National Company Law Tribunal (NCLT)

                                                National Company Law Tribunal (NCLT)

 

The National Company Law Tribunal (NCLT) is a quasi-judicial body in India that adjudicates issues relating to companies. It was established under the Companies Act, 2013 and came into existence in 2016. The NCLT is responsible for handling various corporate disputes and insolvency proceedings.

 

Key Functions of NCLT:

1. Company Law Matters:
• Merger, demerger, and restructuring of companies.
• Oppression and mismanagement cases.
• Reduction of share capital.
• Rectification of company registers.
• Approval of compromises and arrangements.
2. Insolvency and Bankruptcy Cases:
• Insolvency resolution process for companies and limited liability partnerships (LLPs) under the Insolvency and Bankruptcy Code (IBC), 2016.
• Liquidation of companies.
3. Other Powers:
• Hearing appeals against orders of the Registrar of Companies.
• Handling cases related to the revival and rehabilitation of sick companies.

 

Importance of NCLT:

• It replaced the Company Law Board (CLB) and some functions of the High Courts regarding company law.
• It provides a specialized forum for company and insolvency law cases, ensuring faster and more expert resolution.
• The decisions of NCLT can be appealed to the National Company Law Appellate Tribunal (NCLAT), and subsequently to the Supreme Court of India.

Composition

The tribunals shall consist of a President and required number of judicial and technical members as considered necessary by the central government. These members of the tribunal are appointed by the central government through a notification to exercise the powers which are given to the tribunal. The president and the chairperson and other judicial members of the tribunal are appointed after consultation with the chief justice of India. 

The president and every member of the tribunal shall serve a 5 year term from the date of assuming office and shall be eligible for reappointment for an additional term of 5 years. Also a member of the tribunal shall hold office till he attains the age of 67 if he is a President and the age of 65 if he is a member. 

The establishment of National company Law tribunal NCLT and National Company Law appellate tribunal is a significant step towards streamlining and simplifying all judicial matters related to company law under a single framework.

The central govt appoints the national company law appellate tribunal with the main task of hearing appeals against the orders passed by the NFRA or national financial reporting authority

Orders of the tribunal

Now moving to the orders of the tribunal .The tribunal will give the companies or any parties a reasonable opportunity to be heard before passing any order. The tribunal within 2 years from the date of an order can amend or rectify any mistakes from the record, if such mistakes are brought to the notice of the tribunal. The tribunal and the appellate tribunal have the same jurisdiction, powers and authorities regarding contempt as those exercised by the High court.

The salary allowances and other terms and conditions related to the service of the members of the tribunal and the appellate tribunal shall be as prescribed by the law.

Moving on, if the president, the chairperson or any member of the tribunal wishes to resign he should do this by giving a notice in writing to the central government. However in spite of this resignation letter the president, the chairperson or member shall continue to hold office for a maximum of 3 months or until a successor is appointed or until the expiry of their term whichever occurs first.

The Central Government, after consulting the Chief Justice of India, may remove the President, Chairperson, or any Member from office if they:

(a) Are declared insolvent.

(b) Are convicted of an offense involving moral turpitude, as determined by the Central Government.

(c) Become physically or mentally incapable of performing their duties.

(d) Acquire a financial or other interest that may adversely affect their functions.

(e) Misuse their position in a manner that makes their continuation in office detrimental to public interest.

 

The tribunal deals with disputes related to registration and management of companies as per the company act. The tribunal can direct the company to change its auditors if it is satisfied that the auditor has either directly or indirectly engaged himself in fraudulent conduct or has aided or been a part of any fraud involving the company, its directors or officers. 

When an application is filed with the National company Law tribunal seeking relief against operation or miss management the tribunal after conducting its proceedings can remove any director of a company if deemed necessary.

The tribunal also deals with the cases related to the operation of shareholders or mismanagement by the board of directors of a company. The tribunal also deals with insolvency and bankruptcy cases.

A.Muthuramalingam

L.Sanjeev

I B.Com