NCLT and NCLAT under Company Law
About NCLT and NCLAT.

A ‘tribunal’ is an administrative body established to carry out quasi-judicial functions. An administrative tribunal isn’t a court or a government agency. It strikes a balance between a court and a government agency.

The creation of tribunals was driven by the necessities of the circumstances, which demanded the enforcement of new rights in the wake of growing state activities and the development of justice demands.

Meaning of National Company Law Tribunal (NCLT)

The NCLT, also known as the tribunal, is a quasi-judicial body established to resolve corporate civil disputes under the Companies Act of 2013. It is a legal entity with the same powers and procedures as a judge or a court of law. NCLT is supposed to evaluate facts, make decisions based on natural justice principles and issue orders according to its findings.

Bare Act PDFs

Constitution of NCLT

According to section 8 of the Companies Act, 2013, there is a provision that the central government by notification may establish a tribunal that will be called the National Company Law Tribunal. It will consist of a president, judicial and technical members whose number will be decided by the central government as it may deem necessary. These members and the president will exercise and discharge the powers and functions prescribed under this Act or any other law for the time being.

Meaning of National Company Law Appellate Tribunal (NCLAT)

The NCLAT, or Appellate Tribunal, is a body established to hear appeals against the tribunal’s decisions. It was established to correct the tribunal’s mistakes. It is an intermediate appellate forum where appeals are heard after the tribunal’s decision. The Appellate Tribunal’s decisions can be appealed to the Supreme Court.

Constitution of NCLAT

By issuing a notification, the central government has the power to establish an Appellate Tribunal, which is known as the National Company Law Appellate Tribunal.

NCLAT consists of a chairperson and a maximum of eleven judicial and technical members as the central government may deem fit, to be appointed by notification for hearing appeals against the tribunal or the National Financial Authority’s orders. It will come into effect from such date as may be specified in the Companies Act, 2013.

Difference Between NCLT and NCLAT

Primary jurisdiction is handled by the NCLT, while the NCLAT handles appeals.

NCLAT is a relatively higher forum than NCLT. NCLT is usually presented with evidence and witnesses for decision-making, while NCLAT evaluates and checks NCLT’s decisions on the point of law or fact.

The Tribunal (NCLT) is primarily in charge of fact-finding and evidence gathering, while the Appellate Tribunal (NCLAT) makes decisions based on evidence and witnesses already gathered.

Powers and Functions of NCLT

National Company Law Tribunal works as a court to solve disputes arising in a company. Therefore, NCLT has certain powers, and let’s learn about them one by one.

Orders Given by NCLT

Tribunal has the power to pass an order as it deems fit after giving the parties a proper opportunity of being heard.

The tribunal can amend any order it has passed in order to correct any mistake, and the tribunal shall do so if the mistake is brought to its attention by the parties. Moreover, no such amendment shall be made in respect of any order against which an appeal has already been filed.

Every order issued by the tribunal under this provision must be sent to all parties involved therein.

Expeditious Disposal by Tribunal and Appellate Tribunal

Every application or petition presented to the tribunal, and every appeal filed with the Appellate Tribunal, shall be dealt with and decided as quickly as possible. And the tribunal or the Appellate Tribunal shall make every effort to dispose of such application, petition, or appeal within three months of its presentation to the tribunal or the filing of the appeal with the Appellate Tribunal.

If an application, appeal, or petition is not disposed of within three months, then the tribunal or Appellate Tribunal shall record their reasons for non-disposal and the president or chairperson, after reading the recorded reason, can extend the time period but not exceeding 90 days.

Power to Punish for Contempt

The tribunal and the Appellate Tribunal must have the same jurisdiction, powers, and authority as High Court if any person or company does contempt of the tribunal. The tribunal may exercise the provisions granted by the Contempt of Courts Act, 1971 for this purpose.

Delegation of Powers

The tribunal or the Appellate Tribunal by general or special order can direct any of its officers, employees, or any other authorised person to inquire into any matter connected with any proceeding and report the same in such manner as may be specified in the order.

Right to Legal Representative

A party to a proceeding or appeal before the tribunal or the Appellate Tribunal, as the case may be, may appear in person or appoint one or more chartered accountants, company secretaries, cost accountants, legal practitioners, or any other person to represent him before the tribunal or the Appellate Tribunal.

Conversion of Public Company Into Private Company

When a company converts from a public to a private company, section 13 to 18 of the Companies Act, 2013, read with Rule 41 of the Companies (Incorporation) rule 2014, the NCLT must approve the conversion. Section 459 of the Companies Act allows the tribunal to impose terms and conditions.

Deregistration of Companies

Procedural errors made during registration can now be challenged at any moment. The tribunal has the authority to take several actions, including cancelling the company’s registration and dissolving it. The tribunal also has the authority to declare member’s responsibility to be unlimited.

Section 7(7) of the Companies Act, 2013 establishes a new method for deregistration of companies in particular cases, such as where a company’s registration was gained in an illegal or wrongful manner. Deregistration differs from winding up and striking off as a treatment option.

Conclusion

NCLT was established for a speedy judgment of the cases keeping in mind that the judges and the courts are already over-burdened with a lot of cases, and there are many pending cases in the court.

Therefore, a separate forum was made for the disputes relating to companies to provide a speedy trial.

Any person who is not satisfied by the judgment given by NCLT may appeal to NCLAT and then to the Supreme Court.

Read Next:
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2. What Is Articles of Association of a Company
3. What Is Memorandum of Association of a Company

ABOUT OUR AUTHOR
Author Anushka Saxena
Anushka Saxena is pursuing B.A.L.L.B (3rd year) from the Indore Institute of Law. She is hard-working, dedicated and committed to her work. She loves to explore new things and gain knowledge.
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