Polity

THE NATIONAL COMPANY LAW TRIBUNAL (NCLT)

19 Oct 2023 3 mins Download PDF

NCLT has been constituted by the central govt. under section 408 of the Companies Act, 2013.
The body was established based on the recommendation of the V. Balakrishna Eradi committee on law relating to the insolvency and the winding up of companies
It is a quasi-judicial body that adjudicates issues relating to Indian companies.
The body deals with all proceedings under the Companies Act, including proceedings relating to
1. arbitration
2. compromise
3. Arrangements
4. reconstructions
5. winding up of companies
6. limited liability partnerships under the Insolvency and Bankruptcy Code, 2016.
The NCLT bench is chaired by a Judicial member (retired or a serving High Court Judge) and a Technical member who must be from the Indian Corporate Law Service, ICLS Cadre.
Decisions of the tribunal may be appealed to the National Company Law Appellate Tribunal which can be further appealed to the Supreme Court of India on a point of law.

Objectives:The key objectives behind the establishment of National Company Law Tribunal (NCLT) in India:

To consolidate and streamline corporate dispute resolution: NCLT subsumed powers of multiple bodies like Company Law Board, BIFR, AAIFR etc. into one unified tribunal for faster settlements.
To improve efficiency in resolution: Specialist combined benches of technical and judicial members ensure quicker adjudication of winding up, mergers, insolvency and other cases.
To reduce burden on High Courts: Transfer of company law cases from overstretched High Courts has enabled them to focus more on constitutional matters.
To impart professionalism and expertise: Complex corporate disputes are handled expertly by experienced technical and accountancy members alongside legal experts.
To enhance investor confidence: Specialist tribunals boost investor faith in the dispute resolution framework for companies and LLPs in India.
To adapt globally: Most developed economies have specialized corporate tribunals. NCLT aligned India with global best practices.
To expedite cases: Strict timelines are prescribed for resolution to reduce delays and backlogs.
To improve enforcement: As a unified authority, NCLT ensures better compliance of orders through close coordination between Benches.
To strengthen corporate governance: By ensuring timely justice, NCLT deters violations and defaults through strong, deterrent verdicts.

So in summary, NCLT aims to deliver faster, expert resolutions to strengthen India's corporate justice system, encourage investment and improve governance.