Justice Eradi Committee Recommendations

The Post-Independent Era in India saw the curve of the economic development and stability depleting as the Industries and Companies were facing industrial sickness, and the Sick Industrial Companies Act, 1985 (SICA) was not able to stabilize the situation with its least effective measures and schemes. In the year 1999, the Government of India appointed and constituted a committee under Justice V. Balakrishna Eradi, which had to examine the existing laws of insolvency of sick industries and companies and to wind up with the aim of suggesting reforms to avoid delay in any such proceedings. Taking reference from the corporate indebtedness system prevalent in certain nations, the Committee suggested the constitution of a national tribunal which should consolidate the forces of different forums, for example, high courts in restructuring, rebuilding and winding up, the Company Law Board (CLB), Board for Industrial and Financial Reconstruction (BIFR) and Appellate Authority for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act.

Compliant with the proposals of the Committee, the Companies (Second Amendment) Act, 2002 was enacted that accommodated an amendment in the then predominant company law for the arrangement of a national tribunal. The amendment was met with different legal difficulties which slowed down the procedure. Inevitably, Section 408 of the Companies Act, 2013 accommodated the foundation of National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). This section was advised through the Ministry of Corporate Affairs (MCA) warning dated June 1, 2016, wherein NCLT is, to begin with, 11 benches. The CLB presently stands dissolved.

Any new change which is introduced or presented before accompanies its own arrangement of difficulties. The impact of the warning is that CLB stands promptly broke down. With just 11 benches right now usable, there will be a tremendous weight on the tribunal to manage cases moved from CLB and different discussions. This may fill in as an obstacle in the change procedure. Further, not all arrangements regarding NCLT have been advised, for example, arrangements identified with ending up, capital decrease, amalgamation and bargains, which implies that the High Court keeps on practising purview over these issues. When all the arrangements with respect to the working of NCLT are informed, there will be greater clearness on the impact this has on dispute resolution.

By and large, the constitution of NCLT and NCLAT has cleared the path for a genuinely necessary legal change. For the present, everything that could be said is that in the light of expanding globalization and the need to move the in-a state of harmony with evolving times, a milestone step has been taken to advance better corporate dispute redressal components.