National Company Law Tribunal (NCLT)

National Company Law Tribunal (NCLT) is a proposed quasi-judicial body in India that will
govern the companies in India.
It will be established under the Companies Act, 2013 and is a successor body of the Company
Law Board.
The principal bench of NCLT is expected to be established in New Delhi. NCLT will have the
same powers as assigned to the erstwhile Company Law Board (which are mostly related to
dealing with oppression and mismanagement), Board for Industrial and Financial
Reconstruction (BIFR)(revival of sick companies) and powers related to winding up of
companies (which was available only with the High Courts).
Specialized Tribunals -Alternative Institutional Mechanisms Enabling Specialized Tribunals :
Part XIVA of the constitution was inserted by Constitution (42nd Amendment) Act, 1976
containing Articles 323 A and 323B , providing for Tribunals.
Supreme Court validated the theory of alternative institutional mechanism in SP Sampath Kumar
V. Union Of India, 1985 (4) SCC 458
A number of quasi-judicial forums and tribunals like Debts Recovery Tribunal (DRT),
Securities Appellate Tribunal (SAT), Company Law Board (CLB), Board for Industrial and
Financial Reconstruction (BIFR) were established to provide speedier and specialized for a for
dispensation of justice.
A Comprehensive Company Law Tribunal
The Companies (Second Amendment) Act, 2002 provided for a single National Company Law
Tribunal (NCLT) for combining the jurisdiction of various bodies administering the Companies
Act, 1956 (1956 Act).
The proposed Tribunal was challenged in Thiru R. Gandhi, President, Madras Bar Association vs.
Union of India, wherein the Madras High Court held that certain aspects of the tribunal were
against the basic structure of the constitution and thus unconstitutional. However, the Supreme
Court of India on 11th May, 2010 ruled that the provisions of Companies (Second Amendment)
Act, 2002 pertaining to transfer of several judicial and quasi-judicial powers to NCLT are
constitutionally valid subject to amendments being made to make the Tribunals members
independent.
With the Supreme Courts green light, the Companies Act, 2013 (New Act) now provides for the
constitution of NCLT & National Company Law Appellate Tribunal (NCLAT).
Merits
Streamlining: Amalgamating the administration of justice under the company law within one
Tribunal.
Depth: A good mix of senior judicial and technical members. The members of NCLT are
intended to have greater expertise and experience to adjudicate disputes more efficiently and
expeditiously.
Speed: Every proceeding before the Tribunal to be dealt with and disposed of as expeditiously as
possible. Tribunal to endeavour to dispose the proceedings within 3 months from the date of
commencement of the proceeding before it. In case appeal against the order of the Tribunal is not
filed within the period of 45 days, then the Tribunal on being satisfied for the reason of delay, can
allow the appeal to be filed after the expiry of aforesaid period, only if the said appeal is filed
within additional period of 45 days after the expiry of the prescribed period and not any indefinite
period as available under the 1956 Act.

Under the New Act, NCLT & NCLAT

will have jurisdiction & powers vested in

CLB under the Companies Act,

BIFR & AAIFR under the Sick

1956 primarily oppression

and mismanagementC

Industrial Companies (Special

Provisions) Act, 1985

High Courts primarily in

relation to winding-up,
amalgamation, restructuring
and appeals from CLB

The National Company Law Tribunal (NCLT), which would replace the Company Law Board, is
likely to be operational by April next year, with the principal bench based in the national capital.
The tribunal is to be set up under the Companies Act, 2013. The legislation is being implemented
by the Corporate Affairs Ministry.
The plan is to have to have about 12 to 13 NCLT benches in different parts of the country but a
final decision is yet to be taken, according to a source. "NCLT is expected to be operational by
April 2014
To begin with, the existing benches of Company Law Board would be converted into NCLT
ones. Then, in due course, new benches would be created. Meanwhile, the Ministry has started
the consultation process for creation of new posts for the tribunal. In this regard, it has written to
the Finance Ministry as well as the Department of Personnel and Training, the source said. The
tribunal would have a President, judicial and technical members. The President should be a
person who is or has been a High Court judge for at least five years.
To become a judicial member at NCLT, an individual is or should have been a High Court judge
or district judge for at least five years or with a minimum of ten years experience as an advocate
of a court. Meanwhile, among others, chartered accountants or cost accountants or company
secretaries having at least 15 years of experience are eligible to be technical members. The
appeals against NCLT orders would be heard by the proposed National Company Law Appellate
Tribunal, which would have a chairperson, judicial and technical members.
Untangling the Web
High Court
CLB
BIFR
NCLT
Within the HC
High Court (HC),
AAIFR , then
NCLAT, then
Appeals
and then to
then appeal to SC
writ petition to
appeal to SC
Supreme Court (SC)
HC
Sitting Chief
Chairman need
Chairman need
President to have
Chairperson
Justice
not
be
retired
HC
not
be
retired
been HC judge
&
judge
HC judge
for at least 5
Eligibility
years.
Each state has a
Principal Bench at New Delhi
Such number of
Geography
HC or its Bench.
New Delhi, and
benches as may
four Regional
be specified by
Benches located at
Central
New Delhi,
Government.
Mumbai, Kolkata
Principal Bench
and Chennai
at New Delhi

The New Act does not contain provisions dealing with processes, time lines etc. More clarity is expected
to be provided by the rules yet to be notified.
Need for transitional provisions. Certain time critical processes such as Schemes under section
391 of the 1956 Act which involve two motions will need to be transitioned carefully.
Reserved judgements of CLB are likely to be re-heard by NCLT. NCLAT is not empowered to
entertain an appeal against the order of CLB. Therefore, High Court powers under 10F of the
1956 Act have been saved.
The number and geographical spread of benches needs to be carefully considered as access to justice
should not be hampered by logistics.