National Company Law Tribunal to have more benches
What is the issue ?
- Considering the rising number of insolvency cases the Centre to planning to increase the number of benches of the National Company Law Tribunal in order to cope with the increased workload.
About National Company Law Tribunal (NCLT) :
The National Company Law Tribunal was setup by the Central Government in 2016 under Section 408 of the Companies Act 2013.
The National Company Law Tribunal has been setup as a quasi-judicial body to govern the companies registered in India and is a successor to the Company Law Board.
Scope of National Company Law Tribunal :
- The National Company Law Tribunal (NCLT) consolidates 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 is a quasi-judicial authority incorporated for dealing with corporate disputes that are of civil nature arising under the Companies Act.
- With the establishment of the NCLT and NCLAT, the Company Law Board under the Companies Act, 1956 has now been dissolved.
Major Functions of NCLT :
1. Registration of Companies:
- The new Companies Act, 2013 has enabled questioning the legitimacy of companies because of specific procedural errors during incorporation and registration.
- NCLT has been empowered in taking several steps, from cancelling the registration of a company to dissolving any company.
- The Tribunal could even render the liability or charge of members to unlimited.
- NCLT can de-register any company in specific situations when the registration certificate has been obtained by wrongful manner or illegal means.
2. Transfer of shares:
- NCLT is also empowered to hear grievances of rejection of companies in transferring shares and securities and under section 58- 59 of the Act which were at the outset were under the purview of the Company Law Board.
- Unhappy depositors now have a remedy of class actions suits for seeking remedy for the omissions and acts on part of the company that impacts their rights as depositors.
4. Power to investigate:
- As per the provision of the Companies Act, 2013 investigation about the affairs of the company could be ordered with the help of an application of 100 members whereas previously the application of 200 members was needed for the same.
- Moreover, if a person who isn’t related to a company and is able to persuade NCLT about the presence of conditions for ordering an investigation then NCLT has the power for ordering an investigation.
- An investigation which is ordered by the NCLT could be conducted within India or anywhere in the world.
5. Freezing assets of a company:
- The NCLT isn’t just empowered to freezing the assets of a company for using them at a later stage when such company comes under investigation or scrutiny, such investigation could also be ordered on the request of others in specific conditions.
6. Converting a public limited company into a private limited company:
- Sections 13-18 of the Companies Act, 2013 read with rules control the conversion of a Public limited company into the Private limited company, such conversion needs an erstwhile confirmation from the NCLT.
- NCLT has the power under section 459 of the Act, for imposing specific conditions or restrictions and might subject granting approvals to such conditions.
National Company Law Appellate Tribunal (NCLAT) :
- Appeal from order of Tribunal can be raised to the National Company Law Appellate Tribunal (NCLAT).
- Appeals can be made by any person aggrieved by an order or decision of the NCLT, within a period of 45 days from the date on which a copy of the order or decision of the Tribunal.
- On the receipt of an appeal from an aggrieved person, the Appellate Tribunal would pass such orders, after giving an opportunity of being heard, as it considers fit, confirming, changing or setting aside the order that is appealed against.
- The Appellate Tribunal is required to dispose the appeal within a p