2015 (2) TMI 1343 - SC - Companies Law

Constitutional validity of Parts I-B and I-C of The Companies Act 1956 inserted by Companies Second Amendment Act of 2002 - HELD THAT - The substantial questions of law involving interpretation of the provisions of the constitution falls for determination. That apart since an analogous challenge in the earlier round of litigation had been examined by a Constitution Bench of this Court we see no reason why the present writ petitions should also not be referred to a larger Bench for an authoritative pronouncement on the questions that have been raised. We accordingly refer these writ petitions to be placed before a Constitution Bench for final hearing and disposal. Additional paper books shall be filed by the Petitioners within two weeks. The papers shall be placed before Hon ble the Chief Justice of India for constituting a larger Bench. Petition disposed off.

Summary

Issues:
1. Constitutional validity of Parts I-B and I-C of The Companies Act, 1956
2. Establishment of National Company Law Tribunal and National Company Law Appellate Tribunal under Companies Act, 2013
3. Interpretation of provisions of the constitution and reference to a larger Bench

Analysis:
1. The Supreme Court examined the constitutional validity of Parts I-B and I-C of The Companies Act, 1956, inserted by the Companies Second Amendment Act of 2002. The Court referred to a previous judgment in Union of India v. R. Gandhi, President, Madras Bar Association 2010 (11) SCC 1, where it was held that the creation of the National Company Law Tribunal and the National Company Law Appellate Tribunal was not unconstitutional. However, Parts I-B and I-C of the Act were declared unconstitutional. Subsequently, the Parliament enacted The Companies Act, 2013, repealing the Companies Act, 1956, and established the National Company Law Tribunal and National Company Law Appellate Tribunal under Chapter XXVII. The constitutional validity of Chapter XXVII was challenged in a writ petition, seeking implementation of directions issued in the previous judgment.

2. The Court, after hearing arguments from learned counsels, found that substantial questions of law involving the interpretation of constitutional provisions needed determination. Due to a similar challenge previously examined by a Constitution Bench, the Court decided to refer the present writ petitions to a larger Bench for an authoritative pronouncement on the raised questions. The Petitioners were directed to file additional paper books within two weeks for the larger Bench's consideration. The Chief Justice of India was to constitute the larger Bench for the final hearing and disposal of the writ petitions.

3. Additionally, two Special Leave Petitions (SLP) were de-tagged and listed separately for future consideration after four weeks. The Court's decision to refer the writ petitions to a larger Bench indicates the significance of the constitutional issues involved and the need for a comprehensive and authoritative interpretation of the law in question. The legal proceedings demonstrate the thorough consideration given by the Court to ensure a just and well-founded decision on the matters at hand.