The idea of constituting National Company Law Tribunals (NCLT) was brought in the Companies Act, 1956 through Companies (Second Amendment) Act, 2002 w.e.f. 1.4.2003 with each bench consisting of one judicial member and one technical member. It envisaged replacing Company Law Board, which was hitherto, functioning under the Companies Act, 1956 dealing with specific cases under the law. The process of constituting NCLT was marred into litigation and by the time decks were cleared for its formation in 2010 by Supreme Court, the Central Government was not keen to form it as Companies Bill, 2009 containing similar provisions was lying with the Parliament. Eventually, Companies Act, 2013 became a reality and the Central Government after another round of litigation before a five-member bench of Supreme Court, constituted it with effect from 1st June, 2016.
Members of NCLT
The NCLT consists of judicial members and technical members with qualifications prescribed in the Companies Act 2013 (in short CA13 or the Act). While an advocate with ten years’ experience can be appointed as a Judicial member, for appointment as a technical member, fifteen years’ is generally required for a chartered accountant, cost accountant, company secretary or a member of Indian Corporate Law Service or Indian Legal service. Higher requirement of experience has not been a subject matter of challenge before any Court. In a similar manner, the National Company Law Appellate Tribunal consists of judicial and technical members.
The Act provides that the powers of the Tribunal shall be exercised by Benches consisting of two members out of whom one shall be a Judicial Member and the other shall be a Technical Member. Exceptionally, the President of the NCLT is empowered to constitute a Bench consisting of a single judicial member to deal with the certain class of cases.
Status of Members under the Companies Act, 2013
Under the Act, both the Judicial and Technical members enjoy the same status and are eligible for similar scale of pay. The Act does not distinguish between a Judicial member and a Technical Member as to the tenure, status, power, responsibility, pay scale, signing or pronouncing of orders. While sitting on the Bench, the members enjoy equal power as to the hearing of the matter, raising questions to the counsels or parties, fixing next date of hearing or dictating the orders as well. It is not the task of a Judicial member alone to take the lead just by being a Judicial member to make a decision, dictate the order or decide the next date of hearing. The plain reading of the provisions enshrined in the Act and the rules framed thereunder indicates that all this must be done in a consented manner. The Act also provides the manner in which the proceedings will take a future course, in case of any disagreement between the members on the Bench. In other words, the Judicial members do not enjoy any supremacy over the Technical members. The Act or the Rules do not provide the seating arrangement of the Judicial and Technical Members. As a customary practice and as a matter of propriety, the seating arrangement and placement of the name/signatures of a member on the order should be organized in order of seniority of the members sitting on the bench and not because of classification of members. Hence it is clear that the law does not confer any higher status upon the Judicial members over the Technical members and any such attempt or interpretation, is bound to cause irreparable harm to the system which would be unknown to law.
Position under NCLT Rules
Each order or judgment of the NCLT is to be signed and dated by concerned members of the Bench. If there is a difference of opinion, dissenting member (judicial or technical) is entitled to append a separate or dissenting opinion. In case of difference of opinion, judicial member does not enjoy any extra authority to say that his or her opinion shall prevail. On the contrary, if there may be a difference of opinion between the members, it is incumbent upon the President of the Tribunal to refer the matter to other member(s) of the Bench. Here also the matter may be referred by the President to either to a Judicial member or a Technical member. The equality of status of Judicial and Technical members is also discernible from the fact that the rules provide that any Member of the Bench may pronounce the order for and on behalf of the Bench.
Interestingly, on the point of signing of the order is concerned, the Rules make it clear that the members constituting the Bench shall affix their signatures in the order of their seniority (date of appointment would be considered as seniority) from right to left. In other words, if a Technical member enjoys seniority, then his signatures would appear on the right side at the bottom of the order. In fact, the signatures of members of a Bench should appear side by side and not one after the other.
Legal Jurisprudence on the Constitution of Benches
Let us now look at the need for appointing technical members on the benches of NCLT. Companies Act, 2013 and Insolvency and Bankruptcy Code, 2016 (in short IBC or the Code) are considered to be economic laws requiring intrinsic knowledge of the provisions of the corporate law involving deep knowledge of financial and commercial aspects of the subject matter. While enacting the Act to constitute the Tribunal our law makers were quite conscious that Legal knowledge only may not be enough to decide the cases falling under the purview of Act or the Code. Hon’ble Supreme Court in its judgmentUnion of India v. R. Gandhi, President, Madras Bar Association, while allowing the appointment of technical members on NCLT, categorically stated that “only where the exercise of jurisdiction involves inquiry and decisions into technical or special aspects, where presence of technical members will be useful and necessary, Tribunals should have technical members.”
