The National Company Law Tribunal (NCLT) is the adjudicating authority (quasi-judicial authority) for the insolvency resolution process of companies and limited liability partnerships under the Insolvency and Bankruptcy Code, 2016. Previously, there were four different legal forums viz. High Courts, Company Law Boards, Board for Industrial and Financial Reconstruction (BIFR), and Debt Recovery Tribunal (DRT) which have overlapping jurisdictions resulting in delays and complexities in the process of recovery of bad debts. After the establishment of the National Company Law Tribunal (NCLT), it has become adjudicating authority that will adjudicate insolvency resolution for limited companies and LLPs. The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals and unincorporated entities.
NCLT (Tribunal) is chaired by a Judicial member who is supposed to be a retired or a serving High Court Judge and a Technical member who must be who must be from the Indian Corporate Law Service, ICLS Cadre. The Tribunal turned active on June 1st, 2016 handles cases related to every company listed in India, sparing financial institutions such as banks. The tribunal has principal bench at New Delhi and subsidiary benches in New Delhi, Ahmadabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kochi, Kolkata and Mumbai.
Jurisdiction of NCLT
Latest update: As per recent Companies (Winding-Up) Rules, 2020, effective 1 April 2020, small businesses can wind up operations without moving NCLT. The rules will apply to companies with total outstanding deposits of up to ₹25 lakhs, or with outstanding loans of up to ₹50 lakhs.
The proceedings initiated before the Company Law Board under the previous act (section 434 of the Companies Act 1956); The proceedings pending before the Board for Industrial and Financial Reconstruction (BIFR), including those pending under the Sick Industrial Companies (Special Provisions) Act, 1985; proceedings pending before the Appellate Authority for Industrial and Financial Reconstruction; cases pertaining to claims of oppression and mismanagement of a company, class action against fraud committed by the management of the company, share transfer dispute/ mishandled registration of transfer of shares, dispute winding up of companies and all other powers prescribed under the Companies Act are handled and adjudicated by NCLT . The newly added Section 447 (Punishment for fraud) and 448 (Punishment for False Statement) to companies act 2013 prohibits companies from acting on their will and opening accounts to revise their financial statements. While companies are permitted to review their financial statement under Section 131, they do not have the power to reopen any accounts. However, Section 130 allows the Tribunal authority to command a company to reopen accounts under certain circumstances. The Tribunal has the power to deregister and dissolve companies which received their active status 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 it necessary. The earlier authority to close cases related to companies and factories was officially transferred from the CLB to the NCLT.
Appeal:
Decisions of the NCLT may be appealed to the National Company Law Appellate Tribunal (NCLAT). Decisions may further be appealed to the Supreme Court of India on a point of law. No other criminal courts have jurisdiction to entertain any suit or preceding which the Tribunal or the Appellate Tribunal is exclusively empowered to determine.
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