UNIVERSITY OF PETROLEUM & ENERGY STUDIES

COLLEGE OF LEGAL STUDIES

BBA.LLB (HONS.)

SEMESTER V
ACADEMIC YEAR: 2016-17 SESSION: AUGUST-DECEMBER

PROJECT
FOR
COMPANY LAW

AN ANALYSIS OF THE COMPANY LAW TRIBUNAL

NAME: ANKITA AGARWAL
AYUSH.S.RAO
SAP NO: 500037381
500037387
ROLL NO: R760214014
R760214011
 ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance and assistance from
many people and I am extremely fortunate to get this all along the completion of my project
work. Whatever I have done I owe my profound gratitude to our teacher Prof. Ajit Kaushal,
who took keen interest on our project work and guided us all along, till the completion of our
project work by providing all the necessary information for developing a good system. We
learnt a lot about the working and jurisdiction of the newly constituted National Company
Law Tribunal. Due to such guidance and assistance I would not forget to thank them. I am
thankful to and fortunate enough to get constant encouragement, support and guidance from
all Teaching Staffs of Department of legal studies which helped us in successfully completing
our project work. Also, I would like to extend our sincere regards to all the non-teaching staff
of department of legal studies for their timely support.
 INTRODUCTION

There is discernible trend around the world towards rationalization of business processes and
simplification of legislations governing them. This trend is being driven partly by the use of electronic
communication and information technology that has speeded up business transactions as well as
making them international. Time is, therefore, ripe to ensure that dispensation of justice and disposal
of business matters by the court and authorities should be in tune with the speed with which business
is being transacted. Further certain business matters require specialized domain knowledge for dealing
with the matters justifiably. Keeping in view the pendency of legal matters and need for specialized
knowledge of the persons discharging the responsibility of adjudicating the matters involving intricate
issues relating to the subjects, the process of setting up of specialized tribunals has gained
acceptability over a period of time.
The NCLT was constituted in August, replacing the Company Law Board (CLB). Under the
Companies Act, 2013, NCLT and its appellate tribunal were notified by the Corporate Affairs Ministry
on June 1. NCLT has powers to delegate inquiry related to proceedings before it, securing assistance
of a magistrate or collector to take possession of property.
In the first phase, the Ministry of Corporate Affairs have set up eleven Benches, one Principal Bench
at New Delhi and one each Regional Benches at New Delhi, Ahmedabad, Allahabad, Bengaluru,
Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. These Benches will be headed by
the President and 16 Judicial Members and 9 Technical Members at different locations. In total, NCLT
will have 63 members and 21 benches.
NCLT has the power under the Companies Act to adjudicate proceedings:
1. Initiated before the Company Law Board under the previous act (the Companies Act 1956);
2.pending before the Board for Industrial and Financial Reconstruction, including those pending
under the Sick Industrial Companies (Special Provisions) Act 1985;
3.pending before the Appellate Authority for Industrial and Financial Reconstruction; and
4. Pertaining to claims of oppression and mismanagement of a company, winding up of companies
and all other powers prescribed under the Companies Act.
The Decisions of the NCLT may be appealed to the National Company Law Appellate Tribunal.
NCLT and While NCLT will resolve insolvency cases of companies and limited liability partnerships,
Debt Recovery Tribunal (DRT) will handle cases of individual bankruptcy.
NCLT subsumes the corporate jurisdiction of the CLB; Board of Industrial and Financial
Reconstruction; Appellate Authority for Industrial and Financial Reconstruction and; Jurisdiction and
powers relating to winding up, restructuring and other such provisions, currently vested in the High
Courts. Shareholders and creditors can now file class action suits against a company for breaching the
provisions of the Act.
 FORMATION
Although the Companies Act, 2013 was enacted nearly three years ago, significant parts of the
legislation were not brought into force. These related to the role of the National Company Law
Tribunal (NCLT). The NCLT was conferred legislative status in the 2002 amendment of the
Companies Act, 1956, it did not see the light of day as questions were raised on the constitutionality
of taking away of jurisdictional powers from the High Courts which are part of the basic structure
doctrine.

