Supreme Court Invalidates Companies Act Provisions, Refers Constitutional Validity Issue to Larger Bench

The Supreme Court declared Parts I-B and I-C of The Companies Act, 1956 unconstitutional but upheld the establishment of the National Company Law Tribunal and National Company Law Appellate Tribunal under the Companies Act, 2013. The Court referred the constitutional validity of Chapter XXVII to a larger Bench for interpretation of constitutional provisions. The Petitioners were directed to submit additional documents for the larger Bench's review. Two Special Leave Petitions were listed separately for future consideration. The decision to refer the case to a larger Bench highlights the importance of resolving substantial questions of law and ensuring a thorough and just interpretation of the legal issues involved.

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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.

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