The government has put its act together to see that the Company Law Board, the quasi-judicial body that gives verdicts on litigation and complaints that come under the purview of the Companies Act, gets a fresh set of members soon.
This is in the backdrop of the arrest of R Vasudevan, the seniormost CLB member, on November 24. This has left the board with just two members to hear the pending cases that run into thousands.
Corporate affairs minister Salman Khurshid today said the new chairman will take charge of CLB next week. "Justice Deshmukh, a retired high court judge, has been appointed the new CLB chairman. He will take charge in two or three days," said R Bandopadhayay, secretary in the ministry.
According to official sources, the government has also cleared the appointment of four other members, who were selected by a four-member committee headed by a Supreme Court judge recently. "Of the nine members (including chairman), seven will be in place by January," a senior official said.
The members of the selection committee are the secretaries in the ministry of corporate affairs and law ministry and the CLB chairman. In this case, the selections were carried out before the former CLB chairman, S Balasubramanian, retired last month.
According to the current practice, of the eight members, four will have a legal background, while the others will be drawn from professionals like company secretaries or chartered accountants or from a government department. Vasudevan was the lone official nominee in the existing CLB member list.
The arrest of the CLB member has once again raised the demand for more prudence in the selection of members to the board.
"This underscores the need for deeper involvement of judicial persons in the board. The CLB should invariably be headed by a judge (retired or sitting), as lack of confidence in a CLB verdict can shake the entire investor confidence," Manoj Kumar, senior partner of Delhi-based legal consultants Hammurabi and Solomon said.
"Satyam was a shock. What a bigger shock it will be if legal entities meant to put them at check are also creating similar perception."
According to sources, about 2,000 cases were pending before the board as on March 2009, though CLB's track record in disposing cases are known to be better than several other courts.
The vacancies in CLB arose after the government firmed up plans for the establishment of the National Company Law Tribunal.
"People were not interested in taking up CLB posts, as they considered them to be temporary. The Tribunal would have seen CLB wind up," a senior official said.
The NCLT was proposed to be a single dispute handling body for companies, with powers to take cases handled by Board for Industrial and Financial Reconstruction and the CLB.
It was also proposed to give some powers traditionally under the high courts to NCLT. The matter is being looked into by a five-member Constitutional bench of the Supreme Court.
The apex court has completed the hearing and a verdict has been reserved. The arrest of the CLB member, they say, has compelled the government to turn CLB fully functional despite its uncertain future.