Overview of NCLT & NCLAT

1. BY:
Ankur Sharma
CS, LL.B, M.com

2.  National company law tribunal (NCLT) is a Quasi judicial body in India that
adjudicates issues related to companies in India. The NCLT was established
under the companies Act 2013 and was constituted on 1st June 2016.
 National company law Appellate tribunal (NCLAT) is body where Decisions
of the NCLT may be appealed.
Introduction

3.  The Companies (Second Amendment) Act, 2002 provides for the setting up of a National
Company Law Tribunal and Appellate Tribunal to replace the existing Company Law Board
(CLB) and Board for Industrial and Financial Reconstruction (BIFR).
 The setting up of the NCLT as a specialized institution for corporate justice is based on the
recommendations of the Justice Eradi committee.
 The establishment of the National Company Law Tribunal (NCLT) consolidates the corporate
jurisdiction of the following authorities:
1. Company Law Board.
2. Board for Industrial And Financial Reconstruction.
3. The Appellate Authority For Industrial And Financial Reconstruction .
 Jurisdiction and powers relating to winding up restructuring and other such provisions,
vested in the high courts.
With the establishment of the NCLT and NCLAT, the Company Law Board under the
Companies Act, 1956 will stand dissolved.
SETTING UP OF A NCLT & NCLAT

4. NCLT
BIFR
High
courts
CLB
AllCorporateLitigationUnder
OneRoof
The Creation of Single
Forum (NCLT) which is
dedicated to corporate
matters is a welcome move,
and removes the problem
of multiple regulators.

5. Constitution of NCLT
 On June 01 , 2016 MCA published a notification w.r.t constitution of NCLT &
NCLAT.
 The constitution of the aforesaid tribunals is in exercise of the powers
conferred by sections 408 and 410 respectively of the new companies act,
2013.The central government vide its notification also constituted 11 benches
of the NCLT.
Benches of
NCLT
New Delhi (2)
Ahmedabad Chandigarh
Bangalore Chennai
Guwahati
Kolkata
Hyderabad
Mumbai

7. In relation to NCLT & NCLAT ( Section 407 to 414):
 Definitions (Section 407);
 Constitution of NCLT (Section 408);
 Qualification of the President and Members of NCLT (Section 409);
 Constitution of NCLAT (Section 410);
 Qualification of the Chairperson and Members of NCLAT (Section 411);
 Selection of Members of NCLT & NCLAT (Section 412);
 Term of office of president, chairperson and other members (Section 413);
 Salary , Allowance and other terms & conditions of service of members
(Section 414).
SECTIONS OF THE NEW ACT MADE EFFECTIVE

8. NCLT
President of NCLT
Members of NCLT
• High Court Judge.
• District Judge (5 years or more).
• Advocate (10 years or more).
• PCS (15 years or more).
• PCA (15 years or more).
• PCWA (15 years or more).
• Joint Secretary level legal officer in govt. (15
years or more).
• Person with special knowledge (15 years or
more).
• Presiding officer of labour court (5 years or
more).
• Tribunal under Industrial Disputes Act (5
years or more).
JUDICIAL MEMBERS TECHNICAL MEMBERS
MEMBERSOFNCLT
SECTION 409
Qualification Of
President And Members
Of Tribunal

9. MEMBERSOFNCLAT
NCLAT
Chairperson of NCLAT
Who is or has been Judge of the Supreme Court / Chief Justice of a High
Court.
Members of NCLAT
JUDICIAL MEMBERS TECHNICAL MEMBERS
• Who is or has been Judge of a High
Court / is a Judicial Member of
Tribunal for 5 years or more.
• Who is having special knowledge &
experience of 25 years or more in law ,
industrial finance & administration ,
investment , accountancy etc.

