National Company Law Tribunal (NCLT)- All You Need To Know

This article aims to educate an individual about the authority of the National Company Law Tribunal, so; here is all that one needs to know.

The governing body for Industrial and Financial Corporations and the Company Law Board handled the duties and responsibilities of the Companies before the creation associated with the National Company Law Tribunal [NCLT] and National Company Law Appellate Tribunal [NCLAT]. In accordance with Section 408 of the 2013 Companies Act, the Central government established NCLT. It was found to comply with the Judge Eradi Committee's proposals and was formally established on June 1, 2016. The National Company Law Tribunal [NCLT] president since November 1, 2021, is Shri Ramalingam Sudhakar.

All governing authority over Indian-registered businesses will be consolidated under the National Company Law Tribunal [NCLT] umbrella. The corporate law Board established by the Companies Act of 1956 has been abolished with the enactment of the newly established NCLT and NCLAT.

Functions of Nations Company Law Tribunal [NCLT]

1: Companies Registration

The result of particular procedural mistakes throughout incorporation and registration, the new Companies Act of 2013, has made it possible to bring into doubt the legality of companies. The NCLT has the authority to take several actions, including dissolving any business and revoking a company's registration. The Tribunal may even make a member's liability or obligation limitless. According to section 7(7) of the 2013 Companies Act, NCLT may employ this strategy to remove any company in particular circumstances where the registration certificate was obtained fraudulently or unlawfully.

2: Transfer of Shares

In accordance with sections 58 and 59 of the Act, NCLT is also given the authority to receive complaints from companies that have had their requests to transfer shares and securities rejected. Initially, the Company Law Board had jurisdiction over these complaints. Getting to the Companies Act of 1956, the remedy accessible for the denial of distribution or transfer was restricted solely to a company's shares and debt instruments. Still, the possibility has been obtained according to the Companies Act of 2013 and currently includes all company investments.

3: Deposit

The company's Law Board was the main body responsible for bringing up the matters under Chapter V of the Companies Act, dealing with deposits, and had been repeatedly updated in 2014. Currently, NCLT has this authority under Chapter V within the Companies Act. Before the introduction of the NCLT, the rules regarding deposits in the Companies Act of 2013 were made clear. Depositors dissatisfied with the company's decisions or actions that affect their depositor liberties now have collective procedural litigation as an alternative.

4: The Authority to Inquire

Under the Companies Act of 2013, 100 members could request an inquiry into the company's procedures, as compared to 200 members who were required to request in the past. Furthermore, NCLT has the authority to order an investigation if a third party who isn't connected to a business can convince NCLT that the conditions for doing so exist. The NCLT has the authority to order an investigation to be carried out anywhere globally, including in India. The guidelines are designed for providing and requesting assistance from overseas courts, investigation agencies, and governments.

5: Freezing a Company's Assets

The NCLT cannot only freeze a company's assets to use them later when that company is under investigation or inspection; under certain circumstances, the NCLT may also be asked to initiate an investigation.

Benefits of National Company Law Tribunal

• NCLT is a specialist court that only hears cases involving Corporates or Indian-registered companies.
• It will merely serve as a tribunal for corporate members.
• The NCLT will lessen the amount of litigation that is brought before various forums and tribunals.
• With its numerous branches, NCLT can deliver justice up close.
• When making decisions, the NCLT comprises judicial and specialized members.
• A shorter period of time is needed to dissolve a company.
• The number of cases will decrease with quick case settlement.
• NCLT and NCLAT hold exclusive authority.

Limited to the remaining provisions of this Act and any regulations established by the Central Government, the appellate Court and the Appellate Tribunal are restricted by the rules outlined in the CPC and are governed by the concepts of natural justice. Both the appellate Court and the Appellate Tribunal can regulate their processes.

Powers of NCLT

Any lawsuit or proceeding about an issue that the Tribunal court or the Appellate Tribunal has the authority to adjudicate is not subject to the jurisdiction of any civil court.

