Brief overview on NCLT and NCLAT

In India, miscellany bodies act as an expeditious and advantageous alternative to courts of law, with additions to the list being the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). As the two tribunals have been recently established with an aim to regulate and resolve disputes between civil corporations, there is not much awareness about quasi-judicial body like these. In this article the author have provided a brief overview on NCLT and NCLAT.

BACKGROUND

The National Company Law Tribunal (NCLT) & The National Company Law Appellate Tribunal (NCLAT) were established on 1st June, 2016 under the Companies Act, 2013. The NCLT & NCLAT are quasi-judicial bodies in India that adjudicate issues relating to Indian Companies.

The National Company Law Tribunal (NCLT) consolidates the corporate jurisdiction of the Company Law Board (CLB), Board for Industrial and Financial Reconstruction (BIFR), The Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and the powers relating to Winding up or restructuring and other provisions, vested in High Courts. Hence, the National Company Law Tribunal will consolidate all powers to govern the companies registered in India. With the establishment of the NCLT and NCLAT, the Company Law Board under the Companies Act, 1956 has now been dissolved.

ADVANTAGES OF TRIBUNAL

1. Avoid multiplicity of litigation and ambiguity

2. Speedy disposal of cases

3. Reduction of undue hardships

4. Reduction of burden on High Courts

5 Single Window

WHO CAN REPRESENT A PARTY IN A PROCEEDING OR APPEAL?

Disputing parties in a case before the Tribunal or appeal can represent themselves or authorize any of the following to represent them:

• Company Secretaries
• Chartered Accountants
• Legal Practitioners
• Cost Accountants
• An Officer of a company

BENCHES OF TRIBUNAL AND APPELLATE TRIBUNAL

The Central Government has constituted 15 Tribunal benches in New Delhi, Ahmedabad, Allahabad, Hyderabad, Bengaluru, Chandigarh, Chennai, Cuttack, Guwahati, Hyderabad, Indore, Jaipur, Kochi, Kolkata, Mumbai and 1 Appellate Tribunal bench in New Delhi.

COMPOSITION, QUALIFICATION AND TENURE OF MEMBERS OF TRIBUNAL

Composition	President	Judicial Member	Technical Member
Qualification	A person who is or has been the Judge of High Court for 5 years.	A person who is or has been a Judge of a High Court or is a district judge for at least 5 years or has been an advocate of a court for at least 10 years.	A person who has member of Indian corporate law service or Indian legal services or has been in practice as Chartered Accountant or Company Secretary or Cost Accountant for at least 15 years or presiding officer of Labour court for at least 5 years or a person of proven ability, integrity and standing having special knowledge and professional experience of not less than 15 years in industrial finance, industrial management
Tenure	Age of 67 years or such for a term of five years from the date on which he enters upon his office; Whichever is Earlier	Age of 65 years or such for a term of five years from the date on which he enters upon his office; Whichever is Earlier	Age of 65 years or such for a term of five years from the date on which he enters upon his office; Whichever is Earlier

COMPOSITION, QUALIFICATION AND TENURE OF MEMBERS OF APPELLATE TRIBUNAL

Composition	Chairperson	Judicial Member	Technical Member
Qualification	A person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court.	A person who is or has been a Judge of a High Court or is a Judicial Member of the Tribunal for 5 years.	A person of proven ability, integrity and standing having special knowledge and professional experience of not less than 25 years in industrial finance, industrial management & reconstruction, investment and accountancy.
Tenure	Age of 70 years or such for a term of five years from the date on which he enters upon his office; Whichever is Earlier	Age of 67 years or such for a term of five years from the date on which he enters upon his office; Whichever is Earlier	Age of 67 years or such for a term of five years from the date on which he enters upon his office; Whichever is Earlier

Provided that a person who has not completed 50 years of age shall not be eligible for appointment as Member. Provided further that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be, while holding office as such for a period not exceeding one year.

