NCLT has recently approved Videocon's request to extend its insolvency resolution process by another 90 days beyond February 4, 2020. Small businesses are now able to wind up operations without moving NCLT as per the recent Companies (Winding-Up) Rules, 2020, signed on 24 January and effective 1 April. If a company has a total outstanding deposit or loan of more than 25 lakhs, the rules will apply.

The NCLT, established by the Supreme Court, serves as a quasi-judicial authority dedicated to handling corporate laws, structures, and dispute settlements. This article delves into the NCLT’s formation, functions, benches, jurisdiction, and the cases it oversees.

Since the 1900s, India has had several laws dealing with industries and companies. The East India Company operated in accordance with the guidelines laid out in the Royal Charter and the Indian Companies Act, which was established in 1913, revised in 1956 and then further amended numerous times.

In June 2016, the Supreme Court established a National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) to handle company law matters.

Interesting Facts about the NCLT

• The National Company Law Tribunal works as a quasi-judicial authority that handles, structures and settles disputes and laws related to corporate cases.
• Both the NCLT and NCLAT were formed on the statutory sanction of Article 245 of the Indian Constitution.
• The Eradi Committee is credited with developing the NCLT, which functions as a court of law that handles corporate cases.
• The NCLT is expected to fact-check and hear out discussions to conclude legal matters concerned with corporations.
• The authority to close cases related to companies and factories was officially transferred from the CLB to the National Company Law Tribunal, making it the Supreme Power after the Supreme Court when it comes to such legal matters. 
• The pending cases under the CLB were also shifted to the NCLT as per the guidelines laid out in Section 434 of the Companies Act.
• The parliament decreed that the judicial powers of the High Court, the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and Board of Industrial and Financial Reconstruction (BIFR) would all lie with the Tribunal, making it an independent authority on such matters.
• The Tribunal, handles cases related to every company listed in India, barring financial institutions such as banks.
•  NCLT currently has one principal bench and 15 other benches under it.
• You can check the National Company Law Tribunal (NCTL) PDF cause list at nctl.gov.in 

Bench Wise Information

The NCTL cause list of each bench attached is maintained on the NCTL government website.

Scope and Jurisdiction of NCLT

The Tribunal is bound by the rules laid down in the Code of Civil Procedure and guided by the principles of natural justice. Further, National Company Law Tribunal and NCLAT are expected to function as per the guidelines laid out by the Central Government. 

The NCLT has jurisdiction over the following actions:

• Class Action

Class Action suits can be undertaken against frauds under Section 245 of the Indian Companies Act. Any company registered under the Indian Companies Act which cheats or steals money from investors is liable to be fined and penalised by the National Company Law Tribunal. 

Companies that make money fraudulently by duping investors and shareholders are expected to provide compensation to the victims for their losses. Class Action suits can be filed in the NCLT against both private and public companies but cannot be filed against banking institutions.

• Share Transfer Disputes

If any company refuses to transfer shares or mishandles the registration of transfers, then the victim or the individual who incurred losses due to such malpractice can appeal to the National Company Law Tribunal within the relevant time frame to seek justice. Contracts and arrangements for security transfer come under the jurisdiction of the NCLT as per Sections 58 and 59 of the Companies Act. 

• Oppression

Under Section 397 individuals are given the liberty to file complaints about ongoing cases of abuse and mismanagement. However, the Tribunal allows people the opportunity to seek justice for all forms of abuse, whether it be in the past or present. 

If someone finds that the working of a company is prejudiced and aims to benefit certain parties while being oppressive towards others, then he or she has the right to approach the National Company Law Tribunal and demand a look into the company.

• Revision of Financial Statements

Addressing the historical prevalence of falsification in record books, Sections 447 and 448 were incorporated to empower the Tribunal in effectively handling such instances. 

These amendments explicitly prohibit companies from unilaterally manipulating their financial statements or opening accounts for revision. Section 130 provides the Tribunal the authority to mandate the reopening of accounts under specific circumstances. 

While companies are granted the right to review their financial statements under Section 131, they are not bestowed with the authority to reopen any accounts.

• Deregistration

The National Company Law Tribunal has the power to deregister and dissolve companies operating through fraudulent and illicit means. The procedural errors of registration involved concerning a company can be investigated and questioned by the Tribunal if it deems the same necessary.

• Investigation

The Tribunal can initiate an inquiry into the operations of any company upon the filing of an application by 100 members. Additionally, individuals or groups outside the National Company Law Tribunal, if duly authorized, can serve as investigators in specific situations. The Tribunal is also empowered to freeze company assets and impose restrictions on products when deemed necessary

Conclusion

The National Company Law Tribunal pivotal role in reviewing facts, engaging in discussions, and concluding legal proceedings is paramount. In essence, the Tribunal’s establishment has ushered in a new era of efficiency and expediency in handling corporate legal matters.

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