Companies Act Section 417A

Companies Act, Section 417A: Qualifications, Terms and Conditions of Service of Chairperson and Members of the Appellate Tribunal

Section 417A of the Companies Act, 2013 was inserted to bring the service conditions of the Chairperson and Members of the National Company Law Appellate Tribunal (NCLAT) in line with the new legal framework introduced through the Tribunals Reforms Act, 2021. 

This provision clarifies which provisions will now apply to individuals appointed after the reforms, and which older provisions will continue to govern those already in service prior to the reforms.

This section ensures consistency between tribunal governance laws and prevents confusion regarding the rights, responsibilities, and service conditions of Members managing crucial appellate functions under the Companies Act.

1. Application of Tribunals Reforms Act, 2021

The section begins with a “notwithstanding” clause, meaning it overrides all conflicting provisions in the Companies Act, where applicable.

It specifies that for Chairpersons and other Members of NCLAT appointed after the enforcement of the Tribunals Reforms Act, 2021, the following aspects will be governed exclusively by Chapter II of that Act:

Eligibility and qualifications required for appointment, the formal appointment process and authority, the length of tenure.

Salary structure, allowances, and additional benefits, procedure for resignation from service.

Grounds and process for removal from office, any other employment-related conditions.

This shift centralizes governance of multiple tribunals under one consistent statute, ensuring uniformity across India’s tribunal system and reducing reliance on earlier provisions from different Acts.

2. Protection for Those Appointed Before Earlier Reforms

The section also contains a significant proviso to protect those already serving in the Appellate Tribunal before earlier reforms were enforced. It clarifies that:

Chairpersons and Members appointed before the commencement of Part XIV of Chapter VI of the Finance Act, 2017  will continue to follow the earlier provisions of the Companies Act and the rules made under it. Further, it states that such individuals will be treated:

As if Section 184 of the Finance Act, 2017 (which changed service conditions of tribunal members) had not yet come into force.

This ensures fairness and prevents retrospective alterations to the service conditions of existing Members, thereby protecting their legitimate rights and expectations.

Purpose and Relevance of Section 417A

This provision reflects a major shift in the governance of tribunals in India. Its objectives include:

Bringing all tribunal service-related matters under a single unified law. Ensuring that newly appointed Members follow a modernized and standardized system.

Safeguarding the continuity and vested rights of Members appointed before earlier reforms.

Maintaining legal clarity, preventing disputes over which rules apply. Strengthening institutional stability and public confidence in tribunal administration

These changes support a more efficient, coordinated, and regulated approach to tribunal personnel management.