The constitutional validity of the NCLT and the NCLAT is an issue that was first tested before the
Supreme Court of India in Union of India vs. R. Gandhi, President, Madras Bar Association1 (the
2010 Judgment). In the 2010 Judgment, while the constitution bench of the Supreme Court held the
NCLT and the NCLAT as envisaged by the Part 1B and Part 1C of the Companies Act, 1956 (the 1956
Act) to be a fit and proper body, it agreed with the views of the Madras High Court (wherefrom the
issue came to the Supreme Court in appeal) that certain provisions of Part 1B and Part 1C of the 1956
Act relating to the appointment and the eligibility for membership of the NCLT and the NCLAT were
"defective" and required rectification (by way of amendment).
However, pursuant to the 2010 judgment, the rectification to Part 1B and Part 1C of the 1956 Act to
operationalize the NCLT and the NCLAT were not carried out. In 2013, the Companies Act, 2013 (the
2013 Act) was passed by the Parliament and partially notified into effect; although, the provisions in
the 2013 Act relating to the NCLT and the NCLAT were not notified. Although the rectifications to
Part 1B and Part 1C of the 1956 Act directed by the Supreme Court in the 2010 Judgment had been
included in Chapter XXVII of the 2013 Act, the Madras Bar Association filed the present writ petition
before the Supreme Court. The Madras Bar Association prayed for a writ of declaration contending
that some provisions of Chapter XXVII of the 2013 Act too suffered from the same defects as those
observed in the 2010 Judgment, and therefore should be struck down as unconstitutional.
Issues already decided:
The issues raised in the proceedings were primarily three fold: (a) A challenge to the validity of the
constitution of the NCLT and the NCLAT; (b) A challenge to the prescription of qualifications
including their term of office, salary, allowances etc. of the president and the members of the NCLT as
well as the chairman and members of the NCLAT; and (c) A challenge to the structure of the selection
committee for appointment of the president/ members of the NCLT, and the chairman/ members of the
NCLAT.
At the very outset, the constitution bench of the Supreme Court categorically stated that all issues
raised in the present petition were already covered by the 2010 Judgement, and consequently chose to
adopt the same approach to deal with the impugned provisions of the 2013 Act.
With regard to first issue, the court held that the validity of the NCLT and NCLAT is an issue which is
already res judicata since the first case clearly upheld the constitutionality of the NCLT and NCLAT
on all accounts.
On the second issue, the Supreme Court held Sections 409 (3) (a), 409 (3) (c) and 411 (3) of the 2013
Act relating to the appointment and technical qualifications of members of the NCLT suffer from the
same vice as the corresponding provisions in the 1956 Act (as observed in the 2010 Judgment).
Accordingly, these provisions were held invalid and the Supreme Court directed that necessary
corrections to these provisions, as pointed out in the 2010 Judgment, would need to be carried out.

1 2010 11 SCC 1
With respect to the third issue (pertaining to the selection committee for selecting the members of the
NCLT and the NCLAT), the Supreme Court observed that Section 412 (2) of the 2013 Act was
contrary to its observations in the 2010 Judgment. Accordingly, the Supreme Court held that Section
412 (2) of the 2013 Act was invalid and issued directions to rectify the defects in this provision in line
with the recommendations in the 2010 Judgment.
Even in the 2010 Judgment, the Supreme Court showed urgency and directed that the intentions of the
legislature to set up a consolidated forum for adjudication of disputes relating to companies be given
form at the earliest. In the present decision too, the Supreme Court directed the Union of India to
disclose the status of the process of establishing the NCLT and NCLAT, and noted that the only step
that remained in establishing the NCLT and the NCLAT was to appoint the president and the members
of the NCLT, and the chairperson and members of the NCLAT.
The Supreme Court reiterated the need to act expeditiously and directed the Union of India to comply
with the directions in its judgment at the earliest and establish and ensure proper functioning of the
NCLT and the NCLAT.

