NATIONAL COMPANY LAW TRIBUNAL

AND NATIONAL COMPANY LAW

APPELLATE TRIBUNAL

CMA N P Viswanathan
ENESIS OF NATIONAL
L C
COMPANY LAW TRIBUNA

It all started way back in 1999 when Justice Eradi

Committee, constituted by the Govt of India in
1999 headed by Justice V. Balakrishna Eradi, a
retired Judge of the Supreme Court of India,
submitted its report recommending, inter alia,
setting up of a National Company Law Tribunal
(NCLT in short) to be vested with the functions
and power with regard to rehabilitation and revival
of sick industrial companies, a mandate presently
with BIFR, AAIFR under SICA.
ARGUMENTS FAVOURING TRIBUNALISATION

The courts function under archaic and elaborate
procedural laws and highly technical Evidence Law.
To ensure fair play and avoidance of judicial
error, the procedural laws provide for appeals,
revisions and reviews, and allow parties to file
innumerable applications and raise vexatious
objections as a result of which the main matters
get pushed to the background.
background All litigation in
courts get inevitably delayed which leads to
frustration and dissatisfaction among litigants.

In view of the huge pendency, courts are not able
to bestow attention and give priority to case
arising under special legislations.
legislations Therefore, there
is a need to transfer some selected areas o
litigation dealt with by traditional courts to
special Tribunals. As Tribunals are free from the
shackles of procedural laws and Evidence Law
they can provide easy access to speedy justice in
‘cost-affordable’ and ‘user friendly’ manner.
 MEMBERS OF THE TRIBUNAL

Tribunals should have a Judicial Member and a Technical

Member. The Judicial Member will act as a bulwark
against apprehensions of bias and will ensure compliance
with basic principles of natural justice such as fair
hearing and reasoned orders.
orders The Judicial Member would
also ensure impartiality, fairness and reasonableness in
consideration. The presence of Technical Member
ensures the availability of expertise and experience
related to the field of adjudication for which the special
Tribunal is created, thereby improving the quality of
adjudication and decision-making
making.
 COMPANIES (AMENDMENT) ACT, 2002

In line with the Eradi Committee Report and long felt
need and widespread criticism from different quarters,
we saw the Companies (Amendment) Act, 2002 and
repeal of SICA (Sick Industrial Companies Act) proposed
to the new regime of tackling corporate rescue and
insolvency procedures in India with a view to creating
confidence in the minds of all the stakeholders like
investors, creditors, labour and shareholders. The
amended Act suggested for change by combining the
powers of Courts, the BIFR and the CLB in one
specialised NCLT.
 INSERTION OF CHAPTER 1B & 1C IN Companies Act, 1956

Accepting the recommendations of Eradi Committee,

Government passed Company (Second amendment) Act,
2002 inserting chapters 1B
1 and 1C in Companies Act,
1956 which provided for establishment of National
Company Law Tribunal (NCLT) and National Company Law
Appellate Tribunal (NCLAT) to take over the functions
which were being performed by Company Law Board
(CLB), Board of Industrial and Financial Reconstruction
(BIFR), Appellate Authority for Industrial and Financial
Reconstruction (AAIFR) and the High Court.
 CHALLENGE TO NEW INSERTIONS

The Madras Bar Association, apprehending an

encroachment into their exclusive professional
domain by other professionals like practising
CMAs, CAs & CSs, challenged the validity of the
Chapters 1B and 1C in 2002 before the Madras
High Court. High Court in its judgment dated 30th
March, 2004 held that creation of the tribunal
and vesting therein the powers exercised by High
Court and Company Law Board was not
unconstitutional.
 CHALLENGE TO ARTICLE 323B OF INDIAN CONSTITUTION

The petitioner had challenged Article 323B, which, they

alleged, diluted the judiciary powers by empowering the
executives to sit in judgment over matters requiring judicial
experience. It was also argued that the dependence of
tribunals on the sponsoring or parent department for
infrastructural facilities or personnel may undermine the
independence of the tribunal.When
When the tribunals are formed,
they are mostly dependant on their sponsoring department
for funding and even space for functioning. The statutes
constituting tribunals routinely provide for members of civil
services from the sponsoring departments becoming members
of the tribunal and continuing their lien with their parent
cadre.
PREJUDICED TRIBUNAL MEMBERS

This is indeed a fact even today when the Tribuna

like MSTT, CESTAT etc, with due respect to them
have been rolling out judgment after judgment
favour of the Revenue, despite valid grounds raised b
the assessees, because their posting and privilege
are contingent upon the pleasure of the Governmen
of the day which has appointed them. So there is n
denying the facts as argued by the Petitioner, Madra
Bar Association.
 ARTICLE 323B OF INDIAN CONSTITUTION

Article 323B provides for (1) the adjudication or trial by tribunals of any
disputes, complaints, or offences with
ith respect to all or any of the matters
specified in clause (2) with respect to which such Legislature has power to
make laws.