The NCLT is endowed with numerous authorities. Its powers include the following:

• The authority to request the Chief Metropolitan Magistrate's help.
• Companies that have been deregistered.
• Declare that a member's obligation is limitless.
• De-registration of companies is possible in some situations, such as when registration was acquired fraudulently or illegally.
• Remedy for negligence and oppression.
• The authority to receive complaints about the company's refusals to exchange securities and to correct member registration information.
• Safeguarding the interests of all parties involved, particularly depositors and stockholders who are not promoters.
• The ability to protect investors from a broad range of misconduct committed by the business administration or other associated experts and advisors.
• Depositors unhappy with the company's conduct or omissions damaging their investor rights may seek redress through class lawsuits.
• Powers that restrict the closure of accounts but that can order the company to open its accounts or permit the company to amend its financial statements. The business may also request an alteration of its financial statements from the Tribunal through its director.
• The authority to conduct investigations or to start investigations. Even overseas investigations are possible. There are provisions to support foreign courts and investigation agencies during inquiry procedures.
• The authority to look into who owns the company.
• Authority to freeze corporate assets.
• The authority to place restrictions on any company's securities.
• Converting a public limited company to a private limited company.
• The Tribunal possesses the authority to call for General Meetings if the company cannot or has not conducted an Annual General Meeting or an Extraordinary General Meeting in the manner prescribed by the Companies Act.
• Authority to modify a fiscal year of a company enrolled in India.

Process of Filing Before National Company Law Tribunal [NCLT]

• Each petition or proposal submitted to the Tribunal must be written in English. The document must be provided with a copy translated into English if it is in another Indian tongue.
• A fair and readable typewritten, lithographed, or printed version of the application or appeal is required.
• The phrase "Before the National Company Law Tribunal" and the name of the Court to which it is submitted must appear in the cause description.
• Every procedure must include the legal provision that it is favoured under right after the cause title.
• Each paragraph of the appeal or application must contain a particular or precise fact, allegation, or claim. Each section must be numbered subsequently.
• The application or appeal must include information about the parties' full names, ages, parentage, descriptions, and addresses. The same must be stated when a party brings a lawsuit or is brought by another in the role of a representative.
• Each party's name and details should appear on a distinct line, and the titles of the parties will be numbered regularly.
• The numbers mentioned above must not be changed. The legitimate heir(s) or representative(s) of a party who passes away while a petition is pending must be identified by a sub-number.
• When other parties are added, they will be numbered under their categories.

After being given a chance to be heard, the Appellate Tribunal will issue any orders it deems appropriate to uphold, modify, or set away the charge that has been appealed against upon receiving an appeal from a party who feels violated. Six months must pass after the appellate Tribunal received the petition before it must be decided.

Difference Between NCLT And NCLAT

Although the same Companies Act was used to create both NCLT and NCLAT, there are some differences between the two that are explained below.

National Company Law Tribunal

• Section 408 in the 2013 Companies Act established National Company Law Tribunal.
• The NCLT is a committee with primary jurisdiction.
• Cases may be submitted immediately to NCLT.
• No petition brought by the National Financial Reporting Authority ("NFRA") or cases concerning the Competition Law is handled by NCLT.
• NCLT is not an alternative for COMPAT, the Competition Appellate Tribunal.
• There are 16 benches of NCLT in India.

National Company Law Appellate Tribunal

• NCLAT was created under Section 410 of the 2013 Companies Act.
• NCLAT exercises appellate jurisdiction.
• No case may be brought immediately to NCLAT; instead, it must go through NCLT under Section 421 of the Companies Act of 2013 or another tribunal listed under Section 410 of the same law.
• According to the authority given to it under Sections 410(a) and (b) of the Companies Act, 2013, the National Financial Reporting Authority ("NFRA") and the Competition Commission of India have been designated to serve as appellate bodies for decisions made by them.
• NCLAT has substituted the Competition Appellate Tribunal (COMPAT) under part 14 of chapter 6 of the Finance Act, 2017, which amended Sections 2(ba) and 53A of the Competition Act, 2002, and Section 410 of the Companies Act, 2013.
• there are two NCLAT benches in India: the first is in New Delhi, and the other is in Chennai. Although it was announced on March 15, 2020, the NCLAT Chennai court is not yet operational.

Conclusion

The Indian shareholders praised the central government's decision to create the NCLT as a distinct court to hear company law disputes. It speeds up the decision-making process and eliminates all the pointless overlapping and division. Creating National Company Law Tribunal decreases the load on India's High Courts. All these issues were resolved by making the NCLT and the NCLAT, simplifying the running of justice.

Any legal challenge against a Company Law Board ruling would still be heard by the appropriate High Court, not the NCLAT, even after the NCLT was established. The highest Court of India may also hear a petition involving a legal issue regarding NCLAT rulings.