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NCLAT
Introduction
Sec. 2(90) of the new Companies Act, 2013 defines ‘Tribunal’ as the National Company
Law Tribunal (NCLT) and Sec. 2(4) defines ‘Appellate Tribunal’ as National Company
Law Appellate Tribunal (NCLAT). The Act confers power on the Central Government to
constitute NCLT and NCLAT. These Tribunals are quasi judicial bodies to govern the
companies in India and administer the provisions of the Act. It has to replace the earlier
body known as Company Law Board (CLB). It would exercise almost similar powers that
were being assigned to CLB by the erstwhile Companies Act, 2013. The constitution of
NCLT, as envisaged, would streamline the administration of justice under the Act. It is
intended to have greater expertise to adjudicate disputes more efficiently and
expeditiously. The Appeal from NCLT order would lie before NCLAT. The second appeal
may be filed with the Supreme Court. The whole justice administration system has been
made time bound by the Act. The Tribunals would comprise of senior judicial and
technical members. These Tribunals will not be bound by the procedure laid down by
the Civil Procedure Code, 1908 and will have the power to regulate their own procedures.
These are to be further guided by the Principles of Natural Justice. Their orders will be
enforceable as a Court’s decree.
Constitution of National Company Law Appellate Tribunal (NCLAT) (Sections 410-411)
The Central Government shall constitute an Appellate Tribunal to be known as the
National Company Law Appellate Tribunal. It shall consist of a Chairperson and
members not exceeding eleven. The Central Government shall notify such
appointments. The Appellate Tribunal has to hear appeals against the orders of the
Tribunal. Sec. 411 establishes the eligibility criteria for the Chairperson and the
members. It provides that the Chairperson shall be a person who is or has been a Judge
of the Supreme Court or the Chief Justice a High court. A Judicial Member has to be a
person who is a sitting or retired Judge of High Court or Judicial Member of the Tribunal
for five years. A Technical Member shall be a person of proven ability, integrity and
standing having special knowledge and experience, for not less than twenty-five years,
in law, industrial finance, industrial management or administration, industrial
reconstruction, investment, accountancy, labour matters, or such other disciplines
related to management, conduct of affairs, revival, rehabilitation and winding up of
companies.
Selection of Members (Sec. 412)
The President of the Tribunal, the Chairperson and Judicial Members of the Appellate
Tribunal have to be appointed with consultation of the Chief Justice of India. The
Members of the Tribunal and Technical Members of the Appellate Tribunal have to be
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appointed on the recommendation of a selection committee consisting of:
The Secretary in the Ministry of Corporate Affairs shall be the Convener of the Selection
Committee. The said Committee shall determine its procedure for recommending
persons as mentioned above. However, no such appointment of the Members of the
Tribunal or the Appellate Tribunal shall be invalid due to any defect or vacancy in the
constitution of the Selection Committee.
POWERS AND FUNTIONS OF THE TRIBUNAL:
The NCLT & NCLAT is bound by the rules laid down in the Code of Civil Procedure and is
guided by the principles of natural justice, subject to the other provisions of this Act and
of any rules that are made by the Central Government. The NCLT & NCLAT has the
power to control its own procedure.
NCLT & NCLAT enjoys a wide range of powers. Its powers include:
· Class Action:
According to s. 245 of the companies act, 2013 an application can be filed before the
tribunal stating that affairs are conducted in a manner which is prejudicial to the interest
of the company. The company may be restrained from doing any act outside the scope
of MOA, AOA.
· De-registration of Companies:
According to Section 7(7) of the Companies Act of 2013, if the tribunal finds that the
company provided false or inaccurate information at the time of incorporation or by
suppressing any relevant facts, information, or declarations, the tribunal may issue any
of the following orders:
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o Pass whatever orders that it deems appropriate.
o Pass orders for winding up the company.
o Direct the liability of members shall be unlimited.
· Oppression and mismanagement:
According to s.244 of the companies act, 2013 a member shall file a complaint to the
tribunal stating the affairs of the company are against the interest of the creditors of the
company, debenture holders, share holders of the company.
· Investigation powers:
According to s.213 of the companies act, 2013 power to investigate or for initiating
investigation proceedings. An investigation can be conducted even abroad. Provisions
are provided to assist investigation agencies and courts of other countries with respect
to investigation proceedings. Power to investigate into the ownership of the company.
· Reopening of accounts:
According to s.130 of the companies act, 2013 powers to direct the company to reopen
its accounts or allow the company to revise its financial statement but do not permit
reopening of accounts. The company can itself also approach the Tribunal through its
director for revision of its financial statement.
· Freeze assets:
According to s.221 of the companies act, 2013 power to freeze assets of the company.
· Alter financial years:
According to s.2(41) of the companies act, 2013 power to alter the financial year of a
company registered in India.
· Winding up of the company:
According to s.242 of the companies act, 2013 a company can be wound up by the
tribunal
· Convert public company to private company:
According to s.13 to 18 of the companies act, 2013 conversion of public limited
company into private limited company.
· Annual general meeting:
According to s.97 and 98 of the companies act, 2013 if the company cannot or has not
held an Annual General Meeting as required under the Companies Act or a required
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Extraordinary General Meeting, then the Tribunal has powers to call for a General
Meetings.