(2) The matters referred to in clause (1) are the following, namely:-
namely:

(a) levy, assessment, collection and enforcement of any tax;

(b) foreign exchange, import and export across customs frontiers;

(c) industrial and labour disputes;

(d) land reforms by way of acquisition
ion by the State of any estate as defined
in article 31A or of any rights therein
ein or the extinguishment or modification
of any such rights or by way of ceiling on agricultural land or in any other
way;
 (e) ceiling on urban property;

(e)

(f) elections to either Hous
ouse of Parliament or the House
or either House of the Legislature of a State, but
excluding the matters referred to in article 329 and
article 329A (delimitation of constituencies or the
allotment of seats to such constituencies).

(g) production, procuremenent, supply and distribution of
food-stuffs (including edib
ible oilseeds and oils) and such
other goods as the Preside
dent may, by public notification,
declare to be essential goods for the purpose of this
article and control of prices of such goods;
EMPOWERMENT FOR CONSTITUTING TRIBUNALS

Article 323B does not talk about general

Corporate Laws related to Companies. That was
the reason why the Supreme Court held in its
2010 judgment that the legislative competence of
Parliament to provide for creation of courts and
tribunals can be traced to Entries 77, 78, 79 and
Entries 43, 44 read with Entry 95 of List I, Item
11A r/w Entry 46 of List III of the Seventh
Schedule of the Constitution.
Constitution
 LEGALITY OF NCLT

Articles 323A and 323B of the Constitution are enabling

provisions which enable the setting up of tribunals
contemplated therein; and that the said Articles,
however, cannot be interpreted to mean that they
prohibited the legislature from establishing tribunals not
covered by those Articles, as long as there is legislative
competence under the appropriate Entry in the Seventh
Schedule. And hence it held that Article 323B had
nothing to do with the constitution of NCLT and that its
formation was valid and constitutional.
constitutional
 HIGH COURT’S STAND ON CH 1B & 1C

The Madras High Court held that several

provisions of chapters 1B1 and 1C i.e. Sections 10-
FD(3)(f)(g)(h), inter-alia,
alia, were defective and thus
violative of basic constitutional scheme of
separation of power and independence of
judiciary; and that unless the provisions were
amended by removing the defects, it would be
unconstitutional to constitute NCLT and NCLAT.
CHALLENGE OF MADRAS HIGH COURT ORDER

In 2006, the Union of India went in Appeal against the
Madras High Court Order of 2004, before the Supreme
Court of India and the judgment of Supreme Court came on
11th May, 2010. In the said 2010 Judgment, while the
constitution bench of the Supreme Court held the NCLT and
the NCLAT as envisaged by the Part 1B and Part 1C of the
Companies Act, 1956 (the 1956 Act) to be a fit and proper
body, it agreed with the views of the Madras High Court
(wherefrom the issue came to the Supreme Court in appeal)
that certain provisions of Part 1B and Part 1C of the 1956
Act relating to the appointment and the eligibility for
membership of the NCLT and the NCLAT were "defective"
and required rectification (by way of amendment).
ELIGIBILITY OF CMAs TO BE TECHNICAL MEMBER

The provisions of Part 1B & Part 1C of the Companies Act,

1956, as replicated in Chapter XXVII of the Companies Act,
2013, related to NCLT/NCLAT laid down the terms for
constitution of the Tribunal, qualifications of the judicial and
technical members, etc. Accordingly, CMAs/CAs/CSs in
practice for more than 15 years were eligible to become
technical members of the Tribunal.
Tribunal It also laid down that
even Jt. Secretary rank bureaucrats and Class A Officers
were eligible to become technical members, which was
objected to by both the Madras High Court as well as the
Supreme Court. The Courts directed that only Secretary or
Addl. Secretary level officials could be treated as eligible
for appointment as technical members.
members
MISTAKEN NOTION ON T
TECHNICAL MEMBERSHIP

There is a mistaken notion that the Courts had objected to

professionals like CMAs/CAs/CSs being considered for the
post of technical members, which is not correct. In fact, the
Supreme Court had categorically stated in their 2010
judgment that only Clauses (c), (d), (e), (g), (h), and later part
of clause (f) in sub-section (3
3) of section 10FD and officers
of civil services of the rank of the Secretary or Additional
Secretary in Indian Company Law Service and Indian Legal
Service can be considered for purposes of appointment as
Technical Members of the Tribunal.
Tribunal Clauses ( c),(d),(e) relate
to CAs, CMAs & CSs.
RECTIFICATION OF PART 1B & 1C

Pursuant to the 2010 judgment, th

rectification to Part 1B and Part 1C of th
1956 Act to operationalize the NCLT an
the NCLAT were not carried out. May b
because already the 2013 Companies Ac
was seriously deliberated upon and th
Government felt that the changes could b
incorporated in the new Act.
 CHALLENGE OF COMPANIES ACT, 2013

