Statement: “NCLT IS THE NEED OF THE

HOUR”

NCLT Official Website: https://nclt.gov.in/

Introduction:
Introduction of any new reform come with its own set of challenges. One such reform is the introduction of
NATIONAL COMPANY LAW TRIBUNAL in India. The rise of an economy in today’s modern context
depends not only on the opportunities but also on the soundness of the business environment of a country.
The legal environment is one of the key factors deciding the ease of doing business in a country. India has
a long and great legacy in terms of its Judicial Infrastructure. Prior to the formation of National Company
Law Tribunal and Appellate Tribunal, India had Company law Board. This change from CLB to NCLT is a
massive shift and has its own benefits and challenges. Later, in the recent years the seeds of NCLT have
been sown and it started bearing fruitful results soon. This work elaborates on the reasons as to why NCLT
is the need of the hour and the primary reasons for the shift in course.

What is NCLT?
NCLT is a semi or a quasi-judicial body which that arbitrates and adjudicates the issues related to the
companies in India. NCLT now exercises the administrative powers which were exercised by the Company
Law board and the High courts.

Scope:
The National Company Law Tribunal (NCLT) consolidates the corporate jurisdiction of the Company Law
Board, Board for Industrial and Financial Reconstruction (BIFR), The Appellate Authority for Industrial and
Financial Reconstruction (AAIFR) and the powers relating to winding up or restructuring and other
provisions, vested in High Courts. Hence, the National Company Law Tribunal will consolidate all powers
to govern the companies registered in India. With the establishment of the NCLT and NCLAT, the Company
Law Board under the Companies Act, 1956 has now been dissolved.

When was it established?

The following timeline gives us a brief overview of NCLT’s evolution

2002 The Companies Second amendment act initiated the set-up of NCLT

2013 Established by the companies act of 2013

2015 The Madras Bar association challenged the constitutional validity in the SC

2016 Constituted from 1st June,2016 by the MCA, as a result of Eradi Committee
Who are the administrative personnel?
President, Judicial and Technical members are the steering hands of NCLT. Each member has a specialized
set of qualifications ranging from the years of experience, age to the field of study.

Judge of the Supreme Court or Chief Justice of a

President
High Court
NCLT

A present or retired judge of a High Court or is a

Judicial Members
judicial member of the tribunal for 5 years

A person of proven ability, integrity and standing

Technical Members having special knowledge and experience of not less
than 25 years

Where are the benches of NCLT located ?

NCLT has 15 regional benches, and a principal bench in the National Capital. The following image shows
the 15 benches of NCLT.

NCLT Time Frame:

As per the law, NCLT and NCLAT have to dispose off all the petitions and appeals within 3 months of
presentation and in any event within a further period of 90 days.

Appeal: Any aggrieved party can appeal to NCLAT (Appellate Tribunal) within 45 days of the order.

Company Law Board:

Under the Companies Act of 1956 the company law board was formed . Before NCLT the company law
board was the adjudicator the proceedings related to Indian companies.
CLB had 5 benches across the country including the principal bench in Delhi and consisted of not more
than 9 members.
Appeal:
Any aggrieved party can appeal to the High Court (of the state where the registered office is located)within
60 days from the date of order.

Why was NCLT established?

The following are the reasons for the shift from CLB to NCLT
 Excessive Burden of High Courts
 Speedy trials and Dispute settlement
 Lack of Specialisation and standardisation
 Cost and time constraints

Excessive Burden:
 The primary reason was the excessive burden faced by the high courts.
 They had numerous pending cases which led to the delay in the deciding the matters on mergers,
acquisitions, amalgamations, winding up , mismanagement and many more.
 Delays in resolving the issues of company had a huge impact on the economy of the country and
disrupted the entire flow of economic, financial and legal activities of the country. To reassure and
reduce the burden , NCLT was a necessary change to be initiated.

Speedy trials and Dispute settlement

 Faster settlement of dispute leads to the ease of doing business in India which is a very positive
factor in long run for which a specialised body like NCLT was needed.

Lack of Specialisation and standardisation:

 The tribunals were specialised in nature , dealing with the issues of companies and they followed the
set of standard procedures which came along with the establishment of tribunal and therefore there is a
single window for the settlement of all company related legal disputes .
 This helps in making up for the lack of specialisation that was prevalent and will avoid multiplicity
of proceedings .

Cost and time constraints:

 Having a standard procedure and specialised benches also made the entire legal process cost and
time efficient for all the parties and helped in the free flow of business activities and management
by authorities.

