Libertatem Magazine

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

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The Supreme Court in its latest judgment declared sections 409(3)(a), 409(3)(c), 411 (3) and 412(2) of the companies act invalid relying upon its previous judgment in the case of Union of India v. R. Gandhi, Madras Bar Association wherein identical sections from the Companies Act,1956 were declared ultra vires.

The challenges were regarding the constitution of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) and also regarding the formation of the committee, the appointment of the judicial as well as the technical members. The SC upheld the judgment of the Madras H.C. declaring NCLT and NCLAT to be valid but declared the above mentioned sections to be unconstitutional and stressed upon the point that any institution performing a judicial function should be constituted of members having judicial experience and expertise and thus the judicial members were to exceed the technical members so as to maintain the essential fabric of the said institution.

The court also held that a person had to be an ’expert’ in the field to be a technical member and thus members of the Indian Company Law Service were not automatically entitled to the said post.

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