In 2014, the Companies Act, 2013 (the 2013 Act) was passed by
the Parliament and partially notified into effect; although, the
provisions in the 2013 Act relating to the NCLT and the NCLAT
were not notified. Although the rectifications to Part 1B and Part
1C of the 1956 Act directed by the Supreme Court in the 2010
Judgment had been included in Chapter XXVII of the 2013 Act,
the Madras Bar Association filed its writ petition before the
Supreme Court in 2013. The Madras Bar Association prayed for a
writ of declaration contending that some provisions of Chapter
XXVII of the 2013 Act too suffered from the same defects as
those observed in the 2010 Judgment, and therefore should be
struck down as unconstitutional.
 FINALITY TO CONSTITUTION OF NCLT

On May 14, 2015, the Constitution Bench of the Supreme
Court led by Chief Justice HL Dattu partly allowed the writ
petition filed by the Madras Bar Association wherein it
struck down the validity of Technical Member appointment &
Selection Committee constitution but it upheld the validity of
the NCLT / NCLAT under the Companies Act, 2013. The
provisions relating to NCLT & NCLAT were also challenged
under the Companies Act, 1956 (in Union of India Vs R.
Gandhi, President, Madras Bar Association), wherein the
Supreme Court’s Constitution Bench upheld the validity of
NCLT / NCLAT and certain provisions relating to constitution
of board of company law administration were held as
‘unconstitutional’.
 NTT –VS
VS- NCLT

SC completely dismissed Madras Bar Association’s reliance on 2014 ruling of SC,
wherein the constitution of National Tax Tribunal (NTT) was held as
‘unconstitutional’.

In the present case, the Supreme Court’s Constitution Bench rejected Sr.
Advocate Arvind Datar’s (representing the writ petitioner, Madras Bar
Association) contention that UoI Vs R. Gandhi judgment did not deal with
constitution of NCLAT. The SC held that the Constitution Bench categorically
dealt with the constitutional validity of NCLT & NCLAT under the caption
“Whether the constitution of NCLT and NCLAT under Parts 1B & 1C of
Companies Act are valid”.

SC remarked that such ‘adventurism’ on the petitioner’s part is totally
unfounded and stated that the earlier ruling in UoI Vs R. Gandhi is of
Constitution Bench and is binding on the co-ordinate Bench as well.

Apex court differentiated the NTT ruling from NCLT/NCLAT and
held that the NTT was a matter where power of judicial review
exercised by the High Court was vested in NTT which was sought to
be unconstitutional. SC observed that NCLT is the ‘first forum’ in the
hierarchy of quasi-judicial fora set-up under the Companies Act
2013 and stated that NCLT, would not only deal with question of law
but would be called upon to thrash out the factual disputes/aspects
as well.

With respect to the issue of constitutionality of provisions for
appointment of technical members to NCLT/NCLAT, the constitution
bench of SC relied on its earlier ruling in Union of India Vs R. Gandh
and observed that only officers holding ranks of Secretaries o
Additional Secretaries can be considered for appointment as
Technical members.
CONSTITUTION OF SELECTION COMMITTEE

The SC held the constitution of Selection Committee
(for selecting the Members of NCLT and NCLAT) as
invalid and stated that instead of 5 members Selection
Committee, it should be 4 members (2 from
administrative branch + 2 from judiciary) Selection
Committee. The 4-member
member Selection Committee shall
include - Chief Justice, Senior Judge, Secretary in the
Finance Ministry and Law Secretary, with the caveat
that the Chief Justice will have a casting vote.
 PAVING THE PATH TO NCLT

The recent SC ruling on the constitutional validity of NCLT &
NCLAT is one of the biggest leaps for the corporate sector and
the professional fraternity. The step will have a positive impact on
the corporate restructuring (i.ee. mergers and acquisitions, capital
restructuring, revival of sick companies and dispute related
matters) as the NCLT will not just only replace the Company Law
Board (CLB), but will also bring under its umbrella cases filed with
the High Courts, Board for Industrial and Financial Reconstruction
(BIFR) and the Appellate Authority for Industrial and Financial
Reconstruction (AAIFR).

It seems that matters pertaining to winding up have been taken
out of jurisdiction of NCLT and NCLAT by recent amendment to
the Companies Act, 2013 in 2015.
2015 However, Section 270 (which are
yet to be made effective) onwards still refer to “Tribunal”.
 CHAPTER XXVII OF COMPANIES ACT, 2013
DEFINITIONS

407. In this Chapter, unless the context otherwise requires,—

(a) “Chairperson” means the Chairperson of the Appellate Tribunal;

(b) “Judicial Member” means a member of the Tribunal or the Appellate
Tribunal appointed as such and includes the President or the
Chairperson, as the case may be;

(c) “Member” means a member, whether Judicial or Technical of the
Tribunal or the Appellate Tribunal and includes the President or the
Chairperson, as the case may be;

(d) “President” means the President of the Tribunal;

(e) “Technical Member” means a member of the Tribunal or the
Appellate Tribunal appointed as such.
such
 CONSTITUTING THE NCLT

408. The Central Government shall, by notification,

constitute, with effect from such date as may be
specified therein, a Tribunal to be known as the National
Company Law Tribunal consisting of a President and such
number of Judicial and Technical members, as the
Central Government may deem necessary, to be
appointed by it by notification, to exercise and discharge
such powers and functions as are, or may be, conferred
on it by or under this Act or any other law for the time
being in force.
 QUALIFICATION OF MEMBERS

409. (1) The President shall be a person who is or has been a Judge of a High
Court for five years.