APPEAL TO SUPREME COURT AGAINST ORDER OF APPELLATE TRIBUNAL AND TO APPELLATE TRIBUNAL AGAINST ORDER OF TRIBUNAL

Any person aggrieved by the order of NCLT then appeal any order on Question of Law and Fact within 45 Days to NCLAT and any person aggrieved by the order of NCLAT then appeal on Question of Law within 60 Days to Supreme Court.

OPPORTUNITIES UNDER NCLT REGIME

1. Inherit from High Court & BIFR – Merger & Amalgamation – De-Merger – Reduction of Share Capital – Winding Up – BIFR

2. Inherit from CLB – Oppression & Mismanagement – Rectification of Registers – Compounding – To call AGM/EOGM – Removal of Directors & Auditors – Others

3. New Concepts – Class Action suit – Financial Year Changing – Cross Border Merger – Issue & Redemption of Preference Shares – Reopening of Accounts.

DIFFERENCE BETWEEN NCLT AND NCLAT 

NCLT	NCLAT
NCLT is established as per Section 408 of companies act, 2013	NCLAT is established as per Section 410 of companies act, 2013
It holds primary jurisdiction on cases of insolvency and bankruptcy	It holds appellate jurisdictions over the cases judged by NCLT
NCLT accepts and analyzes the evidence from creditors and debtors	NCLAT accepts and analyzes the decision made by NCLT
NCLT collects facts and evidences	NCLAT analyzes facts and evidences

 SCOPE FOR PRACTICING COMPANY SECRETARY

The establishment of NCLT/NCLAT shall offer various opportunities to Practicing Company Secretaries as they have been authorized to appear before the Tribunal/ Appellate Tribunal. Therefore, Practicing Company Secretaries would be eligible to appear for matters which were hitherto dealt with by the High Court viz. mergers and amalgamations proceedings under the Companies Act, 2013. Further, with enactment of Insolvency and Bankruptcy Code, 2016, another area of practice has been opened for Company Secretaries to make appearance before Tribunal in Insolvency and Liquidation cases.

ART OF ADVOCACY

1. Filing Memorandum of Appearance with Tribunal along with Pleading.

2. Case summary /fact sheet of the case. Dress code as prescribed by Institute/NCLT Rules.

3. Services of documents to opposite party.

4. Standing position of council’s petitioner at Left hand side of Judge & defendant at Right Hand side of Judge.

PREPARATION & REHEARSAL

1. Use notes-as prompts not to read. Make clear brief on law and evidence.

2. Find Merits-Focus on it. Look previous similar cases and their determination.

3. Body Language-Positive and Respectful.

4. Avoid frequent interruptions or objections. Wait for chance.

5. Knowledge of development of law and background will be helpful.

6. Do not argue with the Judge, explain with reason. Focus on winning war not battle.

7. Co-operate with opposite counsel or representative

NCLT LANDMARK JUDGMENTS

• Innovative Industries Vs ICICI Bank
• Swiss Ribbons vs. Union of India
• Binani Industries Vs Bank of Baroda, National Company Law Tribunal, Kolkata Bench, Kolkata
• Tata Sons Vs Cyrus Mistry Case
• Mack Soft Tech Pvt. Limited & amp; Anr. vs Quinn Logistics India Pvt. Limited

NCLAT LANDMARK JUDGMENTS

• Phoenix ARC Pvt. Ltd. v. Kotak Mahindra Prime Ltd.
• Deepakk Kumar v. Phoenix ARC Pvt. Ltd.
• Punjab National Bank v. Mittal Corp. Ltd.
• Jamal Ahmad v. Reliance Nippon Life Asset Management
• John v. Jitender Kumar Jain

CONCLUSION REMARKS

The constitution of the NCLT and NCLAT is a welcome move to deal with company law matters. The earlier regime of the Company Law Board had a lot of bottlenecks which did not help to revive Sick Companies and instead led to prolongation of cases. Though NCLT and NCLAT are doing great work in streamlining the system, a lot more needs to be done. There is a need for improving the infrastructures at these Tribunals, increasing the Number of Benches which will help in deciding cases speedily and effectively and thus proves to be time saving and cost effective for the companies which would ultimately lead to growth of the economy of India.