NCLT Power and Functions
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Meaning of NCLT
The National Company Law Tribunal, which is a quasi-judicial body created in India with the
purpose of deciding the matters of company law under the Companies Act, 2013,NCLT,
short for National Company Law Tribunal, plays an important role in law governed by
regulating and resolving corporate disputes in India. NCLT has been established to simplify
and streamline the law of procedure as it regards companies and to bring efficiency to
corporate adjudication.
Features of NCLT
The NCLT is blessed with distinct features that guarantee efficient corporate dispute
resolution and company governance.
Judicial Nature: NCLT holds judicial jurisdiction to determine issues relating to the
company.
Single Window for Disputes: The institution has brought together dispersed functions that
exist between courts and tribunals under a single entity.
Fast Track Resolution: NCLT aims at reducing delays that occur during the adjudications
involving companies.
Appeal Mechanism through NCLAT: Appeals concerning orders rendered by the NCLT are
adjudged and disposed of by the National Company Law Appellate Tribunal.
Insolvency: NCLT is significant in insolvency procedures under the IBC, 2016 in India.
Binding Nature of Orders: The order rendered by the NCLT has binding value like a civil
court's order.
Functions of NCLT
The National Company Law Tribunal (NCLT) performs numerous functions to streamline
corporate governance and speedy disposal of cases. Being a quasi-judicial body, NCLT is to
ensure convergence with the Companies Act, 2013, and plays an important role in enforcing
corporate laws, mergers, insolvency resolutions, and safeguarding the rights of the
stakeholders. Under this are the core functions of NCLT:
1. Adjudication of Company Law Matters
NCLT decides cases on corporate governance, shareholder disputes, and directorial
misconduct.
It applies the Companies Act, 2013 provisions in its judgments on companies.
2. Approvals for mergers, demergers, and Restructuring
NCLT approves merger/demerger plans/restructuring schemes and enquires whether such
arrangements are per the law and whether the interests of stakeholders are adequately
protected.
It tests the fairness of such arrangements and safeguards the interests of minority
shareholders also in M&A deals.
3. Insolvency and Bankruptcy Laws
NCLT is the primary adjudicating authority for corporate insolvency proceedings under the
IBC, 2016.
It either revives a company or liquidates it to settle creditors' claims.
4. Prevention of Oppression and Mismanagement
NCLT intervenes where minority shareholders or members are oppressed or mismanaged
by the majority.
It protects the interests of shareholders by having measures like the removal of existing
management or reorganisation of a company.
5. Winding-Up of Companies
NCLT regulates proceedings for winding up companies: voluntary and on a decree of a
court.
Liquidation of companies and distribution of assets among all stakeholders with regard to
settling debts and liabilities is carried out with perfection.
6. Reduction of Share Capital
Requests relating to reductions in share capital are dealt with by NCLT to ascertain whether
the process fulfills legal requirements.
It examines whether the reduction affects the rights of the creditors and protects the interests
of the stakeholders.
7. Depositor and Creditor Grievance Redress
NCLT hears grievances from the depositors and creditors and renders fair treatment and
speedy action against the defaulting companies.
It redresses grievances on a non-payment or fraudulent basis.
8. Revival of Dormant Companies
NCLT has the authority to revive companies that have been lodged for strike-off from the
register of companies by the Registrar of Companies.
It enables dead companies to start working when their essential needs are met.
9. Appeal against Registry of Companies decisions/orders
NCLT disposes of appeals filed against any decision/order made by the Registry of
Companies.
It provides an opportunity to the companies as well as other individuals to file appeals once
wrongful decisions have been meted out.
10. Enquiry of Company Affairs
NCLT can conduct an inquiry about the company's matters if there is a suggestion of fraud or
malpractice.
It becomes an order to the regulatory authorities, like the Serious Fraud Investigation Office
(SFIO), for instance, to carry out an investigation.
Powers of NCLT
NCLT has a galaxy of powers with which it can adjudicate disputes and enforce compliance
with the law. They are as follows:
1. Summoning and Enforcement of Attendance: It can summon people and enforce
their attendance.
2. Production of Records or Documents: It has the power to requisition the
production of any records or documents relating to a proceeding.
3. Examination on Oath: It can administer the oath to examine parties and record their
statements.
4. Issuance of Orders relating to Insolvency and Bankruptcy: the NCLT decides the
fate of companies undergoing the process of insolvency or bankruptcy.
5. Winding Up of Companies: It can issue orders to wind up companies under the
provisions of the Companies Act, 2013.
6. Punitive Action: The NCLT is authorized to impose penalties on the respective
companies or individuals if they do not obey.
Notable Cases Handled by NCLT
Some of the landmark judgments pronounced by NCLT are shaping the corporate landscape
of India.
● Tata Sons vs. Cyrus Mistry:The most crucial decision in that series is Tata Sons vs.
Cyrus Mistry, where NCLT was seen playing the pivotal role in the heavyweight clash
between Tata Sons and its erstwhile chairman Cyrus Mistry. NCLT also filed an
insolvency petition for Jet Airways, paving the way for revival.
● Bhushan Steel Insolvency Case: NCLT handled one of the largest insolvency
cases, and it was acquired by Tata Steel from Bhushan Steel.
● Satyam Computer Services Scam: NCLT was involved in the restructuring process
of Satyam post-scam, and it was acquired by Tech Mahindra.
● Videocon Group Insolvency: The tribunal managed the case of insolvency in
Videocon Industries, which is one of the most complex cases with multiple
stakeholders involved.