(2) A person shall not be qualified for appointment as a Judicial Member unless
he -

(a) is, or has been, a judge of a High Court;
Court or

(b) is, or has been, a District Judge for at least five years; or

(c) has, for at least ten years been an advocate of a court.

Explanation.—For the purposes of clause (c), in computing the period during

which a person has been an advocate of a court, there shall be included any
period during which the person has held judicial office or the office of a
member of a tribunal or any post, under the Union or a State, requiring special
knowledge of law after he becomes an advocate.
advocate

(3) A person shall not be qualified for appointment as a Technical Member unless he
-

(a) has, for at least fifteen years been a member of the Indian Corporate Law
Service or Indian Legal Service out of which at least three years shall be in the pay
scale of Joint Secretary to the Government of India or equivalent or above in that
service; or

(b) is, or has been, in practice as a chartered accountant for at least fifteen years;
or

(c) is, or has been, in practice as a cost accountant for at least fifteen years; or

(d) is, or has been, in practice as a company secretary for at least fifteen years; or

(e) is a person of proven ability, integrity and standing having special knowledge and
experience, of not less than fifteen 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;
companies or

(f) is, or has been, for at least five years, a presiding officer of a Labour Court,
Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947.
 CONSTITUTING NCLAT

410. The Central Government shall, by notification,

constitute, with effect from such date as may be
specified therein, an Appellate Tribunal to be known as
the National Company Law Appellate Tribunal consisting
of a chairperson and such number of Judicial and
Technical Members, not exceeding eleven, as the Central
Government may deem fit, to be appointed by it by
notification, for hearing appeals against the orders of
the Tribunal.
 QUALIFICATION OF NCLAT MEMBERS

411. (1) The chairperson shall be a person who is or has been a
Judge of the Supreme Court or the Chief Justice of a High Court.

(2) A Judicial Member shall be a person who is or has been a
Judge of a High Court or is a Judicial Member of the Tribunal for
five years.

(3) A Technical Member shall be a person of proven ability,
integrity and standing having special knowledge and experience, of
not less than twenty-five 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.
APPOINTMENT OF MEMBERS OF NCLT/NCLAT

412. (1) The President of the Tribunal and the chairperson and Judicial Members of the
Appellate Tribunal, shall be appointed after consultation with the Chief Justice of India.

(2) The Members of the Tribunal and the Technical Members of the Appellate Tribunal
shall be appointed on the recommendation of a Selection Committee consisting of—

(a) Chief Justice of India or his nominee—Chairperson
Chairperson;

(b) a senior Judge of the Supreme Court or a Chief Justice of High Court—Member;

(c) Secretary in the Ministry of Corporate Affairs—Member;

(d) Secretary in the Ministry of Law and Justice—Member;
Justice and

(e) Secretary in the Department of Financial Services in the Ministry of Finance—
Member.

412(3) The Secretary, Ministry of Corporate Affairs shal
be the Convener of the Selection Committee.

(4) The Selection Committee shall determine its procedure
for recommending persons under sub-section (2).

(5) No appointment of the Members of the Tribunal or the
Appellate Tribunal shall be invalid merely by reason of any
vacancy or any defect in the constitution of the Selection
Committee.
 HOLDING OF OFFICE

413. (1) The President and every other er Member of the Tribunal shall hold office
as such for a term of five years from the date on which he enters upon his
office, but shall be eligible for re-appo
pointment for another term of five years.

(2) A Member of the Tribunal shall hold office as such until he attains,—
attains,

(a) in the case of the President, the age of sixty-seven
sixty years;

(b) in the case of any other Member, the age of sixty-five
sixty years:

Provided that a person who has not completed fifty years of age shall not be
eligible for appointment as Member:

Provided further that the Member mayay retain his lien with his parent cadre or
Ministry or Department, as the case may
ma be, while holding office as such for a
period not exceeding one year.

413(3) The chairperson or a Membe ber of the Appellate Tribunal shall hold
office as such for a term of five years
ye from the date on which he enters
upon his office, but shall be eligible for re-appointment
re for another
term of five years.

