Misc

National Company Law Tribunal

Background National Company Law Tribunal in India is an outcome of the Eradi Committee and was to be introduced in the Indian legal system in 2002 under the framework of the Indian Companies Act, 1956 but was delayed because of litigation with respect to its constitutional validity. Therefore it was notified ten years later under the Companies Act, 2013. The constitutionality of NCLT was again challenged and the case was finally decided in May 2015 by the apex court which upheld the concept of NCLT barring a few provisions. About NCLT NCLT is a quasi-judicial body that adjudicates issues related to Indian Companies that are civil in nature arising under the Indian Companies Act. The tribunal was constituted by the government of India on 1st June 2016. NCLT works like a normal court in the country and has to determine without any bias according to the facts of each case and adheres to the principle of natural justice before passing any order. The tribunal is not bound by strict judicial procedure and hence has a sort of flexibility in speedy disposal of cases and less formality. Its principal bench is in New Delhi. Powers and Functions of NCLT Some of the important powers of NCLT are: •Class Action- It is a procedural device which permits one or more than one plaintiff to file and prosecute a lawsuit on behalf of a larger group or ‘class’. This is to protect the interests of various stakeholders having a common purpose. •Deregistration of a Company- The procedural errors in registration of a company can be questioned now at any time. The tribunal is empowered to take steps including cancellation of registration of a company to dissolving a company. •Oppression and Mismanagement- The remedy against oppression and mismanagement can be provided by the tribunal. •Prior approval of NCLT required for conversion of a public company to a private company. •The Tribunal is empowered with reopening of accounts and revision of financial statements. •The tribunal has the power to review its own orders. Composition of NCLT Composition of the National Company Law Tribunal consists of a President and such number of other Judicial and Technical Members as may be prescribed. The President of the Tribunal shall be appointed by the Central Government after consultation with the Chief Justice of India. The Members are to be appointed by the Central Government on the recommendation of a Selection Committee. •President of NCLT A person who is or has been the judge of a High Court for five years is eligible to be appointed as president of the National Company Law Tribunal. •Judicial Member A person shall not be qualified for appointment as a Judicial Member unless he: Is or has been a judge of the High Court; or Is or has been a District Judge for at least five years; or Has, for at least 10 years been practicing as an advocate Appeal Decisions of the tribunal may be appealed to the National Company Law Appellate Tribunal, the decisions of which may further be appealed to the Supreme Court of India. Significance of NCLT The formation of the NCLT is a significant step towards fast and efficient resolution of disputes which relates to the affairs of the Indian corporations. Being the sole forum to address such disputes it prevents overlapping of jurisdictions and conflict in rulings. Due to faster disposal of cases in such tribunals and self-regulating procedures with expertise in company-related matters, the tribunal significantly reduces major roadblocks of ease of doing business in India.
Source: https://www.companiesact.in/Companies-Act-2013/New-Concept-Detail/5/National%20Company%20Law%20Tribunal, Wikipedia



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