National Company Law Tribunal

12 June 2024
5 min read
National Company Law Tribunal
whatsapp
facebook
twitter
linkedin
telegram
copyToClipboard

Earlier, the Company Law Board (CLB) and the Board for Industrial and Financial Reconstruction (BIFR) laid down the powers and functions of companies in India. However, on June 1, 2016, under Section 408 of the Companies Act 2013, the National Company Law Tribunal (NCLT) was established to address the malpractices and mismanagement happening in Indian companies. 

Read this blog to learn more about NCLT, its benches, objectives, and more.

What is National Company Law Tribunal

The National Company Law Tribunal is a quasi-judicial body established to resolve disputes arising in Indian companies.

The NCLT was formed based on recommendations from the Justice Eradi Committee of the  Central Government of India. It focuses on laws concerning the insolvency and winding up of companies.

The NCLT serves as a special court with exclusive jurisdiction over cases related to civil court matters. The composition of the National Company Law Tribunal includes a president and the necessary judicial and technical members.

National Company Law Tribunal Jurisdiction Benches

The following table lists the National Company Law Tribunal (NCLT) benches under different jurisdictions:

National Company Law Tribunal (NCLT) Benches

Jurisdiction

Ahmedabad Bench

State - Gujarat

Union Territory of Daman and Diu

Union Territory of Dadra and Nagar Haveli

Allahabad Bench

State - Uttar Pradesh

State - Uttarakhand

Amaravati Bench

State - Andhra Pradesh

Bengaluru Bench

State - Karnataka

Chandigarh Bench

State - Haryana

State - Punjab

State - Jammu and Kashmir

State - Himachal Pradesh

Union Territory of Chandigarh

Chennai Bench

State - Tamil Nadu

Union Territory of Pondicherry

Cuttack Bench

State - Odisha

State - Chhattisgarh

Delhi Bench

Union Territory of Delhi

Principal Bench

Guwahati Bench

State - Arunachal Pradesh

State - Assam

State - Manipur

State - Mizoram

State - Meghalaya

State - Nagaland

State - Sikkim

State - Tripura

Hyderabad Bench

State - Telangana

Indore Bench

State - Madhya Pradesh

Jaipur Branch

State - Rajasthan

Kochi Bench

State - Kerala

Union Territory of Lakshadweep

Kolkata Branch

State - West Bengal

State - Bihar

State - Jharkhand

Union Territory of Andaman and Nicobar Islands

Mumbai Bench

State - Goa

State - Maharashtra

Objectives of National Company Law Tribunal

The following are the objectives of the National Company Law Tribunal:

  • Simplifying Dispute Resolution

It streamlines the corporate dispute resolution process by replacing multiple forums and tribunals with a single specialised body. It aims to resolve disputes more efficiently and avoid delays and overlapping jurisdictions.

  • Efficient Adjudication of Disputes

The NCLT acts as a quasi-judicial body with powers akin to those of a civil court, aiming to resolve corporate disputes fairly and promptly. It seeks to bring together expertise in company law matters for effective resolution, even in complex cases.

  • Facilitating Business

With the goal of promoting a business-friendly environment, the NCLT consolidates and simplifies dispute resolution processes. This helps boost confidence among businesses and stakeholders, making transactions smoother and enhancing the ease of doing business.

  • Streamlining Insolvency Resolution

The NCLT plays a vital role in overseeing insolvency resolution processes, ensuring transparency and efficiency. It initiates proceedings, appoints professionals, and monitors the resolution process to benefit both debtors and creditors.

  • Protecting Stakeholder Interest

Besides corporate developments, the NCLT prioritises the rights of stakeholders in its judgments. It aims to deliver fair resolutions within stipulated time frames, safeguard the rights of minority shareholders, and promote corporate governance.

  • Facilitating Corporate Restructuring

It approves corporate restructuring initiatives like mergers and acquisitions, ensuring they benefit stakeholders' interests and comply with regulatory frameworks. This promotes business growth while preventing the potential misuse of restructuring processes.

Functions of the National Company Law Tribunal

The following are some of the major functions of the NCLT:

  • Company Registration

Under the Companies Act, 2013, the NCLT has the authority to address issues related to the legitimacy of company registrations. It can cancel registrations, dissolve companies, and hold members liable, ensuring compliance with the law.

  • Share Transfer

The NCLT addresses complaints regarding the rejection of companies' shares and securities transfers, which were previously handled by the Company Law Board under sections 58-59 of the Act.

In the past, the Companies Act of 1956 had limited solutions for rejected transmission or transfer to shares and debentures. However, under the Companies Act of 2013, this scope has expanded to cover all securities issued by any company.

  • Deposits

Chapter V of the Companies Act of 2013 focuses on deposits, which were initially overseen by the Company Law Board. However, with the establishment of the National Company Law Tribunal, its authority expanded to cover matters outlined in Chapter V.

Notably, the regulations regarding deposits were in place before the NCLT was created. Now, dissatisfied depositors can pursue class action suits in the NCLT to address any company actions impacting their rights as depositors.

  • Asset Freezing

Section 221 of the Companies Act 2013 grants the NCLT the authority to freeze a company's assets. The tribunal has the authority to freeze assets for later use during investigations or scrutiny.

Additionally, it can initiate investigations upon request or under specific conditions outlined in the Companies Act 2013.

  • Investigative Powers

An NCLT can order investigations into company affairs based on applications from 100 members or individuals demonstrating the need. These investigations can occur globally, with provisions for collaboration with foreign courts and agencies.

  • Conversion of Companies

Sections 13 to 18 of the Companies Act 2013, in conjunction with Rule 41 of the Companies (Incorporation) Rules 2014, mandate NCLT approval for converting a public limited company to a private limited company. NCLT can also impose conditions per Section 459 of the Companies Act 2013.

The Bottomline

The National Company Law Tribunal plays a crucial role in streamlining the corporate resolution process, including examining facts, conducting discussions, and finalising legal proceedings. It strives to resolve corporate disputes more efficiently, within set timeframes, and with clear decision-making processes.

You may also be interested to know

1.

Everything About Public Sector Undertakings (PSUs) in India

2.

What is Corporate Insolvency Resolution Process

3.

Types of Companies in India

4.

Here’s What You Need to Know About Investment Declaration

5.

Financial Regulatory Bodies in India
Do you like this edition?
ⓒ 2016-2024 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 5.1.9
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  GROWWMF |  SBI |  AXIS |  HDFC |  UTI |  NIPPON INDIA |  ICICI PRUDENTIAL |  TATA |  KOTAK |  DSP |  CANARA ROBECO |  SUNDARAM |  MIRAE ASSET |  IDFC |  FRANKLIN TEMPLETON |  PPFAS |  MOTILAL OSWAL |  INVESCO |  EDELWEISS |  ADITYA BIRLA SUN LIFE |  LIC |  HSBC |  NAVI |  QUANTUM |  UNION |  ITI |  MAHINDRA MANULIFE |  360 ONE |  BOI |  TAURUS |  JM FINANCIAL |  PGIM |  SHRIRAM |  BARODA BNP PARIBAS |  QUANT |  WHITEOAK CAPITAL |  TRUST |  SAMCO |  NJ