(4) A Member of the Appellate Trib
ribunal shall hold office as such until he
attains,—

(a) in the case of the Chairperson, the age of seventy years;

(b) in the case of any other Member, the age of sixty-seven
sixty years:

Provided that a person who has not completed fifty years of age shall
not be eligible for appointment as Member:

Provided further that the Member may retain his lien with his parent
cadre or Ministry or Department, as the case may be, while holding
office as such for a period not exceeding one year.
 REMUNERATION OF MEMBERS

414. The salary, allowances and other terms and

414.
conditions of service of the Members of the
Tribunal and the Appellat
llate Tribunal shall be such
as may be prescribed:
Provided that neither the salary and allowances

Provided
nor the other terms and conditions of service of
the Members shall be varied to their
disadvantage after their appointment.
 VACANCY IN OFFICE

415. (1) In the event of the occurrence of any vacancy in the
office of the President or the Chairperson by reason of his death,
resignation or otherwise, the senior-most
senior Member shall act as the
President or the Chairperson, as the case may be, until the date on
which a new President or Chairperson appointed in accordance with
the provisions of this Act to fill such vacancy enters upon his
office.

(2) When the President or the Chairperson is unable to discharge
his functions owing to absence, illness or any other cause, the
senior-most Member shall discharge the functions of the
President or the Chairperson, as the case may be, until the date on
which the President or the Chairperson resumes his duties.
 RESIGNING FROM OFFICE

416. The President, the Chairperson or any Member may,
by notice in writing under his hand addressed to the
Central Government, resign from his office:

Provided that the President, the Chairperson, or the
Member shall continue to hold office until the expiry of
three months from the date of receipt of such notice by
the Central Government or until a person duly appointed
as his successor enters upon his office or until the
expiry of his term of office, whichever is earliest.
 REMOVAL FROM OFFICE

417. (1) The Central Government may, after consultation with the
Chief Justice of India, remove from office the President,
Chairperson or any Member, who—
who

(a) has been adjudged an insolvent;
insolvent or

(b) has been convicted of an offence which, in the opinion of the
Central Government, involves moral turpitude; or

(c) has become physically or mentally incapable of acting as such
President, the Chairperson, or Member;
Member or

(d) has acquired such financial or other interest as is likely to
affect prejudicially his functions as such President, the
Chairperson or Member; or Salary, allowances and other terms and
conditions of service of Members.
Members

(e) has so abused his position as to render his continuance in
office prejudicial to the public interest:
interest

Provided that the President, the Chairperson or the Member shall
not be removed on any of the grounds specified in clauses (b) to
(e) without giving him a reasonable opportunity of being heard.

417(2) Without prejudice to the provisions of sub-section (1), the
President, the Chairperson or the Member shall not be removed
from his office except by an order made by the Central
Government on the ground of proved misbehaviour or incapacity
after an inquiry made by a Judge of the Supreme Court nominated
by the Chief Justice of India on a reference made to him by the
Central Government in which such President, the Chairperson or
Member had been informed of the charges against him and given a
reasonable opportunity of being heard.

417(3) The Central Government may, with the
concurrence of the Chief Justice of India, suspend from
office, the President, the Chairperson or Member in
respect of whom reference has been made to the Judge
of the Supreme Court under sub-section (2) until the
Central Government has passed orders on receipt of the
report of the Judge of the Supreme Court on such
reference.

(4) The Central Government shall, after consultation with
the Supreme Court, make rules to regulate the
procedure for the inquiry on the ground of proved
misbehaviour or incapacity referred to in sub-section (2).
 OFFICERS/STAFF OF NCLT/NCLAT

418. (1) The Central Government shall, in consultation with the Tribunal
and the Appellate Tribunal, provide the Tribunal and the Appellate
Tribunal, as the case may be, with such officers and other employees as
may be necessary for the exercise of the powers and discharge of the
functions of the Tribunal and the Appellate Tribunal.

(2) The officers and other employees of the Tribunal and the Appellate
Tribunal shall discharge their functions under the general
superintendence and control of the President, or as the case may be, the
Chairperson, or any other Member to whom powers for exercising such
superintendence and control are delegated by him.

(3) The salaries and allowances and other conditions of service of the
officers and other employees of the Tribunal and the Appellate Tribunal
shall be such as may be prescribed.
 BENCHES OF NCLT/NCLAT
419. (1) There shall be constituted such number of Benches of t
Tribunal, as may, by notification, be specified by the Cent
Government.
(2) The Principal Bench of the Tribunal shall be at New Delhi which sh
be presided over by the President of the Tribunal.
(3) The powers of the Tribunal shall be exercisable by Bench
consisting of two Members out of whom one shall be a Judicial Memb
and the other shall be a Technical Member:
Member
Provided that it shall be competent for the Members of the Tribu
authorised in this behalf to function as a Bench consisting of
single

Judicial Member and exercise the powers of the Tribunal in
respect of such class of cases or such matters pertaining to such
class of cases, as the President may, by general or special order,
specify

Provided further that if at any stage of the hearing of any such
case or matter, it appears to the Member that the case or matter
is of such a nature that it ought to be heard by a Bench consisting
of two Members, the case or matter may be transferred by the
President, or, as the case may be, referred to him for transfer, to
such Bench as the President may deem fit.

