National Company Law Tribunal
What is National Company Law Tribunal?
The Central Government has constituted National Company Law Tribunal (NCLT) under section 408 of the Companies Act, 2013 (18 of 2013) w.e.f. 01st June 2016.
The official site ”National Company Law Tribunal” retrieved on 6th December 2017.
The National Company Law Tribunal (NCLT) combines the corporate jurisdiction of the Company Law Board, Board for Industrial and Financial Reconstruction (BIFR), The Appellate Authority for Industrial and Financial Reconstruction (AAIFR). It also have powers relating to winding up or other provisions. Hence, the National Company Law Tribunal have all powers to govern and also regulate the companies registered in India. The Company Law Board under the Companies Act, 1956 dissolved after NCLT. All the pending proceedings will be transferred to NCLT and it will dispose of such matters. The “Tribunal” is a quasi-judicial authority created to look into the matters relating to disputes and also determining claims.
National Company Law Appellate Tribunal is an authority dealing with appeals against the decisions of the Tribunal. It also corrects the error of tribunal. It is an intermediate appellate forum where the appeals comes against the Tribunal. Supreme Court also deals with appeals against the decision of Appellate Tribunal. Any party dissatisfied by any order of the Tribunal may appeal against that decision. The Appellate Tribunal has power to review the decisions of tribunal and also has power to set aside, modify or confirm it.
Difference between NCLT and NCLAT
- The NCLT has primary jurisdiction whereas NCLAT has appellate jurisdiction.
- NCLAT is a higher forum than NCLT.
- NCLT for taking the decisions requires evidence and witnesses and NCLAT generally reviews decisions of NCLT and checks it on a point of law or fact
- Primary task of Tribunal is find facts and evidences whereas the Appellate Tribunal decide cases on collected evidences and witnesses.
Advantages for National Company Law Tribunal
Following are the advantages of National Company Law Tribunal :
- a specialized court only for Corporates, i.e., companies registered in India.
- Reduce the multiplicity of litigation.
- has multiple branches and provide justice at close range.
- consists of both judicial and technical members
- reduces time for winding up of company.
- has Speedy disposal of cases
- have exclusive jurisdiction.
Powers vested in NCLT
Following are important powers:
1. Class Action:
A class action is a procedure which permits one or more plaintiffs to file on behalf of a larger number of people. It is a representation of suit. Few of them represents class interest. A huge number shareholders/depositors are affected. It is a useful tool where a few people may file against wrongdoing in interest of whole.
It can be filed against any type of companies. But only against a company which is incorporated under the Companies Act, 2013 or also any previous Companies Act. The Act provides only one exemption i.e. banking companies.
2. Deregistration of Companies:
The people can question the procedure of registration. The Tribunal has many powers such as cancellation of registration and dissolving the company. The Tribunal can even declare the liability of members unlimited. Sec 7(7) provides this new way for de- registration of companies. De-registration is a remedy that is distinct from winding up and also striking off.
3. Refusal to Transfer shares:
The tribunal has power to hear about refusal to transfer securities. It can also rectify register of members and to transferred NCLT. Shares and debenture only has remedy . All securities has provisions.
The deposits are regulated under the Companies Act, 2013 and the Companies Act, 1956 differently. The provision for deposits under 2013 Act were already notified. Aggrieved depositors also have the remedy of class actions for seeking redressal.
6. Reopening of Accounts & Revision of Financial Statements:
Section 130 and section 131 regulates revision of financial statement. In Section 130 the tribunal ask company to reopen its accounts. Section 131 permits company to revise its financial statement. But do not permit reopening of accounts. The company suo motu request the Tribunal through its director for revision of its financial statement.
7. Tribunal Ordered Investigations:
Chapter XIV provides several powers to the Tribunal for carrying out investigations. The most important powers of Tribunal are:
a) power to order investigation: Only 1oo members are required to carry out investigation of company. Further, the power to apply is given to any person. Before applying such person needs to convince the tribunal that investigation is needed. An investigation conducted even abroad. Investigation agencies and courts assist in investigation proceedings.
b) power to investigate into the ownership of the company: Tribunal can ask the company about its ownership and can also investigate about the same.
c) power to impose restriction on securities: The tribunal can impose restrictions not only on shares but also on any securities of the company.
d) power to freeze assets of the company: The Tribunal has powers to hold the assets of the company. It can not be used by the company while investigation.
8. Conversion of public company into private company
Tribunal governs conversion of public company into private company. NCLT approves conversion of company.The Tribunal may impose certain conditions for its approval.
9. Tribunal Convened Annual General Meeting:
The tribunal can call for general meetings of shareholders. It is mandatory to call at least one meeting. Also called as Annual general meeting.. If company fails to call the general meeting then tribunal is has powers to call the meeting.
10. Compounding of Offence:
NCLT has power to compound the offences. It was earlier with the company law board. Now it is with NCLT. Tribunal can compound the offence up to prescribed monetary limit.
11. Change in Financial Year:
The Act requires every company to follow a financial year ending on 31st march.It also have a provision where company can change its financial year. A company or a body corporate can make an application to the Tribunal. The Tribunal was not having power to change the financial year. But company law board had that power. The regulation provides the manner for making the application to CLB. The same has notified on the site of CLB vide order dated 28 January 2015.