National Company Law Tribunal was formed on June 1, 2016. It is a quasi-judicial body for adjudicating disputes of civil nature arising under the Companies Act.
Before the formation of NCLT, there were various authorities (e.g. Company law Board, Board of Industrial and Financial Reconstruction (BIFR)) dealing with company matters. The establishment of NCLT has consolidated the jurisdiction of such bodies.
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Wide powers and Issues which NCLT deals with:
Establishment of NCLT has brought redressal of different kinds of corporate disputes under one umbrella. It deals in the following areas:
- All proceedings like arbitration, compromise, reconstruction and winding up under the Companies Act, are disposed of by the Tribunal.
- It undertakes the proceedings under the Insolvency and Bankruptcy Code, 2016. It initiates the IRP – Insolvency Resolution Process when a company defaults to pay the creditors. Under this Code, a homebuyer can file a complaint before NCLT if the developer does not provide possession of the house as promised.
- It handles the cases related to mismanagement and oppression of a company. The act complained of can be a past or present act. Ex-member of a company can also file a case.
- It also handles the cases of companies committing frauds and improprieties with their depositors and shareholders by drying out their investment. The tribunal awards compensation to these investors/depositors. Class action is permissible for giving relief to the depositors.
- If a company has been registered wrongfully or fraudulently, it has the power to investigate into the same and deregister the company
- It can investigate into the affairs of the company if they are prejudicial to the public interest or to the interest of the company itself.
- Can change the financial year of the Companies.
- Can convene General and extraordinary meetings of the company.
- The Tribunal can declare the liability of the members to be unlimited. For conversion of a company from private to public limited, consent and confirmation of the Tribunal is required.
- If the company refuses to register the transfer of a share, complaint lies to the Tribunal.
- It has the authority to dispose of the cases pending before the earlier authorities.
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Working of National Company Law Appellate Tribunal (NCLT)
It works like a regular court. It passes orders resolving disputes, imposes penalty and orders compensation. The orders of NCLT are appealable before National Company Law Appellate Tribunal. The appeal is filed within 45 days from the date of order. Further appeal lies to the Supreme Court.
Accelerated Dispute Resolution
There were multiple authorities for resolving the disputes related to a company. Resultantly, there used to be delayed and conflicting decisions. The delay hampers the growth of business and discourages investors. The significant benefits of NCLT are accelerated dispute resolution process and uniformity of decision.