(4) The President shall, for the disposal of any case relating to
rehabilitation, restructuring, reviving or winding up, of companies,
constitute one or more Special Benches consisting of three or
more Members, majority necessarily being of Judicial Members.

419(5) If the Members of a Bench differ in opinion on
any point or points, it shall be decided according to the
majority, if there is a majority, but if the Members are
equally divided, they shall state the point or points on
which they differ, and the case shall be referred by the
President for hearing on such point or points by one or
more of the other Members of the Tribunal and such
point or points shall be decided according to the opinion
of the majority of Members who have heard the case,
including those who first heard it.
 ORDERS OF THE TRIBUNAL

420. (1) The Tribunal may, after giving the parties to any
proceeding before it, a reasonable opportunity of being heard,
pass such orders thereon as it thinks fit.

(2) The Tribunal may, at any time within two years from the date
of the order, with a view to rectifying any mistake apparent from
the record, amend any order passed by it, and shall make such
amendment, if the mistake is brought to its notice by the parties:

Provided that no such amendment shall be made in respect of any
order against which an appeal has been preferred under this Act.

(3) The Tribunal shall send a copy of every order passed under
this section to all the parties concerned.
concerned
 APPEAL AGAINST NCLT ORDER

421. (1) Any person aggrieved by an order of the Tribunal
may prefer an appeal to the Appellate Tribunal.

(2) No appeal shall lie to the Appellate Tribunal from an
order made by the Tribunal with the consent of parties.

(3) Every appeal under sub-section
sub (1) shall be filed
within a period of forty-five
five days from the date on
which a copy of the order of the Tribunal is made
available to the person aggrieved and shall be in such
form, and accompanied by such fees, as may be
prescribed:

Provided that the Appellate Tribunal may entertain an appeal after
the expiry of the said period of forty-five days from the date
aforesaid, but within a further period not exceeding forty-five
days, if it is satisfied that the appellant was prevented by
sufficient cause from filing the appeal within that period.

421(4) On the receipt of an appeal under sub-section (1), the
Appellate Tribunal shall, after giving the parties to the appeal a
reasonable opportunity of being heard, pass such orders thereon
as it thinks fit, confirming, modifying or setting aside the order
appealed against.

(5) The Appellate Tribunal shall send a copy of every order made
by it to the Tribunal and the parties to appeal.
 PERIOD OF DISPOSAL

422. (1) Every application or petition presented before the Tribunal and every
appeal filed before the Appellate Tribunal shall be dealt with and disposed of
by it as expeditiously as possible and every endeavour shall be made by the
Tribunal or the Appellate Tribunal, as the case may be, for the disposal of such
application or petition or appeal within three months from the date of its
presentation before the Tribunal or the filing of the appeal before the
Appellate Tribunal.

(2) Where any application or petition or appeal is not disposed of within the
period specified in sub-section (1), the Tribunal or, as the case may be, the
Appellate Tribunal, shall record the reasons for not disposing of the application
or petition or the appeal, as the case may be, within the period so specified; and
the President or the Chairperson, as the case may be, may, after taking into
account the reasons so recorded, extend the period referred to in sub-section
(1) by such period not exceeding ninety days as he may consider necessary.
 APPEAL BEFORE SUPREME COURT

423. Any person aggrieved by any order of the Appellate
Tribunal may file an appeal to the Supreme Court within
sixty days from the date of receipt of the order of the
Appellate Tribunal to him on any question of law arising
out of such order:

Provided that the Supreme Court may, if it is satisfied
that the appellant was prevented by sufficient cause
from filing the appeal within the said period, allow it to
be filed within a further period not exceeding sixty
days.
 TRIBUNAL NOT GOVERNED BY CODE OF CIVIL PROCEDURE

424. (1) The Tribunal and the Appellate Tribunal shall not, while
disposing of any proceeding before it or, as the case may be, an
appeal before it, be bound by the procedure laid down in the Code
of Civil Procedure, 1908, but shall be guided by the principles of
natural justice, and, subject to the other provisions of this Act
and of any rules made thereunder, the Tribunal and the Appellate
Tribunal shall have power to regulate their own procedure.

(2) The Tribunal and the Appellate Tribunal shall have, for the
purposes of discharging their functions under this Act, the same
powers as are vested in a civil court under the Code of Civil
Procedure, 1908 while trying a suit in respect of the following
matters, namely:—

(a) summoning and enforcing the attendance of any person and examining
him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;;

(d) subject to the provisions of sections 123 and 124 of the Indian
Evidence Act, 1872, requisitioning any public record or document or a
copy of such record or document from any office;

(e) issuing commissions for the examination of witnesses or documents;

(f) dismissing a representation for default or deciding it ex parte;

(g) setting aside any order of dismissal of any representation for
default or any order passed by it ex parte; and

(h) any other matter which may be prescribed.
prescribed

424(3) Any order made by the Tribunal or the Appellate Tribunal may be
enforced by that Tribunal in the same manner as if it were a decree made by a
court in a suit pending therein, and it shall be lawful for the Tribunal or the
Appellate Tribunal to send for execution of its orders to the court within the
local limits of whose jurisdiction,—

(a) in the case of an order against a company, the registered office of the
company is situate; or

(b) in the case of an order against any other person, the person concerned
voluntarily resides or carries on business or personally works for gain.

