The Central Government has constituted National Company Law Tribunal (NCLT) under section 408 of the Companies Act, 2013.
The National Company Law Tribunal NCLT is a quasi-judicial body, exercising equitable jurisdiction, which was earlier being exercised by the High Court or the Central Government. The Tribunal has powers to regulate its own procedures.
The establishment of the National Company Law Tribunal (NCLT) consolidates the corporate jurisdiction of the following authorities:
- Company Law Board
- Board for Industrial and Financial Reconstruction.
- The Appellate Authority for Industrial and Financial Reconstruction
- Jurisdiction and powers relating to winding up restructuring and other such provisions, vested in the High Courts.
In the first phase the Ministry of Corporate Affairs have set up eleven Benches, one Principal Bench at New Delhi. These Benches will be headed by the President and 16 Judicial Members and 09 Technical Members at different locations.
Powers of NCLT
The NCLT has been empowered to exercise the following powers:
- Most of the powers of the Company Law Board under the Companies Act, 1956.
- All the powers of BIFR for revival and rehabilitation of sick industrial companies;
- Power of High Court in the matters of mergers, demergers, amalgamations, winding up, etc.;
- Power to order repayment of deposits accepted by Non-Banking Financial Companies as provided in section 45QA of the Reserve Bank of India Act, 1934;
- Power to wind up companies;
- Power to Review its own orders.
The NCLT shall have powers and jurisdiction of the Board for Industrial and Financial Reconstruction (BIFR), the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), Company Law Board, High Courts relating to compromises, arrangements, mergers, amalgamations and reconstruction of companies, winding up etc. Thus, multiplicity of litigation before various courts or quasi-judicial bodies or forums have been sought to be avoided. The powers of the NCLT shall be exercised by the Benches constituted by its President.
Significance of NCLT
Resolution of disputes relating of companies affairs has been one the major roadblock in improving ease of doing business in India. Thousands of cases remain long pending in the courts despite having legal timeline of resolution. Such scenario hinder the new investments not only from outside even domestic companies are preferring to shift their Headquarters outside the countries and choosing more business amicable locations like Singapore to operate. Delay in dispute resolution not only stagnate the new investments it also lead to devaluation of assent and increases inefficiencies of businesses and market.
Till 2016 several bodies like the Company Law Board, Board of Industrial and Financial Reconstruction, the Appellate Authority for Industrial and Financial Reconstruction and High Courts were responsible for the judging the disputes concerning companies affairs, this multiplicity of adjudicating and governing bodies was also delaying the dispute resolution process.
The formation of the NCLT and the NCLAT is also a significant step towards attaining fast and efficient resolution of disputes relating to affairs of the Indian corporates. Being the sole forum dealing with company related disputes, these tribunals would also eliminate any scope for overlapping or conflicting rulings and minimise delays in resolution of disputes, thus, proving to be a boon for litigants.
Instead of getting different decisions on the same matter by different High Courts, consolidation of jurisdiction will help the Tribunal Members and Judges in delivering uniform decisions and thereby removing any ambiguity and friction.
To ensure fair play and avoidance of judicial error, the procedural laws provide for appeals, revisions and reviews, and allow parties to file innumerable applications and raise vexatious objections as a result verdict get delayed.
Appeals against the order of the NCLT will go to NCLAT, exclusively dedicated for this purpose. Further appeal to the Supreme Court will only be on any question of law, thereby reducing the delay in appeals as earlier, the decisions of the Company Law Board were challenged before the High Court and then in the Supreme Court.
Consolidation of Corporate jurisdiction will lead to convergence rather than divergence and will maintain uniformity in the system.