10. As per a notice published on the website of the department
of personnel and training on march 30, 2016, former judge
(retd.) Of the supreme court of India, Hon’ble Mr. Justice
S.J. Mukhopadhya, was appointed as the chairperson of
the NCLAT, and the appointments committee of the cabinet
approved appointment of Justice M.M. Kumar, a retired
judge of the Punjab and Haryana high court as president of
the NCLT.
As per section 466 of the companies act 2013, existing
members and staff would be members and staff of the
NCLT. The rules in this regard are yet to be notified.
Hon’ble Justice S.J.
Mukhopadhya
(Chairperson of
NCLAT)
Hon’ble Justice M.M.
Kumar
(President of NCLT)
Section 409 (1) - The President shall be a person who is or has been a judge of
a high court for five year.
Present Chairperson & President Of NCLAT & NCLT

11. Powers OF NCLT
Powers
of NCLT
Matters of
merger ,
demerger ,
amalgamation.
Revival of
Sick
Industrial
Companies.
Winding up of
companies.
To order re-
payment of
deposits
accepted by
NBFCs.
To review it’s
own orders.

12. PREVIOUS CORPORATE LITIGATION STRUCTURE
High Court
• Amalgamation
• Winding Up
• Demerger
• Reduction of Share
Capital
• Appeals Against
CLB Order.
Company Law Board
• Oppression and
Mismanagement.
• Rectification of
Register of members.
• Compounding.
• To call AGM & EGM.
• Removal of Auditor &
Director.
BIFR
• BIFR under the
Sick Industrial
Companies
(Special
Provision) Act,
1985.
Particulars
Powers

13. Opportunity Under NCLT Regime
Inherit from High
Court and BIFR
- Merger and
Amalgamation.
De-merger.
- Reduction of Share
Capital.-
- Winding Up.
- BIFR.
Inherit from CLB
- Oppression & Mismanagement.
- Rectification of Register of
members.
- Compounding.
- To call AGM & EGM.
- Removal of Auditor & Director.
NEW in NCLT
-Class action suits.
- Deregister a company and
determine other incidental matters
- Reopen of books of accounts
- Revise books of accounts
- Additional powers in case of
non-payment of deposits
- Certain powers in case of fast
track merger

14. • Avoids multiplicity of litigation before various Forums (High Courts,
CLB, BIFR) , thereby leading to consolidation of Corporate Jurisdiction.
• Comprises of technical experts who provide more concrete and precise
decision.
• Mixture of judicial and equitable jurisdiction while deciding matters.
• Reduction in period of winding up from 20-25 years to 2 years.
• Reduction in pendency of cases leading to effective disposal of cases.
ADVANTAGES OF NCLT & NCLAT

15. 5 Sutras of
Appearance
before
NCLT
Drafting
Capability
Representing
the Client
Effective and
logical
communication
Subject knowledge
& Practical
Exposure
Code Craft
ESSENTIALS FOR PROFESSIONALS

16. • Initiated before the Company Law Board under the previous act (the Companies
Act 1956).
• Pending before any District court or High court under the previous act,
including proceedings relating to arbitration, compromise, arrangements and
reconstruction and winding up of companies.
• Pending before the Board For Industrial And Financial Reconstruction,
including those pending under the sick industrial companies (special
provisions) act 1985;
• Pending before the Appellate authority for Industrial And Financial
Reconstruction; and
• Pertaining to claims of oppression and mismanagement of a company, winding
up of companies and all other powers prescribed under the companies act.
The NCLT has the power under the Companies Act to
adjudicate proceedings:
Decisions of the NCLT may be appealed to The National Company Law Appellate Tribunal.

17. Provisions relating to the investigation of a company accounts, freezing of
assets, class action suits, conversion of a public company to a private
company will now be governed by the NCLT, and appeal therefrom would
be before NCLAT instead of high court, those relating to compromise,
amalgamation and capital reduction will continue to be under the purview of
the high courts. Gradually powers of high court under the companies act
2013 / 1956 relating to reduction of share capital, winding-up and
compromise or arrangement (merger, demerger, settlement) would get
transferred to NCLT under specific directions issued by the MCA.

