Assessing NCALT

What is the issue?

The National Company Law Appellate Tribunal seems to be lacking the specifics to ensure the purposeful functioning of the competition adjudications in India.

What are the legal mechanisms in place?

• The Indian competition adjudicatory structure consists of -

1. Competition Commission of India (CCI)
2. National Company Law Appellate Tribunal (NCLAT)

• CCI - The Competition Commission of India is a statutory body responsible for enforcing The Competition Act, 2002.
• It is tasked with preventing activities that have an adverse effect on competition among companies in India.
• The commission is entrusted with regulatory powers for effective regulation.
• NCALT - NCLAT serves as the appellate authority for hearing appeals against the decisions, directions or orders passed by -

1. National Company Law Tribunal(s) (NCLT)
2. Insolvency and Bankruptcy Board of India
3. Competition Commission of India (CCI)

Are tribunals effective?

• Tribunals were envisioned as ad-hoc mechanisms to address the problem of judicial delays.
• They are a tool to harness cost-effectiveness, accessibility, expedited functioning and expert knowledge.
• Nevertheless, reality with the state of competition appeals in India is not appreciable, with some inherent shortfalls in the system.

What are the concerns?

• Delays - The appellate authority is required to dispose of appeals expeditiously; possibly within six months from the date of receipt of appeal.
• However, data suggests that such a deadline is not complied with.
• Resultantly, the average disposal rate per year of competition appeals falls between only 40-50%.
• Procedure - In addition to the delay caused at the appellate stage, there lies further scope of appeal at the Supreme Court level.
• The absence of detailed, stage-wise timelines governing the appellate process adds to the problem.
• Resultantly, the numerous layers of judicial procedures largely undermine the very purpose of these adjudicatory mechanisms in place for ensuring fair competition.
• Capacity - The maximum permissible strength of the NCLAT is 11 members.
• However, it currently comprises only three, leading to limited capacity at the tribunal.
• Composition - NCLAT also does not comprise of any technical members on board.
• There is lack of specific expertise in competition law and policy, for a professional handling of the company cases.

What should be done?

• There is an urgent need to appoint more members in NCALT to ensure that the pending-appeals do not pile up as huge burden.
• In its 272nd Report, the Law Commission of India has recommended that specialised tribunals should comprise of technical persons.
• This may include persons with special knowledge and professional experience or expertise of not less than 15 years in the particular field.
• E.g. in the UK, the Competition Appellate Tribunal (CAT) comprises a combination of industry experts, economists and legal practitioners, etc.
• Case-management techniques such as setting stage-wise timelines, arranging case-management conferences, etc should be adopted.

Source: Financial Express