Jurisdiction of NCLT and NCLAT
Introduction
The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) are judicial bodies established under the Companies Act, 2013, and the Insolvency and Bankruptcy Code (IBC), 2016. They are responsible for adjudicating matters related to corporate law, insolvency, and bankruptcy, thereby providing a specialized forum for resolving such disputes. This article discusses the jurisdiction and key provisions governing NCLT and NCLAT.
National Company Law Tribunal (NCLT)
Establishment and Purpose
The NCLT was constituted under Section 408 of the Companies Act, 2013, and became operational on June 1, 2016. It replaced the Company Law Board (CLB) and consolidated the functions of various authorities, such as the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).
Jurisdiction and Powers
1. Insolvency and Bankruptcy (IBC, 2016):
· Adjudicating Authority (Section 60 of IBC): The NCLT is the adjudicating authority for corporate insolvency resolution and liquidation processes. Applications for initiating insolvency proceedings against defaulting companies and LLPs are filed with the NCLT.
· Corporate Insolvency Resolution Process (Section 7, 9, 10 of IBC): The NCLT handles applications filed by financial creditors, operational creditors, or the corporate debtor itself to initiate insolvency resolution processes.
· Approval of Resolution Plan (Section 31 of IBC): The NCLT approves resolution plans submitted by resolution professionals after creditors' approval.
· Liquidation Order (Section 33 of IBC): The NCLT orders the liquidation of companies if the resolution plan is not approved or if the company is deemed unviable.
2. Company Law Disputes (Companies Act, 2013):
· Oppression and Mismanagement (Sections 241-242): The NCLT adjudicates cases of oppression and mismanagement, providing relief to minority shareholders and ensuring the fair management of company affairs.
· Class Action Suits (Section 245): The NCLT has the authority to hear class action suits filed by shareholders or depositors against the company or its directors for fraudulent or wrongful actions.
3. Mergers and Amalgamations (Companies Act, 2013):
· Scheme of Compromise or Arrangement (Sections 230-232): The NCLT approves schemes of compromise or arrangement, including mergers and demergers, ensuring compliance with statutory requirements and protecting stakeholders' interests.
4. Winding Up of Companies (Companies Act, 2013):
· Voluntary and Compulsory Winding Up (Sections 271-272): The NCLT orders the winding up of companies and oversees the process, ensuring adherence to legal procedures.
5. Reduction of Share Capital (Companies Act, 2013):
· Reduction of Share Capital (Section 66): The NCLT approves reductions in share capital, ensuring that the reduction is fair and equitable to all stakeholders.
6. Conversion of Public to Private Companies (Companies Act, 2013):
· Conversion Approval (Section 14): The NCLT approves the conversion of public companies into private companies, subject to compliance with statutory requirements.
National Company Law Appellate Tribunal (NCLAT)
Establishment and Purpose
The NCLAT was established under Section 410 of the Companies Act, 2013, and became operational on June 1, 2016. It serves as the appellate authority for decisions made by the NCLT and other designated authorities under the Companies Act and the IBC.
Jurisdiction and Powers
1. Appellate Jurisdiction (Companies Act, 2013 and IBC, 2016):
· Appeals Against NCLT Orders (Section 421 of Companies Act and Section 61 of IBC): The NCLAT hears appeals against orders and decisions made by the NCLT. This includes orders related to insolvency and bankruptcy proceedings, mergers and amalgamations, oppression and mismanagement cases, and other company law matters.
2. Review and Modification (Companies Act, 2013 and IBC, 2016):
· Review of Own Orders: The NCLAT has the power to review and modify its own orders to rectify any errors or omissions, ensuring fair and consistent justice.
3. Appeals to the Supreme Court (Companies Act, 2013 and IBC, 2016):
· Appeals on Questions of Law (Section 423 of Companies Act and Section 62 of IBC): Decisions of the NCLAT can be appealed to the Supreme Court of India, but only on questions of law, providing an additional layer of scrutiny and ensuring the upholding of important legal principles.
Conclusion
The establishment of the NCLT and NCLAT has significantly improved the efficiency and effectiveness of corporate dispute resolution in India. By consolidating the jurisdiction of various authorities and providing specialized forums for corporate law matters, these tribunals have enhanced the legal framework for businesses. They play a crucial role in ensuring that corporate disputes are resolved in a timely and equitable manner, contributing to a more robust and transparent business environment in the country.