18. SUPREME
COURT
NCLAT
NCLT
Remedies For Person Aggrieved By Order
Appeal any order
on Questions of
law and fact within 45
days
Appeal any order
on Questions of
law within 60 days

19. Basis CLB NCLT
No. of Benches It was functioning with only 5 benches. It will commence action with 11 benches.
Representative
Professionals
 CA.
 CS.
 CWA.
 Aggrieved Person.
 Authorized CA / CS / CWA.
 Authorized legal practitioners.
Class action suits Shareholders were allowed to protest against the
wrong doings of the management.
Shareholders and creditors can file class action suits
against company for breaching the provisions of the Act.
Dedicated online portal No such Facility. The Draft Rules introduce a ‘dedicated online portal’
through which all the parties or central / state government
agencies and local government bodies may electronically
send and receive documents to or from NCLT and make
required payments.
E-filing No such provision. E-filing shall be mandatory except as provided otherwise,
with effect from the date to be notified in the official
gazette.
Members of the
Selection Committee
It did not have a selection committee. Its selection committee comprises of 4 members including
the Chief Justice of India, who will have a casting vote.
Appeals Appeal to the High Court Appeals from the NCLT will go the NCLAT, and
thereafter with the Supreme Court.
CLB Vs. NCLT

20. The establishment of NCLT/NCLAT shall offer various opportunities to
practicing company secretaries as they have been authorized to appear before the
tribunal/ appellate tribunal.
Therefore, Practicing Company Secretaries would for the first time be eligible to
appear for matters which were hitherto dealt with by the high court viz. Mergers,
amalgamations under section 391-394 and winding up proceedings under the
companies act, 1956.
Areas opened up for company secretaries in practice under NCLT are briefly
stated hereunder: -
Scope of services for Practicing Company
Secretaries under NCLT:-

21. 1. Compromise And Arrangement
With the establishment of NCLT, a whole new area of practice will
open up for company secretary in practice with respect to advising and
assisting corporate sector on merger, amalgamation, demerger, reverse
merger, compromise and other arrangements right from the conceptual
to implementation level. Company secretaries in practice will be able
to render services in preparing schemes, appearing before
NCLT/NCLAT for approval of schemes and post merger formalities.

22. 2. SICK COMPANIES
TIMELY DETECTION OF SICK COMPANY
The practicing company secretary can identify the sickness of the company as
defined under the act and place the matter before the board of directors of the
company to take necessary action for making reference to the tribunal for revival
and rehabilitation of the company.
MAKING REFERENCE TO NCLT
Practicing company secretary may assist and advise the sick company in making
reference to the tribunal, preparing scheme of rehabilitation, seeking various
approvals from the tribunal as may be required. Reference is to be made to the
NCLT within a period of 180 days from the date on which board of directors of
the company or the central government, reserve bank of India or state
government or A public financial institution or a state level institution or a
scheduled bank as the case may be come to know of the relevant fact giving rise
to causes of such reference or within 60 days of final adoption of accounts
whichever is earlier.

23. 3. Winding Up
The national company law tribunal has also been empowered to pass an order for
winding up of a company. Therefore practicing company secretaries may represent
the winding up case before the tribunal.
Unlike the earlier position allowing only government officers to act as official
liquidators, now professionals like practicing company secretaries have been
permitted to act as liquidator in case of winding up by the tribunal.
4. Reduction Of Capital
As per amended section 100 of the companies act, subject to confirmation by the tribunal, a
company limited by shares or a company limited by guarantee and having a share capital may
if so authorized by its articles by special resolution reduce its share capital. The practicing
company secretaries will be able to represent cases of reduction of capital before the tribunal.

24. 5. PCS As Member Of NCLT
A practicing company secretary can be appointed as a technical member of
NCLT, provided he has 15 years working experience as secretary in whole-
time practice.
6. Appearance Before NCLAT
As stated earlier a practicing company secretary has been
authorized to appear before national company law appellate
tribunal (NCLAT).

25. Conclusion
• NCLT – Boon in dynamic corporate governance
environment.
• It’s constitution streamline efforts for faster resolution of
corporate disputes.
• Improves the ease of doing business in India.
• NCLT – Mega Tribunal.
• Enhances the due diligence of professionals while
performing their duties.