National Company Law Tribunal is a quasi-judicial body to regulate and resolve civil corporate disputes. The power to establish National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) was derived from Article 245 of the Indian Constitution and the tribunal was established under the Companies Act, 2013. Under the Insolvency and Bankruptcy Code, 2016, NCLT is also the adjudicating authority for insolvency resolution process of companies and limited liability partnerships.
The powers of NCLT cover the following areas of dispute
- Class Action: Class action suits are filed against frauds. Any company which is registered under the Indian Companies Act and steals money from investors or cheats them is liable for penal action in NCLT.
- Transfer of Shares: In case any company mishandles registration of transfers of shares or refuses to transfer shares then the individual who incurred a loss can approach the NCLT within a period of two months, to seek justice.
- Oppression and Mismanagement: NCLT allows people to seek remedy for any form of abuse be it the past or the present by a company. If anyone finds the working of a company being partial and aiming to benefit select parties or individuals while being oppressive towards others, then the affected people can approach the NCLT to look into the matters of the company so as to ensure justice.
- Compounding of Offence: Provisions of compounding under the Companies act 2013 now vest with NCLT instead of the Company Law Board. All compounding matters which are above the prescribed monetary limit are approved by NCLT.
- Deregistration of Companies: NCLT is vested with the power to deregister and dissolve companies which have got registered by fraudulent and illicit means. NCLT can also investigate any procedural discrepancy involved in registration of a company if it deems necessary.
- Revision of Financial Statements: On several occasions, falsification of record books was noticed under the Companies Act, 1956. Section 447 and 448 have been added to Companies Act 2013 to ensure that such an act is now under the ambit of NCLT.
- Deposits: Aggrieved depositors have the right of class actions for seeking redressal for the acts/omissions of the company which violated rights of depositors. Now the said powers are vested with NCLT.
- Investigation: NCLT has several powers of investigation. The most important powers vested with the tribunal are:
- Power to order investigation: Under the Company Act, 2013 only 100 members are required to apply for an investigation into the affairs of a company, the power to apply for investigation is given to any person who is able to convince the tribunal that such a situation exists for initiating investigation proceedings. An investigation ordered by the NCLT can be conducted within India or anywhere abroad.
- Power to impose restrictions on securities: Earlier the restriction could be imposed only on shares. Now the tribunal can impose restrictions on any security of the company.
- Power to investigate ownership of a company: The tribunal is vested with power to investigate matters relating to ownership of any company.
- Power to freeze assets of a company: The tribunal is vested with powers to freeze the assets of the company which consequently can’t be used while the company is under investigation.
- Conversion of Public Company into Private Company: Approval from the NCLT is required for such a conversion. The tribunal may at its discretion impose certain conditions subject to which approval may be granted.
- Change in Financial Year: NCLT has the power to change the financial year of companies registered in India.
- Tribunal Convened General Meetings: NCLT is vested with the power to convene a general meeting (AGM or EGOM).
Decisions by NCLT can be appealed against, at the National Company Law Appellate Tribunal (NCLAT). Decisions by NCLAT can be further appealed to the Honourable Supreme Court of India
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