(4) All proceedings before the Tribunal or the Appellate Tribunal shall be
deemed to be judicial proceedings within the meaning of sections 193 and 228,
and for the purposes of section 196 of the Indian Penal Code, and the Tribunal
and the Appellate Tribunal shall be deemed to be civil court for the purposes of
section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.
 JURISDICTION, POWERS & AUTHORITY

425. The Tribunal and the Appellate Tribunal shall have the same
jurisdiction, powers and authority in respect of contempt of
themselves as the High Court has and may exercise, for this
purpose, the powers under the provisions of the Contempt of
Courts Act, 1971, which shall have the effect subject to
modifications that—

(a) the reference therein to a High Court shall be construed as
including a reference to the Tribunal and the Appellate Tribunal;
and

(b) the reference to Advocate--General in section 15 of the said
Act shall be construed as a reference to such Law Officers as the
Central Government may, specify in this behalf.
 DIRECTION TO OFFICERS/STAFF

426. The Tribunal or the Appellate Tribunal may,
by general or special order, direct, subject to
such conditions, if any, as may be specified in the
order, any of its officers or employees or any
other person authorised by it to inquire into any
matter connected with any proceeding or, as the
case may be, appeal before it and to report to it
in such manner as may be specified in the order.
 DEEMED PUBLIC SERVANTS

427. The President, Members, officers and other

employees of the Tribunal and the Chairperson,
Members, officers and other employees of the
Appellate Tribunal shall be deemed to be public
servants within the meaning of section 21 of the
Indian Penal Code.
 LEGAL IMMUNITY TO TRIBUNAL/MEMBERS

428. No suit, prosecution or other legal proceeding shall
lie against the Tribunal, the President, Member, officer
or other employee, or against the Appellate Tribunal, the
Chairperson, Member, officer or other employees
thereof or liquidator or any other person authorised by
the Tribunal or the Appellate Tribunal for the discharge
of any function under this Act in respect of any loss or
damage caused or likely to be caused by any act which is
in good faith done or intended to be done in pursuance of
this Act.
 CONTROL OVER PROPERTY, BOOKS OF ACCOUNTS

429. (1) The Tribunal may, in any proceeding relating to a sick compa
or winding up of any other company, in order to take into custody
under its control all property, books of account or other document
request, in writing, the Chief Metropolitan Magistrate, Chief Judic
Magistrate or the District Collector within whose jurisdiction any su
property, books of account or other documents of such sick or oth
company, are situate or found, to take possession thereof, and th
Chief Metropolitan Magistrate, Chief Judicial Magistrate or th
District Collector, as the case may be, shall, on such request bei
made to him,—

(a) take possession of such property, books of account or oth
documents; and

(b) cause the same to be entrusted to the Tribunal or other pers
authorised by it.

429(2) For the purpose of securing compliance with the
provisions of sub-section (1), the Chief Metropolitan
Magistrate, Chief Judicial Magistrate or the District
Collector may take or cause to be taken such steps and
use or cause to be used such force as may, in his opinion,
be necessary.

(3) No act of the Chief Metropolitan Magistrate, Chief
Judicial Magistrate or the District Collector done in
pursuance of this section shall be called in question in
any court or before any authority on any ground
whatsoever.
 NO JURISDICTION FOR CIVIL COURTS

430. No civil court shall have jurisdiction to entertain
any suit or proceeding in respect of any matter which
the Tribunal or the Appellate Tribunal is empowered to
determine by or under this Act or any other law for the
time being in force and no injunction shall be granted by
any court or other authority in respect of any action
taken or to be taken in pursuance of any power
conferred by or under this Act or any other law for the
time being in force, by the Tribunal or the Appellate
Tribunal.
 VACANCY NO BAR ON VALIDITY

431. No act or proceeding of the Tribunal or the

Appellate Tribunal shall be questioned or shall be
invalid merely on the ground of the existence of
any vacancy or defect in the constitution of the
Tribunal or the Appellate Tribunal, as the case
may be.
 APPEARANCE BEFORE NCLT/NCLAT

432. A party to any proceeding or appeal before
the Tribunal or the AppellateTribunal,
AppellateTribunal as the case
may be, may either appear in person or authorise
one or more chartered accountants or company
secretaries or cost accountants or legal
practitioners or any other person to present his
case before the Tribunal or the Appellate
Tribunal, as the case may be.
 LIMITATIONS ACT APPLICABLE

