National Company Law Tribunal
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:
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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.
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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.
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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.
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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.
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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.
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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:
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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.
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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.
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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.
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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.
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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.
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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.