoint the member-administration of the National Company Law Tribunal (NCLT).
The tribunal, according to the amendment, will take over the authority currently vested by the Companies Act with the Company Law Board (CLB) and courts. Chief Justice Subhashan Reddy and Justice K Gnanaprakasam, in an order passed recently, said: “We are of the considered view that the selection process can go on, but the provisions contained in section 10FF of the amended Act shall not put into operation. In the event of constitution of either National Company Law Tribunal or National Company Law Appellate Tribunal, the respective chairpersons shall exercise the powers which are enumerated in section 10FF of the amended Act.�
Earlier, the HC had given an interim stay on various sections of the amendment. While the recent order vacated the stay on those sections, it upheld its stay on section 10FF.
PH Arvindh Pandian, advocate, explained that section 10FF would be detrimental to the autonomy and the independence of the tribunal because it gives the central government the power to designate the member administration, a post that should be independent.
According to section 10FF of the Companies (Second Amendment) Act, 2002, “The central government shall designate any judicial member or technical member as member-administration who shall exercise such financial and administrative powers as may be vested in him under the rules which may be made by the central government.�
“Provided that the member administration shall have authority to delegate such of his financial and administrative powers as he may think fit to any other officer of the tribunal subject to the condition that such officer shall, while exercising such delegated powers continue to act under the direction, superintendence and control of the member administration,� the Act further says.
“In so far as the tenure of office is concerned, the same shall be considered in the context of independence of judiciary and also the dicta laid down by a constitution bench of the Supreme Court in SP Sampath Kumar vs Union of India’’, the high court order adds. Mr Pandian said the tenure was fixed at 3 years which might be a disincentive for those applying. The tenure must be for a longer period, he said.