How did NCLT prove to be efficient and what are the results ?
Results of NCLT are as follows:
 Faster Dispute Resolvement and Efficient Redressal:
 Reduction of burden of High Courts:
 Relevant and Fastrack verdicts:
 One stop solution and specialization
 Class action suits
 Employment opportunities
 Transparency and simplified process
 India’s International performance

Faster Dispute Resolvement :

 NCLT is guided by the Companies Act 2013 and has settled the legal proceedings of companies at
ease and with efficiency.
 NCLT has efficiently disposed the cases in timely manner and when the pending cases rose around
20,000 during the lockdown , all the necessary steps to strengthen the ecosystem of NCLT were
taken.
  Steps like additional special benches, members were introduced in response to the emerging
requirements. By efficiently adopting , NCLT has successfully settled the disputes in timely manner.
 The legal issues involving mammoth multi-national companies are resolved within the stipulated
time and has increased the ease of doing business.

Reduction of burden of High Courts:

 All the cases in the purview of NCLT has been transferred from the high courts and has been
effectively dealt by the Tribunals. By this , NCLT has reduced the work of overburdened High
courts .
 This has resolved the purpose and puts the country in road to prosperity with an ease of doing
business.

Relevant and Fastrack verdicts:

 NCLT has 15 regional benches whereas company law board only had 5 benches it also has
special courts and by establishing various forums across India, it provides justice in speedy and
Fastrack manner.

A COMPARISON OF THE NUMBER OF REGIONAL BENCHES UNDER COMPANY

LAW BOARD AND NCLT

One stop solution and specialization:

 NCLT is a one stop solution for company’s legal disputes. The special court covers matters in the
jurisdiction of company law board, high courts, board for industrial and financial
reconstruction ,appellate authority for reconstruction and the matters of amalgamation, merger,
acquisitions ,winding up and liquidations.
 It is also in consonance with the IBC which was recently enacted and hence simplified the
liquidation procedures. The most important benefit that the tribunals will act as a single window for
settlement of all Company law related disputes effectively.
 It has avoided unnecessary multiplicity of proceedings before various authorities or courts.

Class Action Suits:

 Under this type of proceedings , a class of investors and creditors aggrieved by the same act can
jointly file a single suit in one forum, as opposed to individuals filing various suits in different
forums which, in turn will prevent litigious duplicity. For example, multiple shareholders can file
joint proceedings and seek cumulative relief against oppression by the management.

Employment opportunities:
 The establishment of NCLT has opened up the job opportunities for various qualified
professionals and has served as a forum for the great minds of the country. They are also planning
to open more regional benches which will serve as an excellent employment opportunities.

High Profile Cases:

 NCLT alone in its year of establishment recovered around 80,000 crore Rupees and had solved
numerous high profile cases and the legal disputes of corporate giants. A few of the cases include
RCOM pendency, Cyrus Mistry & Tata sons case, Future Retail vs Amazon case, DHFL case and
much more.
 Though certain cases exceeded time frame NCLT has done a commendable work in its nascent stage
and has handled several High profile cases with great precision.

Transparency and simplified process:

 With E- governance the tribunal has shown excellent degree of transparency right from the case
files to the verdict. It also falls under RTI act. all the details right from the judge’s name to the
intricacies are provided in the portal and is accessible to all the citizens of the country which makes
the tribunal a more reliable and transparent body.
  There is also E- Filing options available with guidance which makes the litigations simplified and
accessible to all.

India’s international performance:

 In the World Bank’s Ease of doing business ratings India stood in 142 place out of 190 countries. In
just 4 years India moved to 77 place.
 It improved 23 places in a short span of time and as of 2020 India is in 63rd position.In resolving
Insolvency , India stands at 52 place the reforms made in legal environment were fruitful and
impactful.
 The following is a snippet from the World Bank’s Doing Business Rank chart which shows India’s
performance in the years 2019 and 2020.

Source: World Bank Website

Source: WB Business Report

 The reasons for such low position in 2014 also included weak judicial structure in terms of
companies legal issues and NCLT has been the specialised, standardised, one stop solution which
steers all the legal issues and is now raising the bar in our country.
 Such great judicial infrastructure serves as a credit and increases the chances of India being the
leader in terms of economy.
The following is a compact checklist which illustrates why NCLT is the need of the hour and how
those issues were solved by NCLT :

S.No Why NCLT was the need of the hour? Did NCLT proved successful?
1 Excessive Burden in High courts Yes, It helped in reducing and redistributing the
burden
2 Lack of speedy trials and Efficient dispute Yes, NCLT has a time frame of three months + 90
settlement days and most of the cases are solved within this
frame efficiently.
3 Lack of Specialisation and standardisation Yes, it avoided multiplicity of proceedings and has
a standardized procedure.
4 Cost and Time Yes, NCLT procedures are cost and time efficient

Conclusion:
One shirt does not fit all. Introduction of any new reforms comes with its own set of benefits and
challenges. NCLT has paved way for a much needed judicial reform in our country. It can be said is that
in the light of increasing globalization and the need to move in-sync with changing times, it is a landmark
step that has been taken to promote better corporate dispute redressal mechanism and is bearing fruitful
results. Hence it can be rightly said that NCLT is the need of the hour and is carving much needed paths in
the judicial avenues.