The President has
given his assent to the Companies (Second Amendment) Bill, 2002
and the Competition Bill, 2002. With this, these two Bills, passed
during the Winter Session of Parliament ending December 20, 2002,
have been notified in the Gazette of India as Act Nos. 11 and
12 respectively of the year 2003.
The Companies
(Second Amendment) Act, 2003 (Act No. 11 of 2003), which seeks
to amend the Companies Act, 1956, provides for a new, modern,
efficient and time bound Insolvency Law to provide for both rehabilitation
and winding up of sick companies within a timeframe of a maximum
of two years as against the existing system taking about 18 to
26 years. It envisages setting up of a National Company Law Tribunal
with several Benches to be notified by the Government all over
the country, appeal from its judgement before the National Company
Law Appellate Tribunal, taking over the jurisdiction of High Courts
in the matters of liquidation of sick companies, abrogation of
Company Law Board, repealing of the Sick Industries (Special Provisions)
Act, 1985 and dismantling of BIFR created thereunder, creation
of a corpus to be known as Rehabilitation Fund for taking care
of the workers of sick companies and their investors as per the
global standards in keeping with the norms of globalization of
Indian economy under the World Trade Organization regime. The
Government will implement this Act from a date to be notified
by the Department of Company Affairs in stages.
Earlier, the Companies
(Amendment) Bill, which was given President’s assent as Act No.
1 of the year 2003, pertained to allowing the producing cooperatives
to come under the Companies Act, 1956 and not to the Insolvency
Law as was reported. The mistake was inadvertent as it was based
on the order of introduction of the two Bills amending the Companies
Act introduced in 2001 and not the order of their passage in the
Parliament.
The Companies (Amendment)
Act, 2003 (Act No. 1 of 2003) seeks to provide for a statutory
and regulatory framework for producer owned enterprises (cooperatives)
to come voluntarily under the Companies Act, 1956 to compete with
other enterprises on a competitive footing under a regulatory
framework afforded by the Company Law with suitable adaptations.
It also provides an opportunity to cooperative institutions to
transform themselves into the new form of producer companies so
as to enable the cooperative societies so opting to compete in
the free market economy as also mobilize resources from the capital
market like any other companies under the Companies Act. The provisions
of this amendment will be implemented from a date to be notified
by the Government in the Department of Company Affairs.
The Competition Act,
2003 (Act No. 12 of 2003), which seeks to repeal the Monopolies
and Restrictive Trade Practices Act, 1969 and dismantle the MRTP
Commission created thereunder, provides for setting up of a Competition
Commission of India (CCI) to prevent practices having adverse
effect on competition, to promote and sustain competition in market,
to prevent abuse of dominance, to ensure quality of products and
services, to protect the interest of consumers and to ensure freedom
of trade carried on by other participants in markets in India
and for matters connected therewith. The CCI will function as
a regulator like other regulators to give impetus to quality of
products and services, competition, faster mergers and acquisitions
of companies, regulation of acquisitions and mergers coming within
the threshold limits, allowing dominance and prevention of abuse
of dominance to give effect to the second generation economic
reforms on the pattern of the global standards set by the United
Kingdom, the USA and the European Commission. The provisions of
the Act will be implemented in three phases from a date each to
be notified by the Government in the Department of Company Affairs.
Accordingly, the corporate sector in the country will be given
adequate time frame to acclimatize themselves to the new scenario
before the CCI is formally constituted.
