The document outlines the establishment of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) under the Companies (Second Amendment) Act, 2002, emphasizing their constitutional validation by the Supreme Court in 2010. It details the powers, jurisdiction, and organizational structure of NCLT and NCLAT, highlighting their role in reducing litigation multiplicity and expediting corporate dispute resolutions in India. The document also discusses NCLT's authority in the insolvency resolution process and notable landmark cases influencing corporate governance.

1. – A NEW JURISDICTION –
NATIONAL COMPANY LAW
APPELATE TRIBUNAL (NCLAT)
NATIONAL COMPANY LAW
TRIBUNAL (NCLT)
&

2. BACKGROUND
• However, the constitutionality of the establishment
of NCLT under the Companies (Second Amendment)
Act, 2002 was challenged in the Madras High Court
in the case of R.Gandhi vs. Union of India.
• NCLT & NCLAT were introduced in the Companies
(Second Amendment) Act, 2002 on the
recommendation of a high level committee headed
by Justice V. Balakrishna Eradi.

3. (Cont’d)
The Madras High Court by its order dated
March 30, 2004 held that establishment of
NCLT and NCLAT and vesting in them the
powers hitherto exercised by the High
Courts and CLB was not unconstitutional
but various provisions of Parts 1B and 1C of
Companies Act, 1956 suffered from
constitutional infirmities which had to be
sufficiently amended to establish NCLT and
NCLAT.
BACKGROUND
Parties approached Supreme Court and the
Constitutional bench of the Supreme Court
after considering all the issues in detail, on May
11, 2010 upheld the decision of Madras High
Court that the establishment of NCLT & NCLAT
were constitutionally valid and further issued
certain guidelines to be followed by the central
govt. while amending the provisions under Part
1B & 1C of the Act in order to remove the
defects and make them constitutional.
UPHELDORDERED

4. NOTIFICATION
The Ministry of Corporate Affairs
has finally notified the constitution of
NCLT & NCLAT and various other relevant
provisions with effect from June 1, 2016.
NCLT has started functioning with
eleven benches. Benches
constituted and their respective
jurisdiction is as follows;

5. S. No. Location Jurisdictional State/Union Territory
1
New Delhi
(2 Benches)
Rajasthan and Union Territory of Delhi
2 Ahmedabad Gujarat, MP, Dadra and Nagar Haveli, Daman & Diu
3 Allahabad Uttar Pradesh and Uttarakhand
4 Bengaluru Karnataka
5 Chandigarh Chandigarh, Punjab, Himachal Pradesh, Haryana and J&K
6 Chennai Kerala, Tamil Nadu, Lakshadweep and Puducherry
7 Guwahati Arunachal Pradesh, Assam, Manipur, Mizoram, Meghalaya, Nagaland, Sikkim and Tripura
8 Hyderabad Andhra Pradesh and Telangana
9 Kolkata Bihar, Jharkhand, Odisha, West Bengal, Andaman and Nicobar Islands
10 Mumbai Chhattisgarh, Goa and Maharashtra
JURISDICTION

6. INTRODUCTION
NCLT is a separate quasi-
judicial authority for
company law matters
established under the
Companies Act, 2013.
NCLT has powers and
procedures like those
vested in a court of law.
NCLAT has the powers
to set aside, modify
or confirm the
decisions of NCLT.
NCLT and NCLAT are
not bound by the CPC
but shall be guided
by the principles of
natural justice.
NCLAT is an appellate
authority established for
dealing with appeals
arising out of the
decisions of NCLT.

7. PRESIDENT
JUDICIAL
MEMBER
TECHNICAL
MEMBER
COMPOSITION OF NCLT

8. President A person who is or has been a judge of High Court for 5 years
Judicial Member
• a present or retired judge of High Court; or
• a district judge for at least 5 years; or
• advocate with 10 years of practice.
Technical Member
• has for at least 15 years been a member of the Indian Corporate Law
Service or Indian Legal Service out of which at least 3 years as Joint
Secretary or above; or
• a PCS/PCA/PCWA, who is or has been in practice for 15 years.
• is a person of proven ability, integrity and standing having special
knowledge and experience, of not less than 15 years, in law, industrial
finance, industrial management or administration, industrial
reconstruction, investment, accountancy, labour matters, or such other
disciplines related to management, conduct of affairs, revival,
rehabilitation and winding up of companies.
• is, or has been, for at least 5 years, a presiding officer of a Labour Court,
Tribunal or National Tribunal constituted under the Industrial Disputes
Act, 1947.
COMPOSITION OF NCLT

9. COMPOSITION OF NCLAT
CHAIRPERSON
JUDICIAL
MEMBER
TECHNICAL
MEMBER

10. Chairperson
A person who is or has been a judge of the Supreme Court or Chief
Justice of the High Court
Judicial Member
• A present or retired judge of a High Court or is a judicial member of
tribunal for 5 years.
Technical Member
• A person of proven ability, integrity and standing having special
knowledge and experience of not less than 25 years.
COMPOSITION OF NCLAT

