All the things you need to know in regards to the Nationwide Firm Regulation Tribunal (NCLT)

This article describes the concept of the National Company Law Tribunal (NCLT); written by Naina solanki student at the Prestige Institute for Management and Research.

introduction

The National Company Law Tribunal (NCLT) is a court-like body that judges matters and issues related to Indian companies established under the Companies Act 2013. It was approved by the Government of India on June 1st, 2016 under Section 408 of the Companies Act, 2013, based on the recommendation of the V Balakrishna Eradi Committee on the Bankruptcy and Dissolution of Companies Act.

Historical background

Prior to the establishment of the National Law Tribunal, business-related issues were resolved by the Company Law Board. In 2002, changes were made to the Companies Act 1956 to create a National Company Law Court instead of a Company Law Committee. There were 4 banks of the board Delhi, Kolkata, Mumbai and Chennai.

However, this 2002 change was challenged by Madras lawyer. Constitutionality was called into question, delaying the formation of NCLT.

Corporate issues related to industry and finance were dealt with by the Board for Industrial and Financial Corporation (BIFR) and its complainant. Also, the Supreme Court has made another decision on the merger and merger.

This means that there was no jurisdiction over corporate matters and these different bodies and courts complicated the process. There was a need for a body to deal with all company-related issues.

The National Company Law Tribunal 2013 was established by the Companies Act on June 1, 2016. This changed all procedures. In 2016, the Supreme Court upheld the Supreme Court ruling and the Company Law Board was abolished and its pending work was transferred to NCLT.

Previously, CA and CS could petition on corporate law, but if the matter leads to the high court attorney representing the company. After the establishment of NCLT, CA and CS will be treated as lawyers. The jurisdiction of the Supreme Court was transferred to NCLT.

Jurisdiction

After the establishment of NCLT, it acquired jurisdiction over the following:

  1. Corporate law director
  2. BIFR (board member for industrial and financial companies)
  3. AAIFR (Appeals Board for Industrial and Financial Reconstruction)
  4. Supreme Court

This means that the NCLT has the power to investigate the affairs of these boards of directors and companies in order to resolve business problems. Procedures under the law are also to be dealt with by this court, such as arbitration, compromise, liquidation etc.

Benches

National Company Law Tribunal benches

S.NO. name of the bank place Territorial jurisdiction
1 (a) National Corporate Law Tribunal, Principal Bank. (b) National Company Law Tribunal, New Delhi Bench. New Delhi (1) Territory of the Union of Delhi.
2 (a) National Company Law Tribunal, Ahmedabad Bench. Ahmedabad (1) Gujarat State (2) Dadra and Nagar Haveli Union Territory (3) Daman and Diu Union Territory
3 National Tribunal for Company Law, Allahabad Bench. Allahabad (1) State of Uttar Pradesh. (2) Uttarakhand State.
4th National Tribunal for Company Law, Amaravati Bench. Hyderabad (1) State of Andhra Pradesh
5 National Tribunal for Company Law, Bengaluru Bench. Bengaluru (1) State of Karnataka.
6 National Corporate Law Tribunal, Chandigarh Bench. Chandigarh (1) Himachal Pradesh State. (2) State of Jammu and Kashmir. (3) State of Punjab. (4) Union of Chandigarh territory. (5) State of Haryana.
7th National Corporate Law Tribunal, Chennai Bench. Chennai (1) State of Tamil Nadu. (2) Territory of the Union of Pondicherry.
8th National Corporate Law Tribunal, Cuttack Bench. Cutack (1) Chhattisgarh State. (2) State of Odisha.
9 National Tribunal for Corporate Law, Guwahati Bench. Guwahati (1) Arunachal Pradesh State. (2) State of Assam. (3) State of Manipur. (4) State of Mizoram. (5) Meghalaya State. (6) Nagaland State. (7) State of Sikkim. (8) State of Tripura.
10 National Tribunal for Company Law, Hyderabad Bench. Hyderabad (1) Telangana State.
11 National Corporate Law Tribunal, Indore Bench. Ahmedabad (1) Madhya Pradesh State
12th National Tribunal for Company Law, Jaipur Bench. Jaipur (1) State of Rajasthan.
13th National Tribunal for Corporate Law, Kochi Bench. Kochi (1) State of Kerala (2) Laksha Union Territory
14th National Company Law Tribunal, Kolkata Bench. Kolkata Bank (1) State of Bihar. (2) Jharkhand State. (3) State of West Bengal. (4) Territory of the Union of Andaman and Nicobar Islands.
15th National Tribunal for Corporate Law, Mumbai Bench. Mumbai Bank (1) State of Goa. (2) Maharashtra State.

Source: https://nclt.gov.in/content/national-company-law-tribunal-benches

There are currently 16 banks, six in New Delhi together with the main bank, two in Ahmedabad, Chennai and Kolkata, three in Hyderabad, one in Amaravathi, five in Mumbai and one each in Allahabad, Bengaluru, Chandigarh, Cuttack, Guwahati. Jaipur and Kochi.

* All banks except Amravathi are dividing banks.

* Indore Bank has not yet been notified.

Structure of the benches

Each bank is headed by a president, 16 judicial members and 9 technical members. The current and first president of the NCLT is Justice MM Kumar.

NCLAT

It is the court of appeal for cases decided by NCLT. It is formed by the Government of India under Section 410 of the Act. A company can also appeal to the Supreme Court if it is not satisfied with the NCLT or NCLAT decision.

NCLT functions

  1. Registration / deregistration of companies
  2. Transfer of Shares / Rejection of Shares
  3. insoles
  4. Investigative powers
  5. Freeze Company Assets
  6. Conversion of a stock corporation into a limited liability company (Section 459)
  7. Class action
  8. Reopening accounts
  9. Dissolution of the company
  • Registration of companies

A company may be deregistered from NCLT if the Certificate of Registration is improperly or illegally obtained under Section 7 (7) of the Companies Act, 2013 of the Companies Act, 2013.

If a company declines or declines to transfer any stock or stock, NCLT can intervene as the company gets closer.

Any matter that arises from deposits in a company can be referred to the tribunal.

It could also take place in India and outside of it. Previously an application by 200 people was filed, now 100 to order an investigation by NCLT.

Under Section 221 of the Companies Act 2013, NCLT may freeze the assets of a company that is under investigation or auditing.

  • Conversion of a stock corporation into a limited liability company (Section 459)

Sections 13 to 18 deal with the transformation of a company. It states that NCLT authorization is required for such an action.

  • Dissolution of the company

Under Section 242 of the Companies Act 2013, NCLT has the power to dissolve a company.

Conclusion

NCLT is a tribunal that has played the roles of various other bodies. NCLT is the ultimate authority for all businesses in India. This speeds up the dispute settlement process in India. Instead of going to court, this is a quick mechanism that companies can turn to for relief.

NCLAT in New Delhi is the Court of Appeal which in turn helps ease the workload of the Supreme Court by allowing a company to appeal to NCLAT in the Supreme Court. Although the Indian Constitution provides that orders can be challenged by any court in the Supreme Court, it is the highest court of appeal in the country.

NCLT has changed the dispute settlement mechanism of Indian companies, equating professionals with lawyers and eliminating the need for companies to initiate legal proceedings.

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