Saturday, 23 July 2016



Well begin, if half done!

In the world of clicks and rat race who wants to wait for years to get Justice, who wants to suffer the loss and the real cost when it comes to Business?  
For adjudicating the matters of Business transactions there were three agencies working simultaneously for different subjects;
  • ·         the High Courts;
  • ·         the Company Law Boards; and
  • ·         the Board for Industrial and Financial Reconstruction.

There are plethora of cases pending before High Courts making them over burdened and inefficient but perhaps the best administration of justice. The other two agencies were also over burdened and not so efficient.

To smoothen the speedy delivery of Justice, the  Ministry of Corporate Affairs (MCA) vide a notification dated 1st June, 2016 has constituted the National Company Law Tribunal (NCLT) a quasi-judicial body and its appellate authority, the National Company Law Appellate Tribunal (NCLAT) with effect from the same date.  The Central Government under Section 408 and 410 of the Companies Act, 2013 (18 of 2013) is empowered to form NCLT and NCLAT through a notification. It has dissolved the Company Law Board (CLB) constituted under the Companies Act, 1956 from that day.  In the first phase company law matters related to CLB has been transferred to NCLT.

Earlier the above stated three bodies were working separately having different powers like High Courts were having power to deal with cases of Winding up, Amalgamation, demergers, Capital Reduction, appeals against CLB orders, AAIFR orders etc. CLB on the other hand had power to adjudicate the matters related to Oppression and mismanagement, rectification of Register of members, Compounding of Offences, Complaints related to Deposits, etc. while, BIFR had power to adjudicate the matters related to Sick Industrial Companies and form Schemes of their rehabilitation. NCLT has emerged as “A single platform for all Corporate Litigation”.

The NCLT has its Principal bench in New Delhi followed by the 10 other regional benches in Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai and New Delhi having its territorial jurisdiction in various states. It is headed by a President who must be a judge of High Court for five years followed by a Judicial member and a Technical member. A Judicial Member must be a present or retired Judge of High Court or a District Judge for five years or an Advocate with 10 years of practice while, a Technical member must be a ICLS or ILS having 15 years of experience or PCS/PCA/PCWA having 15 years of practice or is a person of proven ability, integrity and standing having special knowledge and experience, of not less than 15 years or a presiding officer of a Labour Court for atleast 5 years.

The present President of NCLT is Hon’ble Mr Justice M.M Kumar a retired judge of Punjab and Haryana High Court and Ex Chief Justice of Jammu and Kashmir High Court.

According to Section 412 of the Companies Act, 2013 the President of the Tribunal shall be appointed after the  consultation of the Chief Justice of India and the members of the Tribunal shall be appointed on the recommendation of the selection committee  (a) Chief Justice of India or his nominee—Chairperson; (b) a senior Judge of the Supreme Court or a Chief Justice of High Court— Member; (c) Secretary in the Ministry of Corporate Affairs—Member; (d) Secretary in the Ministry of Law and Justice—Member; and (e) Secretary in the Department of Financial Services in the Ministry of Finance— Member.

The working tenure of President and every other member is five years and they are eligible for reappointment also or until the President attains the age of sixty seven years and a Member attain the age of sixty five years, as per section 413 of the Companies Act, 2013.

The President shall, for the disposal of any case relating to rehabilitation, restructuring, reviving or winding up of companies, constitute one or more Special Benches consisting of three or more Members, majority necessarily being of Judicial Member as per Section 419(4) of the Act.

MCA vide its notification dated 6th July’16 has stated that, the Division bench is entitled to function as a bench and exercise powers of the Tribunal irrespective of any class of cases except those specified by an order of the President. The Single Judicial Member is also empowered to function like a bench and exercise powers of the Tribunal in the cases where:

i) All cases which have been transferred from erstwhile Company Law Board. However, in terms of second proviso to Section 419 (3) of the Act, the Member judicial shall be entitle to refer the matter to the President with the opinion that the matter ought to be heard by two members for the reason to be recorded in writing

ii) All the petitions where company has paid up share capital of Rs. 50 lacs or less where the Division Bench is available. However, where the Division Bench is not available the pecuniary limit of Rs. 50 lacs should not be applied iii) any matter which the President may authorise by passing a specific or general order.

MCA vide a notification dated 19th July’16 has assigned the following matters to the Principal Bench, New Delhi. They are
i)             Section 245: Class Action Suits
ii)           Section 379 to 393: Application of Act to foreign companies
iii)          Section 394: Annual Reports of government companies

And also, any other matters related to the above provisions if, filed anywhere else then, they shall be transferred to the Principal Bench, New Delhi.

The NCLT, its members and their working, powers of benches and everything else has been discussed in Chapter XXVII form Section 407 to Section 434 of the Companies Act, 2013.
Recently, MCA has released Rules related to NCLT and NCLAT for procedures and practice before these forums.

With this the Government has provided a big platform for adjudication of corporate law matters in a speedy manner and would certainly have a positive impact in the adjudication and implementation of corporate law, but the task is yet half done as consolidation of corporate law matters related to BIFR and High Courts are yet in limbo.
          “The updated version of oneself is the best version”

For more information on the Companies Act, 2013, National Company Law Tribunal and National Company Law Appellate Tribunal please visit

To download your copy of NCLT and NCLAT Rules, 2016 please visit below links on

The author (Mr Pankaj Jain) is Partner, Veda Legal, Advocate & Solicitors, New Delhi.  Views expressed are personnel.   

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