Ever since the 1900s, India has had several laws to deal with industries and companies within the country. The East India Company functioned as per the guidelines laid out in the Royal Charter and the Indian Companies Act which was established in 1913, revised in 1956 and then later amended multiple times all dealt with the running of firms and companies. Recently, in June 2016, a National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) were established by the Supreme Court to handle laws regarding companies.
- The National Company Law Tribunal works as a quasi-judicial authority that handles structures and settles disputes and laws related to corporate cases.
- Both the NCLT and NCLAT were formed based on Article 245 of India’s Constitution.
- The Eradi Committee is credited with developing the Tribunal, which functions as a court of law that handles corporate cases.
- The Tribunal is expected to fact check and hears out discussions to conclude legal matters concerned with corporations.
- The authority to close cases related to companies and factories was officially transferred from the CLB to the NCLT, making it the Supreme Power when it comes to such legal matters. The pending cases under the CLB were also shifted to the NCLT as per the guidelines laid out in Section 434 of the Companies Act.
- The law decreed that the judicial powers of the High Court, the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and Board of Industrial and Financial Reconstruction (BIFR) would all lie on the Tribunal, making it an independent authority on such matters.
- The Tribunal, therefore, handles cases related to every company listed in India, sparing financial institutions such as banks and turned active on June 1st, 2016.
- It currently has one principle bench and ten other benches under it.
New Delhi (Principle Bench)
Subsidiary benches in:
- New Delhi
The Tribunal follows the rules set aside in the Code of Civil Procedure and are expected to function as per the guidelines laid out by the Central Government. The NCLT has jurisdiction over the following actions:
Class Action suits are undertaken against frauds and hence comes under Section 245 of the Indian Companies Act. Any company registered under the Indian Companies Act which cheats or steals money from investors is liable to be fined and penalised by the NCLT. Companies who make money fraudulently by duping investors and shareholders are expected to provide compensations to the victims for their losses. Class Action suits work against both private and public companies but cannot be filed against banking institutions.
Share Transfer Disputes
If any company refuses to transfer shares or mishandles registration of transfers, then the victim or the individual who incurred losses due to this malpractice can appeal to the NCLT within a time frame of two months to seek justice. Contracts and arrangements for security transfer come under the jurisdiction of the NCLT as per Section 58 and 59.
Under Section 397 an individual was given the liberty to file complaints only about ongoing cases of abuse and mismanagement. But the Tribunal, allows people the opportunity to seek justice for all forms of abuse, whether it be in the past or present. If someone finds that the working of a company is prejudiced and aims to benefit certain parties while being oppressive towards others, then he or she has the right to approach the Tribunal and demand it to look into the matters of the company so as to ensure that all parties involved get justice.
Revision of Financial Statements
Falsification of record books was a significant form of injustice that was prevalent in the past and Sections 447 and 448 were added to ensure that such instances would be handled effectively by the Tribunal. These new amendments forbid companies from acting on their will and opening accounts to revise their financial statements. Section 130 allows the Tribunal authority to command a company to reopen accounts under certain circumstances. While companies are permitted to review their financial statement under Section 131, they do not have the power to reopen any accounts.
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 Tribunal can ask for an inquiry into the workings of any company if an application is filed against that particular company by 100 members. Any individual or group outside the NCLT if authorised by it can serve as the investigators in certain situations. The Tribunal can also freeze company assets and place restrictions on products if it deems it necessary.
Establishing this body has helped fast track justice concerning corporate civil disputes and has also contributed to increasing the efficiency of the judicial system significantly. It has given the NCLT exclusive jurisdiction, while also decreasing the time required to hear cases and come to a fruitful decision