What Roles Do NCLT and NCLAT Play Under the Companies Act, 2013? [Read Order]

The Companies Act, 2013 introduced a transformative institutional framework for the regulation, governance, and adjudication of corporate affairs in India. Central to this reform was the creation of dedicated quasi-judicial bodies: the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). These bodies were established to streamline corporate dispute resolution and improve efficiency, transparency, and accountability in matters concerning company law and insolvency.

The NCLT was constituted under Section 408 of the Companies Act, 2013 and began operations on June 1, 2016. It absorbed the functions of the now-defunct Company Law Board, the Board for Industrial and Financial Reconstruction (BIFR), and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). The NCLAT, established under Section 410 of the same Act, functions as the appellate forum for decisions made by the NCLT and plays a vital role in the review and correction of first-instance rulings.

Roles and Functions of NCLT

The NCLT acts as the primary forum for adjudicating a wide range of company-related disputes and regulatory issues. As a quasi-judicial body, it combines both legal and technical expertise to ensure informed decisions in complex corporate matters.

1. Adjudication of Company Law Disputes

NCLT has extensive powers under the Companies Act to hear and resolve a broad set of company-related issues, including:

• Class Action Suits (Section 245): Shareholders and depositors can file class action suits to seek redressal against mismanagement or fraudulent activities by the company or its management.
• Oppression and Mismanagement (Section 241): Minority shareholders can approach the tribunal in cases of oppressive conduct by majority shareholders or mismanagement of company affairs.
• Investigation into Company Affairs (Section 213): NCLT can order investigations if there is evidence of fraud, misfeasance, or other misconduct.
• Refusal to Transfer Securities (Section 58): The tribunal can intervene when a company unreasonably refuses to register a transfer of shares.
• Conversion of Public Companies to Private (Sections 13–18 and Rule 41): NCLT approves such conversions, ensuring that legal requirements are followed.

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2. Insolvency and Bankruptcy Resolution

Under the Insolvency and Bankruptcy Code, 2016 (IBC), the NCLT functions as the Adjudicating Authority for corporate insolvency resolution processes (CIRP). This includes:

• Admission or rejection of insolvency petitions filed by financial or operational creditors
• Appointment of insolvency professionals
• Approval of resolution plans
• Ordering a liquidation, if resolution fails

This role is crucial in resolving corporate financial distress and has brought NCLT into the center of India’s evolving insolvency framework.

3. Corporate Restructuring and Mergers

The NCLT oversees schemes of arrangement, compromise, mergers, and amalgamations. It ensures procedural compliance and fairness to stakeholders, including creditors and minority shareholders, during restructuring.

4. Winding Up and Liquidation

NCLT has the power to order the winding up of companies and to supervise the liquidation process under Sections 271 and 272. It ensures that assets are distributed fairly and that liabilities are settled in accordance with the law.

5. Regulatory and Administrative Functions

The tribunal also performs several statutory regulatory functions:

• Change of financial year under Section 2(41)
• Extension or calling of Annual General Meetings under Sections 96, 97, and 98
• Freezing of assets to prevent misuse under Section 221

6. Exclusive Jurisdiction

The NCLT has exclusive jurisdiction over matters assigned to it under the Companies Act and the IBC. Civil courts are barred from hearing cases related to areas under NCLT’s authority, reducing forum shopping and enabling specialization in company law matters.

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Jurisdictional Structure of NCLT

To ensure nationwide access, the NCLT operates through 15 benches across India, each with a defined territorial jurisdiction:

Each bench includes judicial and technical members, with the President currently being Justice M. M. Kumar. The composition is designed to ensure a balanced perspective on both legal and commercial aspects of disputes.

Roles and Functions of NCLAT

The NCLAT serves as the appellate forum for decisions made by the NCLT, enhancing the fairness and reliability of company law adjudication.

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1. Appellate Jurisdiction

NCLAT hears appeals against:

• NCLT decisions under the Companies Act, 2013
• NCLT rulings under the Insolvency and Bankruptcy Code, 2016
• Orders issued by the Competition Commission of India (in competition law cases)

Appeals must be filed within 45 days from the date of receipt of the NCLT order.

2. Time-bound Disposals

NCLAT is required to decide appeals within six months to ensure timely justice and minimal disruption to corporate functioning.

3. Further Appeals to the Supreme Court

Decisions of NCLAT can be appealed to the Supreme Court of India on questions of law, providing a final level of scrutiny and reinforcing legal consistency.

Comparative Analysis and Impact

The establishment of NCLT and NCLAT represents a significant shift toward specialized dispute resolution in Indian corporate law. Key benefits include:

• Centralized Adjudication: Replacing multiple forums, these tribunals provide a unified legal mechanism.
• Faster Resolution: Time-bound disposal improves investor confidence and corporate governance.
• Expertise-driven Decisions: Presence of judicial and technical members leads to well-reasoned rulings.

Despite these advantages, challenges remain, such as delays due to case backlogs and limited infrastructure in some benches. Nonetheless, tribunals have handled landmark cases, including high-value insolvency proceedings, showcasing their growing role in Indian corporate jurisprudence.

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