The Hon’ble Supreme Court in Madras Bar Association vs Union of India & Another, recognized that “the NCLTwould not only deal with question of law in a given case coming before it but would be called upon to thrash out the factual disputes/aspects as well.” The Apex Court further noted that “as far as the technical members are concerned, the officer should be of at least Secretary Level officer with known competence and integrity……..Therefore, when the legislature substitutes the Judges of the High Court with Members of the Tribunal, the standards applicable should be as nearly as equal in the case of High Court Judges. That means only Secretary Level officers (that is those who were Secretaries or Additional Secretaries) with specialized knowledge and skills can be appointed as Technical Members of the tribunal……A `Technical Member’ presupposes an experience in the field to which the Tribunal relates.”
On the NCLT benches to have Judicial and Technical members, the Supreme Court observed that “……there is every likelihood of most of the members, including the so called `Judicial Members’ not having any judicial experience or company law experience and such members being required to deal with and decide complex issues of fact and law. Whether the Tribunals should have only judicial members or a combination of judicial and technical members is for the Legislature to decide. But if there should be technical members, they should be persons with expertise in company law or allied subjects and mere experience in civil service cannot be treated as Technical Expertise in company law.”
Conjunct reading of the provisions of the Act and the Rules made thereunder coupled with judicial pronouncements as expounded by Apex Court from time to time, no distinction can be made between the Judicial and Technical members of the NCLT. To create any such artificial distinction will narrow down the experience and expertise of the Technical member. Once a member gets appointed through a stringent process of selection by a high power expert Selection Committee constituted under the Act, it is assumed that the concerned member, be it Judicial or Technical, possesses sufficient experience, ability and competence to act as a member of NCLT. However, in some quarters, wearing of gowns and bands by Technical members, not being advocates, has been questioned. The basic requirement is that the decorum of the Tribunal must be maintained and for that purpose, it is highly desirable that both the members on bench should maintain uniformity in appearance too and if it can be achieved by all Members wearing gowns and bands, there seems no harm in it and these minor aspects cannot overweigh the real objective. We should be looking at the quality of judgments passed by the benches and not by their appearance. A Technical member is equally competent and empowered to ask questions during the course of hearing to have deeper understanding of the case and this cannot be considered as impediment or browbeating. So long the decorum is maintained and both the Members sitting in a bench, respect each other, it should be of no concern to anyone. On numerous occasions qualitative judgments have been authored by Technical members of these benches which unequivocally demonstrates their capability and competence. This is matter of common experience that Company Law Board, a predecessor of NCLT, worked efficiently for over two decades with each bench having a Judicial and Technical member or even technical members sitting singly. No one ever questioned their sitting on the benches and passing judgments. Needless to say that many of the Technical Members are also the Law graduates/ Post Graduates or even having done Ph. D. in Law though they might not have been enrolled with any Bar Council as an advocate. Here it is worth mentioning that the NCLT by its nomenclature itself, is a Tribunal (i.e. not the common court of law in strict sense) wherein, not only advocates but professionals such as chartered accountants, company secretaries and cost accountants can also appear on behalf of the parties. Law permits them to appear before NCLT and in a similar manner, experienced persons with knowledge in the relevant subject are appointed as technical member of the Tribunal.
Thus, irrefutably, it can safely be concluded, that Technical members are the backbone of NCLT and they are in no way inferior to Judicial members. However, it has been painfully noticed that some of the disgruntled members or persons with ulterior motive are trying or attempting to demean the authority of Technical members viz-a-viz the Judicial members. The author has came across with some write ups suggesting that Judicial members are in fact equivalent to the judges of the High court whereas the Technical Members are their subordinates only. Here, with utmost respect to the Chair, I humbly beg to differ with such a view for the simple reason that at the time of very appointment the judicial member must be aware of the fact that his appointment is for the NCLT and not for the High court as both the positions are not mutually exchangeable. If, however, any judicial member feels insulted by sitting with a non judicial (.i.e. Technical) member on the Bench, it is always open to him not to accept such appointment. As a matter of fact, such an attempt will frustrate the basic purpose of constituting the NCLT and therefore, any such attempt must be depricated by one and all.
S. N. Pandey, Advocate, Supreme Court of India