Ultimate magazine theme for WordPress.

All the things it is best to learn about Nationwide Firm Legislation Tribunal (NCLT)

This article describes the concept of National Company Law Tribunal (NCLT); written by Naina solanki student of Prestige institute of management and research.

Introduction

The National Company Law Tribunal or NCLT is a quasi-judicial body that adjudicates matters and issues related to Indian companies which have been established under the Companies Act, 2013. Constituted on 1 June 2016 by the government of India by virtue of Section 408 of the Companies Act, 2013, based on the recommendation of the V Balakrishna Eradi committee on the law relating to the insolvency and the winding up of companies.

Historical Background

Before the establishment of National law tribunal, company-related issues were resolved by the Company Law Board. In 2002, in companies act, 1956 amendments were made for the formation of National company law tribunal instead of Company law board. There were 4 benches of the board Delhi, Kolkata, Mumbai and Chennai.

But this 2002 amendment was challenged by Madras lawyer. The Constitutionality of this was questioned and thereby the formation of NCLT was delayed.

Company issues related to industries and finance were dealt with by BIFR board (Board for Industrial and Financial Corporation) and Appellant of same. Also, different merger and amalgamation decision was decided by the High court.

This means that there was no one jurisdiction for company issues and these different boards and courts complicated the process. There was a need for one body to deal with all the company related issues.

By the provisions of companies act, 2013 National Company law Tribunal was formed on 1 June 2016. This changed all the proceedings. In 2016, the Supreme Court upheld high court judgement and Company law board was abolished and its pending work was transferred to NCLT.

 Previously, in company law board CA and CS were able to file a petition but if the matter leads to the High court lawyer used to represent the company. After the formation of NCLT, CA and CS are treated at par with lawyers. High court jurisdiction shifted to NCLT.

Jurisdiction

After the formation of NCLT, it acquired the jurisdiction of the following-

  1.  Company law board
  2.  BIFR  (Board for Industrial and Financial Corporation)
  3.  AAIFR (Appellate Authority for Industrial and Financial Reconstruction)
  4.  High court

This means that the NCLT is empowered to look into the matters of these boards and corporation for resolving company issues. Also, the proceedings under the Act are to be dealt with by this tribunal such as arbitration, compromise, winding up etc.

Benches

National Company Law Tribunal Benches

S.NO. Name Of Bench Location Territorial Jurisdiction
1 (a) National Company Law Tribunal, Principal Bench. (b) National Company Law Tribunal, New Delhi Bench. New Delhi (1) Union territory of Delhi.
2 (a) National Company Law Tribunal, Ahmedabad Bench. Ahmedabad (1) State of Gujarat (2) Union Territory of Dadra and Nagar Haveli (3) Union Territory of Daman and Diu
3 National Company Law Tribunal, Allahabad Bench. Allahabad (1) State of Uttar Pradesh. (2) State of Uttarakhand.
4 National Company Law Tribunal, Amaravati Bench. Hyderabad (1) State of Andhra Pradesh
5 National Company Law Tribunal, Bengaluru Bench. Bengaluru (1) State of Karnataka.
6 National Company Law Tribunal, Chandigarh Bench. Chandigarh (1) State of Himachal Pradesh. (2) State of Jammu and Kashmir. (3) State of Punjab. (4) Union territory of Chandigarh. (5) State of Haryana.
7 National Company Law Tribunal, Chennai Bench. Chennai (1) State of Tamil Nadu. (2) Union territory of Puducherry.
8 National Company Law Tribunal, Cuttack Bench. Cuttack  (1) State of Chhattisgarh. (2) State of Odisha.
9 National Company Law Tribunal, Guwahati Bench. Guwahati (1) State of Arunachal Pradesh. (2) State of Assam. (3) State of Manipur. (4) State of Mizoram. (5) State of Meghalaya. (6) State of Nagaland. (7) State of Sikkim. (8) State of Tripura.
10 National Company Law Tribunal, Hyderabad Bench. Hyderabad (1) State of Telangana.
11 National Company Law Tribunal, Indore Bench. Ahmedabad (1) State of Madhya Pradesh
12 National Company Law Tribunal, Jaipur Bench. Jaipur (1) State of Rajasthan.
13 National Company Law Tribunal, Kochi Bench. Kochi (1) State of Kerala (2) Union Territory of Laksha
14 National Company Law Tribunal, Kolkata Bench. Kolkata Bench (1) State of Bihar. (2) State of Jharkhand. (3) State of West Bengal. (4) Union territory of Andaman and Nicobar Islands.
15 National Company Law Tribunal, Mumbai Bench. Mumbai Bench (1) State of Goa. (2) State of Maharashtra.

Source: https://nclt.gov.in/content/national-company-law-tribunal-benches

At present, 16 benches are present, six at New Delhi along with Principal bench, 2 at Ahmedabad, Chennai and Kolkata, 3 at Hyderabad with one at Amaravathi, 5 at Mumbai and one each at Allahabad, Bengaluru, Chandigarh, Cuttack, Guwahati, Jaipur and Kochi.

*All benches are division benches except for Amravathi.

*Indore bench is not yet notified.

Structure of benches

Each Bench is headed by a President, 16 judicial members, and 9 technical members. The current and the first President of the NCLT is Justice MM Kumar.

NCLAT

It is the appellant tribunal for the cases decided by NCLT. It is formed by the government of India under Section 410 of the Act. A company can also appeal to the Supreme Court if it is not satisfied by the decision granted by NCLT or NCLAT.

NCLT Functions

  1. Registration/ De-registration of Companies
  2. Transfer of shares / Refusal of shares
  3. Deposits
  4. Power to Investigate
  5. Freezing assets of the company
  6. Converting a public limited company into private limited company (Section 459)
  7. Class Action
  8. Reopening of accounts
  9. Winding up of the company
  • Registration of Companies

A company can be de-registered by NCLT when under Section 7(7) of Companies Act, 2013 of the companies act, 2013 registration certificate is obtained by wrongful manner or illegally.

If a company rejects or refuses the transfer of securities or shares then NCLT can intervene if the company approaches it.

Any matter arising out of deposits in a company then it can go to the tribunal.

It could take place in India and outside as well. Earlier, an application by 200 people was made which is now by 100 to order an investigation by NCLT.

Under Section 221 of Companies Act, 2013 NCLT can freeze the assets of a company under investigation or scrutiny.

  • Converting a public limited company into private limited company (Section 459)

Section 13 to 18 deals with the conversion of a company. It states that NCLT permission is required for any such action.

  • Winding up of the company

Under Section 242 of Companies Act, 2013, NCLT has power to dissolve a company.

Conclusion

NCLT is a tribunal which took over roles of various other bodies. NCLT is the adjudicating authority for all the companies in India. It makes the dispute resolution process faster in India. Instead of going to court this is a speedy mechanism which companies can go to for any redressal.  

NCLAT at New Delhi is the appellant tribunal which again helps in reducing the work load of the Supreme Court as before going to the Supreme Court a company can appeal at NCLAT. Though, the Indian Constitution provides that orders from every court or tribunal can be appealed before Supreme Court, it is the highest appellant court of the country.

NCLT has changed the dispute resolution mechanism of the Indian Companies, it has treated professionals at par with lawyers and the companies have no longer need to engage into courtroom proceedings.

Comments are closed.