THE CHANGING CONTOUR OF CORPORATE ADJUDICATION IN INDIA
National Company Law Tribunal (NCLT) is a Quasi-Judicial body that adjudicates issues relating to Companies in India. An Appeal can be filed against an order of NCLT to National Company Law Appellate Tribunal (NCLAT). Both of these Tribunals were constituted by Central Government in exercise of its powers conferred by Section 408 and 410 of the Companies Act 2013 via notification dated 1st June 2016.
As per the aforesaid notification, Company Law Board (CLB) stand dissolved with effect from 1st June 2016 & Notification of Section 466 makes the last Chairman of Company Law Board as Provisional and first chairman of NCLT.
National Company Law Tribunal (NCLT)
Chairperson of NCLAT is Justice S.J Mukhopadhaya while President of NCLT is Justice MM Kumar.
It was year 2002, when we first heard about NCLT and NCLAT. The Companies (2nd Amendment) Act, 2002 provided setting up of National Company Law Tribunal and National Company Law Appellate Tribunal to replace the existing Company Law Board and The Board for Industrial and Financial Reconstruction. The establishment of NCLT as a specialized institution for corporate adjudication system is based on the recommendation of Justice Eradi Committee, a committee set up to examine the law relating to winding up and Insolvency in order to re-model it in line with latest developments and innovations in corporate law & governance.
Madras Bar Association v. Union of India
The Petitioner Madras Bar Association via Writ Petition no. 1072 of 2013 had challenged the constitutionality for creation of NCLT AND NCLAT on the ground “Provisions regarding formation of NCLT and NCLAT are ultra vires of Article 14 of the constitution”.
The Supreme Court by rejecting the contention of the Petitioner held that a Legislature can enact a law transferring the jurisdiction exercised by court in regard to any specific subject to any tribunal and any Tribunal to which any existing jurisdiction of court is transferred should also be Judicial Tribunal and should have members, person of rank, status and capacity of the court which was then dealing with the matter.
The Supreme Court did not upheld the issue raised by the Petitioner which resulted into formation of NCLT and NCLAT.
NCLT AS A MEGA TRIBUNAL
NCLT had consolidate the jurisdiction of the following :-
- Company Law Board
- The Board for Industrial and Financial Reconstruction
- Appellate authority for Industrial and Financial Construction
- Jurisdiction and Power of High Court relating to winding up.
The Central Government had constituted the following Benches of the National Company Law Tribunal mentioned in column (2) of the table below, located at the place mentioned in column (3) and to exercise the jurisdiction over the area mentioned in column (4), namely:-
|Serial Number||Title of the Bench||Location||Territorial Jurisdiction of the Bench|
|1.||(a) National Company Law Tribunal, Principal Bench.
(b) National Company Law Tribunal, New Delhi Bench.
|New Delhi||(1) State of Haryana. (2) State of Rajasthan.
(3) Union territory of Delhi.
|2.||National Company Law Tribunal, Ahmedabad Bench.||Ahmedabad||(1) State of Gujarat. (2) State of Madhya Pradesh.
(3) Union territory of Dadra and Nagar Haveli.
(4) Union territory of Daman and Diu.
|3.||National Company Law Tribunal, Allahabad Bench.||Allahabad||(1) State of Uttar Pradesh.
(2) State of Uttarakhand.
|4.||National Company Law Tribunal, Bengaluru Bench.||Bengaluru||(1) State of Karnataka.|
|5.||National Company Law Tribunal, Chandigarh Bench.||Chandigarh||(1) State of Himachal Pradesh.
(2) State of Jammu and Kashmir.
(3) State of Punjab. (4) Union territory of Chandigarh.
|6.||National Company Law Tribunal, Chennai Bench.||Chennai||(1) State of Kerala. (2) State of Tamil Nadu.
(3) Union territory of Lakshadweep.
(4) Union territory of Puducherry.
|7.||National Company Law Tribunal, Guwahati Bench.||Guwahati||(1) State of Arunachal Pradesh. (2) State of Assam. (3) State of Manipur. (4) State of Mizoram. (5) State of Meghalaya.
(6) State of Nagaland.
(7) State of Sikkim. (8) State of Tripura.
|8.||National Company Law Tribunal, Hyderabad Bench.||Hyderabad||(1) State of Andhra Pradesh.
(2) State of Telangana.
|9.||National Company Law Tribunal, Kolkata Bench.||Kolkata||(1) State of Bihar.
(2) State of Jharkhand.
(3) State of Odisha. (4) State of West Bengal.
(5) Union territory of Andaman and Nicobar Islands.
|10.||National Company Law Tribunal, Mumbai Bench.||Mumbai||(1) State of Chhattisgarh.
(2) State of Goa.
(3) State of Maharashtra.
CONSTITUTION OF NCLT AND NCLAT
- There are 2 Classes of members to NCLT viz a) Judicial Members b) Technical Members.
- Tribunal is headed by the President and Appellate Tribunal is headed by the Chairperson.
- NCLAT shall not exceed 11 members for hearing appeals against the order of Tribunal.
ADVANTAGES OF CONSTITUTING NCLT AND NCLAT
- It shall avoid multiplicity of litigation before various Forums (CLB, BIFR, High Courts, AAIFR).
- The Tribunal comprises of Technical Experts who will provide more concrete & precise decisions.
- There would be a reduction in pendency of cases.
- There are 11 benches of NCLT which provides justice at one doorstep.
- There would be reduction in period of winding up from 20-25 years to 2 years.
SCOPE OF SERVICES FOR PRACTICING COMPANY SECRETARIES(PCS) UNDER NCLT
The Establishment of NCLT/NCLAT have offered various opportunities to Practicing Company Secretaries as they are been authorised to appear before the Tribunal/Appellate Tribunal. Areas opened up for Company Secretaries in Practice under NCLT are as follows :-
- PCS as a member of NCLT : PCS can be appointed as a Technical member of NCLT provided he/she must have 15 years of working experience as Secretary in whole time practice.
- Area opened up for PCS under NCLT as for the first time they would be eligible to appear for matters which were erstwhile dealt by High Court viz Merger, Amalgamation and Winding up proceedings.
- Enlarge scope in Revival of Sick Companies.
The Constitution of NCLT AND NCLAT are part of the efforts for faster resolution of Corporate disputes, thus improving the ease of doing business in India. It shall offer various opportunities to various professionals like CS/CA/CMA as they are authorised to appear before Tribunal/Appellate Tribunal.