433. The provisions of the Limitation

Act, 1963 shall, as far as may be, apply
to proceedings or appeals before the
Tribunal or the Appellate Tribunal, as
the case may be.
 TRANSFER OF PENDING CASES TO NCLT
434. (1) On such date as may be notified by the Central Government
this behalf,—
(a) all matters, proceedings or cases pending before the Board
Company Law Administration (herein in this section referred to as t
Company Law Board) constituted under sub-section (1) of section 10E
the Companies Act, 1956, immediately before such date shall sta
transferred to the Tribunal and theTribunal shall dispose of su
matters, proceedings or cases in accordance with the provisions of th
Act;
(b) any person aggrieved by any decision or order of the Company La
Board made before such date may file an appeal to the High Cou
within sixty days from the date of communication of the decision
order of the Company Law Board to him on any question of law arisi
out of such order

Provided that the High Court may, if it is satisfied that
the appellant was prevented by sufficient cause from
filing an appeal within the said period, allow it to be filed
within a further period not exceeding sixty days;

(c) all proceedings under the Companies Act, 1956,
including proceedings relating to arbitration,
compromise, arrangements and reconstruction and
winding up of companies, pending immediately before
such date before any District Courtor High Court, shall
stand transferred to the Tribunal and the Tribunal may
proceed to deal with such proceedings from the stage
before their transfer.

(d) any appeal preferred too the Appellate Authority for
Industrial and Financial Reco
econstruction or any reference
made or inquiry pending to or before the Board of
Industrial and Financial Reco
econstruction or any proceeding
of whatever nature pending before the Appellate
Authority for Industrial and
nd Financial Reconstruction or
the Board for Industrial and Financial Reconstruction
under the Sick Industrial Co
Companies (Special Provisions)
Act, 1985 immediately befor
fore the commencement of this
Act shall stand abated.

Provided that a company in respect of which such appeal or
reference or inquiry stands abated under this clause may make a
reference to the Tribunal under this Act within one hundred and
eighty days from the commencement of this Act in accordance
with the provisions of this Act:

Provided further that no fees shall be payable for making such
reference under this Act by a company whose appeal or reference
or inquiry stands abated under this clause.

(2) The Central Government may make rules consistent with the
provisions of this Act to ensure timely transfer of all matters,
proceedings or cases pending before the Company Law Board or
the courts, to the Tribunal under this section.
 SPEEDING UP OF JUSTICE

The NCLT / NCLAT formation is welcome step as
it will reduce the burden of the Supreme Court,
High Courts and CLBs on the corporate law
related matters, which will ultimately help in
unlocking the value of distressed assets. NCLT /
NCLAT being the ‘specialized benches’ for
corporate law related matters, it is expected
that the matters will be listed and heard in an
expeditious and time bound manner.
 ROLE OF CMAs

The formation of NCLT / NCLAT will open wide gates for the
practicing Cost Accountants, practicing Company Secretaries, and
practicing Chartered Accountants, as they would now be able to
represent their client companies in matters requiring Tribunal
approval i.e. mergers and amalgamations, capital restructuring,
revival of sick companies and shareholders-management
shareholders dispute
matters. Until the formation of the NCLT/NCLAT, the practicing
professionals (CMA, CS & CA) could appear only before the CLB
and for the matters being heard by the HC and Supreme Court,
only Advocates were eligible for arguments and representation.
Now all practising professionals (Advocates, practising CMA,
practising CS & practising CA) will be treated at par for
representation before NCLT / NCLAT.
NCLAT
 PREPARATION BY CMAs

For entering / establishing oneself in the field of NCLT /
NCLAT, it would be desirable of a practicing professional to
take some efforts for enhancing their skill sets, some of
which are listed below:

(1) Thorough study of the provisions of Companies Act,
2013;

(2) Thorough study of the Secretarial Standards,

(3) In-depth analysis and study of the provisions of
Companies Act, 2013 as well as 1956 relating to mergers and
amalgamations, capital restructuring, revival of sick
companies and shareholders-management
management dispute matters;

(4) Thorough knowledge of the case-laws on the
topics relating to mergers and amalgamations, capital
restructuring, revival of sick companies and
shareholders-management dispute matters;

(5) Developing art of advocacy and soft skill;

(6) Having basic knowledge relating to Tax Laws,
Accounting treatments in matters relating to mergers
and amalgamations, capital restructuring, revival of sick
companies and shareholders
shareholders-management dispute
matters;
 CONCLUSION

Now hopefully, the remaining part of the Companies Act,
2013 will be notified and may come into force soon as SC’s
judgment validates the constitutionality of the NCLT /
NCLAT. Now, the Govt. needs to take immediate steps for
the formation of benches (as much as 16 all over the
country), formation of selection committee, electing
Technical Members and Judicial Members etc. In due course,
the Govt. / MCA will notify a cut-off date with respect to
filing of petitions with NCLT (instead of CLB & HC). As
discussed above, another area of ‘lucrative practice’ has
opened up for Practising Professionals like CMA, CS and CA
for which they will be required to take some extra-efforts
and ‘invest’ some time for the same.
Thank you