What is National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT)?

By Aashima Kakkar


In India, miscellany bodies act as an expeditious and advantageous alternative to courts of law, with additions to the list being the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

As the two tribunals have been recently established with an aim to regulate and resolve disputes between civil corporations, there is not much awareness about quasi-judicial body like these.

What is the National Company Law Tribunal?

The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) are the successors to the Company Law Board, which was established in 1956 under the Companies Act.

It was established by the Central Government in 2016 under section 408 of the Companies Act 2013, following the V. Balakrishna Eradi Committee’s recommendation, and it was formally constituted on June 1, 2016. Since then, the functions and powers of NCLT under the old Companies Act and the current Act of 2013 have differed.

The government has set up 11 benches across the country, with the Appellate Tribunal in New Delhi.

The National Company Law Tribunal is a quasi-judicial body tasked with resolving company disputes of a civil nature that arise under the Companies Act.

The NCLT is authorised to act in the same manner as a regular court of law in the country, and it is required to regulate the facts of each case fairly and without bias, and to determine each case in line with natural justice principles.

The NCLT Order can be used to help resolve a situation, correct a corporate mistake, impose penalties, and change the rights, duties, obligations, and privileges of the parties involved.

Members of the Tribunal are chosen by a committee chaired by the Secretary of the Ministry of Corporate Affairs (MCA).

Who are the members of NCLT?

There are three categories of members of NCLT, namely:

  • President

The NCLT’s president must have served as a High Court Judge for at least 5 years and be at least 50 years old, but not more than 67 years old.

The president of the NCLT can only serve for 5 years from the date of appointment and can be re-appointed for another 5 years.

  • Judicial Member

A judicial member of the NCLT must have served as a judge for at least 5 years, or as a district judge for at least 5 years, or as a lawyer with at least 10 years of experience. He or she must be at least 50 years old and no older than 65.

Judicial members of the NCLT can only serve for 5 years from the date of their appointment, and they can be re-appointed for another 5 years.

  • Technical Members

Any of the following can be a Technical Member of the NCLT:

  • Someone who has spent at least 15 years as a member of the Indian Corporate Law Services.
  • Someone who has been a CA for at least 15 years.
  • Someone who has practised CS for at least 15 years.
  • Someone who has practised CMA for at least 15 years.
  • Someone who has served as a presiding officer of a Tribunal or Labour Court National Tribunal for at least 5 years.
  • Someone who has integrity and is over 50 but not over 65 years old at the time of appointment.

NCLT Technical Members can only serve for 5 years from the date of their appointment and can only be re-appointed for another 5 years.

What are the powers and jurisdiction of NCLT?

The Code of Civil Procedure establishes the rules that the Tribunal must follow. They are also expected to follow the guidelines set forth by the federal government. The following actions are subject to the NCLT’s jurisdiction:

  • A class action lawsuit

Section 245 of the Indian Companies Act covers class action lawsuits filed in response to frauds. The NCLT can censure and penalise any firm registered under the Indian Companies Act that defrauds or takes money from investors. Companies that generate money by defrauding investors and shareholders are obligated to compensate the victims for their losses.

Class action lawsuits can be filed against both private and public companies, but not against banks.

  • Disputes Over Share Transfers

If a firm refuses to transfer shares or mishandles transfer registration, the victim or anyone who has suffered losses as a result of the malpractice has two months to file a complaint with the NCLT. The NCLT has jurisdiction over contracts and arrangements for security transfer under Sections 58 and 59.

  • Oppression

Individuals were allowed the freedom to register complaints solely concerning continuing situations of abuse and mismanagement under Section 397.

However, the Tribunal provides people with the option to seek justice for any type of abuse, whether it occurred in the past or is occurring now.

If someone believes that a company’s operations are biased in favour of certain parties while oppressing others, he or she has the right to file a complaint with the Tribunal. Also, urge that the company be investigated in order to ensure that all people involved are treated fairly.

  • Financial Statements Revision

Falsification of records was a common form of injustice in the past, and Sections 447 and 448 were inserted to ensure that such cases would be dealt with properly by the Tribunal. These new rules make it illegal for businesses to open accounts to modify their financial statements on their own volition.

In some instances, Section 130 gives the Tribunal authority to order a firm to reopen its accounts. Companies may analyse their financial statements under Section 131, but they do not have the authority to reopen any accounts.

  • Deregistration

The Tribunal has the authority to deregister and dissolve companies that obtained active status through deceptive or illegal means. If the Tribunal judges it essential, the Tribunal might investigate and probe the company’s registration procedural flaws.

  • Investigation

If 100 members file an application against a firm, the Tribunal has the authority to request an investigation into its operations. In certain cases, any individual or organisation outside the NCLT, if authorised by it, can act as investigators. If the Tribunal judges it essential, it might also freeze company assets and impose product limitations.

  • Conversion of a public corporation to a private corporation

The conversion of a public limited company into a private limited company is governed by Sections 13, 14, 15, 18 and 459 of the Companies Act, 2013, as well as guidelines. It must be approved by the NCLT. A Tribunal approval is required for such a conversion. The Tribunal has the authority to place certain conditions on the approvals it grants.

