Powers of National Company Law Tribunal

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Published on: 20 November 2024

When the Companies Act 1956 was still in force, the Company Law Board (CLB) would adjudicate matters related to company law. However, when Companies Act 2013 came into force, the CLB was dissolved and the National Company Law Tribunal (NCLT) was established. 

NCLT means a quasi-judicial body in India which decides on matters concerning companies in India. It was set up by the Ministry of Corporate Affairs (MCA) under Section 408 of the Companies Act 2013. In this interesting Registrationkraft blog post, we shall discuss the powers of the National Company Law Tribunal. 

Background of NCLT

The National Company Law Tribunal was not established right after the Companies Act 2013 came into force. It took a few years before NCLT was finally established on 1st June, 2016. Because of the changes in the Indian economy and increase in the corporate activities, the need for a specialized tribunal was felt by the Central Government. The tribunal was formed by the MCA to handle complex corporate disputes, company law matters and cases related to insolvency and bankruptcy.

The formation for NCLT was recommended by the V. Balakrishna Eradi committee in 2000. The committee focused on laws related to insolvency and winding up of companies in India. The Board for Industrial and Financial Reconstruction (BIFR) and the Company Law Board (CLB) were superseded by the NCLT. The Companies Act of 1956 created the CLB to resolve issues concerned with the company law while the Sick Industrial Companies (Special Provisions) Act of 1985 created the BIFR. 

The NCLT has the authority to decide cases including allegations of corporate oppression, poor management, company winding up, and other matters. Each of the 16 benches in the NCLT is led by a president. Cases pertaining to the Companies Act of 2013 and the Insolvency and Bankruptcy Code of 2016 are heard by the benches’ judicial and technical members.

Understanding the Legal Powers of NCLT

The National Company Law Tribunal is governed by the rules laid down in the Code of Civil Procedure and directed by the principles of natural justice, subject to the other provisions of the Act and any rules made thereunder or by the central government. The NCLT enjoys the following legal powers:

  • The National Company Law Tribunal (NCLT) has the power to request assistance from the Chief Metropolitan Magistrate for winding up proceedings for a company under the Companies Act 2013, Insolvency and Bankruptcy Code, 2016 proceedings and proceedings relating to a sick company.
  • If there were procedural errors during company incorporation or registration, The NCLT can question such a company’s legitimacy.
  • If a company was registered through illegal or wrongful means, then it can be de-registered by NCLT.
  • If a company was acquired through unlawful or improper means, the NCLT may declare liability of members unlimited according to Section 7(7) of the Companies Act, 2013. 
  • NCLT can remedy oppression and mismanagement of a company.
  • It has the power to hear grievances of refusal of corporations to transfer securities and to rectify the register of members. 
  • Interest of various stakeholders of a company, including non-promoter shareholders and depositors, are provided by the tribunal.
  • The tribunal has the power to provide relief to investors against a large set of wrongful actions committed by the company management or consultants and advisors associated with the company.
  • NCLT can freeze a company’s assets under Section 221 of the Companies Act 2013.
  • It can investigate the company’s ownership.
  • The Tribunal has the authority to summon a general meeting if the company is unable to hold an annual general meeting as required by the Companies Act or has not held an extraordinary general meeting.
  • It has the authority to change the financial year of a company registered in India.
  • Although it does not permit reopening of accounts, NCLT has the power to order the company to reopen its accounts or to permit the company to make revisions to its financial statements. Through its director, the company may itself request a modification of its financial statement from the Tribunal.
  • It has the power to place restrictions on any of the company’s securities. 

Jurisdiction Benches of NCLT

The National Company Law Tribunal benches under various jurisdictions in India as can be seen in the table below:

National Company Law Tribunal Benches Concerned Jurisdictions
Ahmedabad Bench States and UTs: Gujarat, Daman and Diu & Dadra and Nagar Haveli
Allahabad Bench States: Uttar Pradesh & Uttarakhand
Amaravati Bench State: Andhra Pradesh
Bengaluru Bench State: Karnataka
Chandigarh Bench States and UT: Haryana, Punjab, Jammu and Kashmir, Himachal Pradesh & Chandigarh
Chennai Bench State and UT – Tamil Nadu & Pondicherry
Cuttack Bench States: Odisha & Chhattisgarh
Delhi Bench UT: Delhi
Principal Bench
Guwahati Bench States – Arunachal Pradesh, Assam, Manipur, Mizoram, Meghalaya, Nagaland, Sikkim & Tripura
Hyderabad Bench State: Telangana
Indore Bench State: Madhya Pradesh
Jaipur Branch State: Rajasthan
Kochi Bench States and UT: Kerala & Lakshadweep
Kolkata Branch States and UT: West Bengal, Bihar, Jharkhand and Andaman and Nicobar Islands
Mumbai Bench States: Goa and Maharashtra

Benefits of Filing a Case with NCLT

The NCLT handles a variety of cases related to arbitration, compromise, arrangements, reconstructions, and insolvency resolution process. The following are the benefits of filing a case with NCLT:

  • One of the main advantages of filing a case with NCLT is that it offers a speedy resolution process for companies as this tribunal is specifically for company-related matters. This is in contrast to the traditional courts wherein cases can sometimes go on for decades. 
  • Judges serving NCLT benches have in-depth knowledge regarding the company law, ensuring that the complex corporate cases are handled with expertise. 
  • A more favorable outcome for your company can be achieved at NCLT with the assistance of a top NCLT lawyer having the required expertise. 
  • NCLT puts a special emphasis on fairness and transparency in judicial functioning and ensuring unbiased judgements on the basis of facts and legal norms. 
  • NCLT ensures that the Insolvency and Bankruptcy Code (IBC) cases are resolved within a 180-day period, with a 90-day extension option. This helps companies to avoid legal battles which are too lengthy. 
  • The tribunal can effectively manage various legal issues related to shareholder disputes, mergers and acquisitions, financial restructuring, and insolvency cases. 

Conclusion

In this blog post, we discussed the powers which lie with the National Company Law Tribunal (NCLT). Further, we also discussed the background of this tribunal and the benefits of filing a case with it. The NCLT has assisted many businesses in speedy resolution for their matters pertaining to company law. If you enjoyed this blog post, make sure to check out the rest of the blog posts available at Registrationkraft!

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