11. WHO CAN APPEAR?
➢ Section 432 of the Companies Act, 2013.
➢ A party to any proceeding before NCLT or NCLAT can appear either:
to present his case before NCLT or NCLAT.
can authorize CA; or
can authorize CS; or
can authorize legal practitioner; or
any other person,
himself; or

12. POWERS
NCLT
Have The
Following
Powers
Winding Up
Compromise and Arrangements
Revival and Rehabilitation of Sick Companies
Rectification of Register(s)
Complaints relating to refusal to transfer/ of transmission of shares.
Investigation & Compounding
Oppression & Mismanagement
Powers in terms of LLP Act, 2008

13. NEW CONCEPTS
Class Action Suits
Financial Year Changing
Cross Border Merger
Issue & Redemption of Preference Shares
Re-Opening of Accounts
Power to Appoint Amicus Curiae

14. ➢ NCLT consolidates the corporate jurisdiction of the Company Law Board, Board for Industrial
and Financial Reconstruction (BIFR), the Appellate Authority for Industrial and Financial
Reconstruction (AAIFR) and the powers relating to winding up or restructuring and other
provisions vested in High Courts.
➢ Hence, NCLT consolidate all powers to govern the companies registered in India.
CONSOLIDATION OF CORPORATE JURISDICTION

15. CORPORATE DISPUTE
Courts Company Law Board BIFR/AAIFR
• Scheme of compromise/
arrangements
• Winding Up
• Reduction of Share Capital
• Restoration of defunct
companies
• Variation of rights
• Appeal against CLB orders
• Matters relating to
oppression and
mismanagement
• Cause an investigation into
the affairs of the Company
• Compounding of offences
• Power of rectification of
register, rectification of
register of members
• Revival of sick companies
OLD SYSTEM

16. Company
Law Board
BIFR &
AAIFR
High
Court
Companies
Insolvency Matters
NCLT & NCLAT
PRESENT SYSTEM

17. ➢ Section 434 – Set out the procedure in detail to deal
with cases pending in various forums.
➢ The Government has notified on 1st June 2016 for
transfer of matters from CLB to NCLT.
➢ NCLT in its sole discretion can take up the pending
matter before CLB from any stage. It can take up the
matter at stage where it was left by CLB or start the
proceedings afresh or from any stage it deems fit.
TRANSITION

18. ➢ NCLT is a specialized court only for Corporates,
i.e., companies registered in India.
➢ There is no other tribunal/forum for corporate disputes.
➢ NCLT will reduce the multiplicity of litigation before
different forums and courts.
➢ NCLT has multiple branches and is able to provide
justice at a close range.
➢ NCLT consists of both judicial and technical members
while deciding on matters.
➢ The time taken to windup a company is reduced.
➢ Speedy disposal of cases will help reduce the number
of cases.
➢ NCLT & NCLAT have exclusive jurisdiction.
ADVANTAGES

19. THE INSOLVENCY AND BANKRUPTCY CODE, 2016 & NCLT
NCLT is an adjudicating authority
for insolvency resolution process
and liquidation of corporate
debtors. (Section 60 of Code)
Crucial Role: Right from
accepting/ rejecting application
filed for initiating the corporate
insolvency resolution process till
passing of dissolution order.
NCLAT –
Appellate authority

20. SUPREME
COURT
(60 days and
only question
of law)
NCLT
NCLAT
(45 days
under Act &
30 days
under Code)
APPEALS

21. LANDMARK CASES
Innoventive Industries Limited vs. ICICI Bank Limited
➢ Adherence to principles of natural justice would not
mean that in every situation the NCLT is required to
afford reasonable opportunity of hearing to the
corporate debtor before passing its order.
➢ NCLT is bound to issue only a limited notice to the
corporate debtor before admitting a case under
Section 7 of the Insolvency and Bankruptcy Code,
2016.

22. LANDMARK CASES
Cyrus Investments & Ors.. Vs. Tata Sons & Ors.
➢ Rejected the plea of Cyrus Mistry seeking waiver
from the eligibility criteria of holding at least 10%
shareholding in Tata Sons to file a case of oppression
and mismanagement.
➢ Held “Waiver should be granted only in rare,
compelling and exceptional circumstances”.
➢ Failure to fulfill cause of action test to maintain
oppression and mismanagement allegations.
(Cont’d)

23. ➢ Overburden of appeals on NCLAT
➢ With right to appeal to Supreme Court on any question of law, a large number of cases may
be delayed due to pendency of appeal before overburdened Supreme Court
CHALLENGES

24. prashant@samistilegal.in
www.samistilegal.in
+91 955-368-8330
ADVOCATES AND LEGAL ADVISORS