  • Tribunal AGM called to order

Shareholders’ opinions must be evaluated at general meetings on a regular basis. The Act requires that one meeting be called, referred as the “annual general meeting” or “AGM.” “Extraordinary general meeting” refers to any other general gathering.

If the Board or the Member is unable to hold, summon, or convene the AGM or EOGM in the manner stipulated by the Act or the Rules owing to extraordinary circumstances, the Tribunal is empowered under Sections 97 and 98 of the 2013 Act to call or convene general meetings under the Companies Act, 2013.

The requirements in the Companies Act, 2013 for holding an annual general meeting and an extraordinary general meeting are nearly identical to those in the Companies Act, 1956. However, the draught guidelines include an extra clause requiring that such incidents be reported to the ROC.

  • Compounding of Offenses

Compounding provisions under the Act, 2013 were informed prior to the establishment of NCLT and allocated to CLB. NCLT will now have this authority, and NCLT will have to approve all compounding proceedings that exceed the stipulated monetary limit.

  • Change in Financial Year

On April 1, 2014, Section 2(41) was also notified. Every corporation or body corporate, new or old, is required by the Act to have a standard financial year that ends on March 31. It makes an exception, allowing certain businesses to apply to the Tribunal for a different fiscal year. An application to the Tribunal can be made by a company or a body corporate.

The CLB was given the power to change the financial year on application because the Tribunal was not notified when this clause was notified. The rule outlines how to submit an application to CLB. By order dated 28 January 2015, the same was posted on the CLB website.

All applications that have not been resolved by the time the NCLT provisions are notified shall be sent to the Tribunal.

Case Law

  • Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta[1]

Recent case of jurisdiction of NCLT

“NCLT‘s jurisdiction shall always be circumscribed by the supervisory role envisaged for it under the IBC, which sought to make the process driven by trained resolution professionals.”

The NCLT’s authority under Section 60(5)(c) of the IBC cannot be exercised in cases when a termination may occur for reasons unrelated to the corporate debtor’s insolvency. Even more importantly, it cannot be used in the event of a valid contract termination based on an ipso facto clause if the termination does not result in the corporate debtor’s death.

As a result, in the future, NCLT would have to be mindful of dismissing lawful contractual terminations that would just impair the value of the corporate debtor rather than pushing it to its corporate death because it was the corporate debtor’s sole contract.

“NCLT‘s residuary jurisdiction, though wide, is nonetheless defined by the text of the IBC. Specifically, the NCLT cannot do what the IBC consciously did not provide it the power to do.”

The NCLT has broad powers under section 60(5)(c) of the IBC, since it can hear and decide any point of fact or law arising out of or in relation to the insolvency resolution process.

The Court, on the other hand, made it clear that its decision on the validity of the NCLT’s exercise of residuary power was based on the facts of the case at hand, and that it was not laying down a general principle on the contours of the NCLT’s exercise of residuary power.

However, because such matters would fall beyond the scope of the IBC, the NCLT cannot exercise its jurisdiction over subjects other than insolvency proceedings.

What is National Companies Law Appellate Tribunal?

The National Company Law Appellate Tribunal can hear an appeal against the NCLT’s ruling. This Authority was established under the Companies Act of 2013, with the purpose of considering appeals against NCLT judgments.

It also hears appeals from the Insolvency and Bankruptcy Board of India’s orders (IBBI). If a person is still dissatisfied with the NCLAT’s ruling, they can file an appeal with the Supreme Court of India.

Who can be members of NCLAT? What are the qualifications needed?

Following are the members of NCLAT:

  • Chairperson

The head of the NCLAT must have served as a Supreme Court Judge or a Chief Justice of the High Court and must be at least 50 years old but not more than 70 years old.

  • Judicial Member

A judicial member of the NCLAT must have served as a High Court Judge or as a judicial member of the Tribunal for at least 5 years and be at least 50 years old but not more than 67 years old.

  • Technical Member

A Technical Member of the NCLAT must be honest and have 25 years of specialised knowledge or expertise in a specific field. He or she must be at least 50 years old but no older than 67.

What is the difference between NCLT and NCLAT?

The NCLT is in charge of primary jurisdiction, while the NCLAT is in charge of appeals. NCLAT is a more prestigious forum than NCLT. Evidence and witnesses are often brought to NCLT for decision-making, and NCLAT evaluates and checks NCLT’s decisions on a point of law or fact.

The Tribunal is largely responsible for fact-finding and evidence collection, but the Appellate Tribunal decides cases based on evidence and witnesses already collected.


NCLT and NCLAT were created to serve as a unified forum for adjudicating issues relating to company operations, where fast resolution will aid in the smooth operation of the economy. The Company Law Board’s previous regime failed tragically because it was incapable of adjudicating disputes in a timely and effective manner.

The previous administration had numerous barriers that did not aid in the revival of sick companies and instead resulted in the extension of instances. Despite the fact that NCLT and NCLAT are doing an excellent job of streamlining the system, much more has to be done.

There is a need to improve the infrastructure at these Tribunals, increase the number of benches, and sanction judges, all of which will aid in settling disputes in a timely and effective way, freeing up valuable time and resources for corporations to invest in the expansion of India’s economy.


  1. Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta 2021 SCC OnLine SC 194

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