TMI BlogNCLT & NCLAT – OK NATIONAL TAX TRIBUNAL – NOT OK WHY?X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLT & NCLAT – OK NATIONAL TAX TRIBUNAL – NOT OK WHY? - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 4-6-2015 - - In Gandhi, President, Madras Bar Association V. Union of India 2010 (5) TMI 393 - SUPREME COURT OF INDIA the appellant challenged the order of High Court upholding the creation of National Company Law Tribunal and National Company Law Appellate Tribunal and vesting the powers hitherto exercised by the High Court and the Company Law Board and also directed the Government to make certain amendments in the Companies Act, 1956 . The Supreme Court in this case upheld the order of the High Court, Madras and also the directions issued by the High Court to the Union of India to make rectifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Central Government enacted Companies Act, 2013 in place of Companies Act, 1956 in which it has been provided for the constitution of National Company Law Tribunal and National Company Law Appellate Tribunal. Section 408 of the new Act provides for the constitution of National Company Law Tribunal and Section 410 provides for the constitution of National Company Law Appellate Tribunal. Section 411 provides for the qualification of Chairperson and members of Appellate Tribunal. Section 412 provides for selection of members of Tribunal and appellate tribunal by means of a selection committee. Section 413 provides the term of office of President, Chairperson and other Members. In Madras Bar Association V. Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India and another 2015 (5) TMI 501 - SUPREME COURT OF INDIA The petitioners challenged the provisions in Sections 408 , 410 , 411 (3), 412 , 413 , 415 , 418 , 424 , 425 , 431 and 434 as ultra vires of the Constitution. The Supreme Court held that a Legislature can enact a law transferring the jurisdiction exercised by courts in regard to any specified subject, other than those which are vested in courts by express provisions of the Constitution, to any tribunal. The Supreme Court further held that the judgment of Constitution Bench of Supreme Court case in R.Gandhi (supra) is binding in the present case and upheld the validity of constitution of NCLT and NCLAT. Further the Supreme Court directed the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government to follow the directions given in respect of selection of technical members and selection committee by the Supreme Court in R. Gandhi case (supra). In Madras Bar Association V. Union of India 2014 (9) TMI 821 - SUPREME COURT the petitioner challenged the constitution of National Tax Tribunal. After hearing the parties to the case the Supreme Court held that- The Parliament has the power to enact legislation and to vest adjudicatory functions, earlier vested in the High Court, with an alternative court/Tribunal. Exercise of such power by the Parliament would not per se violate the basic structures of the Constitution; Recognized constitutional conventions pertaining to the westminister model, do not debar t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legislating authority from enacting legislation to vest adjudicatory functions, earlier vested in a superior court, with an alternative court/Tribunal. Exercise of such power by the Parliament would per se not violate any constitutional convention; The basic structure of the Constitution will stand violated, if while enacting legislation pertaining to transfer of judicial power, Parliament does not ensure, that the newly created Court/Tribunal, conforms with the salient characteristics and standards, of the Court sought to be substituted. Constitutional conventions, pertaining to constitutions styled on the Westminister model, will also stand breached, if while enacting legislation pertaining to transfer of judicial power, conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entions and salient characteristics of the Court sought to be replaced, are not incorporated in the Court/Tribunal sought to be created; The prayer made in the writ petition (c) No. 621/2007 is declined. Company Secretaries are held ineligible, for representing a party to an appeal before the NTT; Examined on the touchstone of conclusions, Sections 5,6,7,8 and 13 of the National Tax Tribunal Act are held to be unconstitutional. Since the aforesaid provisions, constitute the edifice of the National Tribunal Tax Act, and without these provisions the remaining provisions are rendered ineffective and inconsequential, the entire enactment is declared unconstitutional. In Madras Bar Association V. Union of India and another 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (5) TMI 501 - SUPREME COURT OF INDIA The petitioners relied on the judgment of Supreme Court in the matter of constitution of National Tax Tribunal, wherein it was held that the formation of the National Tax Tribunal has been held to be unconstitutional and prayed that the constitution of NCLT and NCLAT may be declared as unconstitutional. The Supreme Court held that this adventurism on the part of the petitioner is totally unfounded. In the first instance, the validity of NCLT and NCLAT has already been upheld and the issue cannot be reopened. The reading of the Constitution Bench judgment in the matter of National Tax Tribunal would manifest that not only 2010 judgment was taken note of but followed as well. The Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt spelled out the distinguishing features between NCLT/NCLAT on the one hand and the NTT on the other hand in arriving at a different conclusion. In respect of NTT the power of judicial review hitherto exercised by the High Court in deciding the pure substantial question of laws was sought to be taken away to be vested in NTT which was held to be impermissible. In the case of NCLT/NCLAT there is no such situation. On the contrary NCLT is the first forum in the hierarchy of quasi judicial for a set up in the Act, 2013 . The NCLT, thus would not only deal with question of law in a given case coming before it but would be called upon to thrash out that factual disputes/aspects as well. In this scenario NCLAT which is the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate forum provided to examine the validity of the orders passed by the NCLT will have to be revisit the factual as well as legal issues. Therefore, the Supreme Court pointed out that the situation is not akin to NTT. Jurisdiction of NCLAT is mentioned in Section 410 itself which stipulates that NCLAT shall be constituted for hearing appeals against the orders of the Tribunal. The jurisdiction is not circumscribed by any limitation of any nature whatever and the implication thereof is that appeal would lie both on the questions of fact as well as question of law. It is thereafter further appeal is provided from the order of NCLAT to the Supreme Court under Section 423 of the Act, 2013 . Here the scope of the appeal to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court is restricted only to question of law arising out of such order. Because of the above reasons the Supreme Court held that the formation of NCLT and NCLAT as constitutional whereas the constitution of NTT is unconstitutional. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
