One of the primary reasons behind India’s emergence as a global economic giant is company and corporate insolvency laws, and how they have facilitated business and investment growth is commendable. With the increase of trade and industry, the fairs related to company matters were also rapidly increasing, resulting in burdens on the High Courts. As a result, the justice delivery was getting slow. This forced many national and international companies to move to more amicable locations like Singapore to establish their headquarters. In this article, we will talk about National Company Law Tribunal (NCLT).
Till 2016, the Company Law Board also called as CLB (it was set up in 1956 under the Companies Act of 1956), Board for Industrial and Financial Reconstruction also known as BIFR (it was created under the Sick Industrial Companies Act of 1985), Appellate Authority for Industrial and Financial Reconstruction and the High Court used to adjudicate matters related to company affairs, this multiplicity of authorities resulted in justice delivery process. The establishment of the National Company Law Tribunal and the National Company Law Appellate Tribunal eradicated all these problems by simplifying the process of the delivery justice system.
What is NCLT?
- Meaning
In 2002, the Companies Act of 1956 was amended, following which the Eradi Committee proposed introducing provisions related to National Company Law Tribunal and the National Company Law Appellate Tribunal (NCLAT). However, no step was taken until June 6, 2016, when the Ministry of Corporate Affairs issued a notice regarding the powers of NCLT AND NCLAT. The way for NCLT AND NCLAT was carved under the ambit of Section 408 and Section 410 of the Companies Act 2013. NCLT or also called the National Company Law Tribunal is a quasi-judicial authority incorporated under the preview of the Companies Act of 2013 to solely deal with matters related to corporate disputes of civil nature arising under the Act.
NCLT[1] has given the same powers and procedures as a court of law. Just like an ordinary court in India, the tribunal also works on the same line. It also has to be impartial while determining the facts of the case and deciding the case by using the principle of natural justice. All the orders and decisions pronounced by NCLT are to be reviewed by NCLAT. NLACT has the authority to uphold the decisions of NCLT.
- Historical Perspective
In 1988 the Law Commission of India presented its 124th Law Report, which pointed out the problem of backlogging cases. It stated that with the progression in different fields of law, different kinds of disputes are arising, resulting in the delay of justice. Therefore there is an urgent need to establish an independent tribunal.
But finally, the concept of NCLT for dealing with all the matters related to company law came after the Companies (II Amendment) Act of 2002. This was recommended by a committee headed by Justice V. Balakrishna Eradi.
- Difference Between NCLT And NCLAT
The NCLT is the ground level jurisdiction and NCLAT is the appellate jurisdiction like that of a High Court in India. When a case is presented before NCLT, it has the duty to take in account all the evidences and witnesses so that the tribunal can reach upto a conclusion and makes the decision. The NCLAT usually just review orders and decisions of NCLT and only consider points related to law or fact.
Jurisdiction of NCLT
Mentioned below are the branches and respective jurisdictions of the National Company Law Tribunal:
- NCLT, Principal Bench and NCLT, New Delhi Bench
- NCLT, Ahmedabad Bench
- NCLT, Allahabad Bench
- NCLT, Bengaluru Bench
- NCLT, Chandigarh Bench
- NCLT, Chennai Bench
- NCLT Guahati Bench
- NCLT Hyderabad Bench
- NCLT Kolkata Bench
- NCLT Mumbai Bench
Functions of National Company Law Tribunal
Following is the list of functions performed by the National Company Law Tribunal:
- All the proceeding of a company related to arbitration, arrangements, compromise, reconstruction, and winding up will be only be disposed of by the Tribunal.
- The tribunal is also vested with power to dispose of case related to insolvency under the Insolvency and Bankruptcy Code of 2016.
(Note: For the above matters civil courts will have no jurisdiction.)
- All the cases that were pending before the Board for Industrial and Financial Reconstruction (BIFR) and Sick Industrial Companies (Special Provisions) Act of 1985, will only be disposed of by the tribunal.
- The tribunal will also take up cases related to the oppression and mismanagement of the company.
Advantages of the National Company Law Tribunal
The National Company Law Tribunal has helped to fasten the justice delivery system in India. Following are some of the key advantages of the tribunal:
- It provides a speedy trial. As NCLT is a specialized court only for companies are registered in India.
- It has helped to reduce the burden of all the high courts.
- It has helped to reduce the time taken to wind up a company
- As the tribunal is a quasi-judicial body, it is consist of both judicial and technical members while deciding a matter.
- Tribunal has the authority to appoint Amicus Curiae for opinion on various specialized legal issues.
- NCLT and NCLAT have exclusive jurisdictions.
What Are The Power Vested In The Tribunal?
The National Company Law Tribunal exercises the wide range of powers, which are as following:
- It has the power to seek assistance from Chief Metropolitan Magistrate.
- De-registration of Companies.
- It provides the remedy for oppression and mismanagement.
- It has the power to hear cases related to grievance of refusal of transfer securities and rectification of register of members.
- The tribunal has the power to provide relief to the aggrieved investors against a large set of wrongful actions committed by the management of the company.
- The tribunal has all the authority to freeze the accounts of the company. It can also put restrictions on any of the security of the company.
- It has the power to convert a Public Limited Company into a Private Limited Company.
- If the company fails to call an AGM (Annual General Meeting) as required by the Companies Act of 2013, then the tribunal has all the power to call such meeting.
Procedure to File a Case before National Company Law Tribunal
The following points are required to be kept in mind before filling a petition or an application, or an appeal before NCLT:
- All the documents filled in before the tribunal needs to be in English.
- All petitions, applications or appeals need to be filled in Form NCLT 1. This needs to be filled along with the attachment of notice of admission in Form NCLT-2.
- The title heading for proceeding shall be in Form NCLT.4
- An Affidavit shall verify every petition or application in Form NCLT 6.
- Notice of motion needs to be filed in Form NCLT.3.
- Where any petition or application is required to be advertised, it shall be announced by filling Form NCLT-3A.
Conclusion
The move of central government towards the constitution of National Company Law Tribunal (NCLT) as a single forum to adjudicate the cases of company law was welcomed by the shareholders in India. As it speed up the process of decision making also cut down all the unnecessary fragmentation and repetition. It also reduces the burden of the High Courts in India by forming NCLAT (National Company Law Appellate Tribunal. The establishment of the National Company Law Tribunal and the National Company Law Appellate Tribunal eradicated all these problems by simplifying the process of the delivery justice system.
Read Our Article: Commencement Of Winding Up Of A Company By Tribunal Under Companies Act 2013