STRUCTURE

NCLT & NCLAT Consist:

 There are two classes of members to the National Company Law Tribunal; Judicial
Members and Technical Members.
 The Tribunal shall be headed by the President while the Appellate Tribunal by
Chairperson.
 NCLAT not exceeding eleven members for hearing appeals against the orders of the
Tribunal
The qualification required for the President of the NCLT includes him/her being a Judge of High
Court for greater than or for 5 years. In cases of Judicial members, is/has been Judge of High Court
(any period), Is/has been District Judge atleast 5 years or Has been Advocate of court held a judicial
office or as member of a tribunal atleast 10 years. With respect to technical members, has Member of
Indian Corporate Law Service /Indian Legal Service for greater than or for 15 years (out of 15 years at
least 3 years to be in the pay scale of Joint Secretary to GOI or equivalent post), Is/has been Practicing
Chartered Accountant at least 15 years, Is/has been Practicing Cost Accountant at least 15 years,
Is/has been Practicing COMPANY SECRETARY at least 15 years, Person with proven ability,
integrity and standing having special knowledge and experience greater than or for 15 years(in below
mentioned specified areas) or Presiding Officer of Labour Court/ Tribunal/ National Tribunal (under
Industrial Disputes Act, 1947) at least 5 years.
National Company Law Appellate Tribunal, constituting of a Chairperson and not exceeding eleven
members for hearing appeals against the orders of the Tribunal. In cases of Chairman Is/has been
Judge of Supreme Court or Is/has been Chief Justice of High Court. Whereas in case of Judicial
Members, Is/has been Judge of High Court or Is a Judicial Member of Tribunal for at least 5 years. A
technical person shall be a person with proven ability, integrity and standing having special
knowledge and experience greater than or for 25 years.
Tenure- President/ Judicial Member/ Technical Member Shall hold office for 5 year from the date of
enter into office.
Re-appointment- President/ Judicial Member/ Technical Member Eligible for another term of 5 year.
Eligibility NCLT-
 In case of President shall hold office untill he attain age of 67 years.
 In case of Member age atleast 50 year shall hold office untill he attain age of 65 years
Eligibility NCLAT
 In case of President shall hold office untill he attain age of 70 years.
 In case of Member age atleast 50 year shall hold office untill he attain age of 67 years
Advantages of NCLT & NCLAT:
 It shall avoid multiplicity of litigation before various Forums (High Courts, CLB, BIFR.
AAIFT). Thus there will be a consolidation of Corporate Jurisdiction.
 There shall be at least 11 benches of the NCLT, thereby providing justice almost at one’s
doorstep.
 This tribunal shall comprise of technical experts who will provide more concrete and precise
decision.
 There will be mixture of judicial and equitable jurisdiction while deciding matters.
 There shall be reduction in period of winding up from 20-25 years to 2 years.
 Reduction in pendency of cases, expeditious disposal of cases.
There are the remedies for person aggrieved by the order of NCLT/NCLAT such as order of NCLT- as
per Section 421, can be appealed in NCLAT within 45 days and an appellate tribunal may entertain
appeal after 45 days [up to additional 45 days] if satisfied that there was a sufficient cause for not
filing appeal in time and no appeal shall lie if the order was passed with the consent of parties.
As per Order of NCLAT Section 423 can be appealed in Supreme Court within 60 days and Supreme
Court may entertain appeal after 60 days [up to additional 60 days] if satisfied that there was a
sufficient cause for not filing appeal in time and appeal to Supreme Court can be made only on
a question of law. Appeals from the appellate tribunal will not go to the High Court. Thus, reducing
the burden of the High Courts.
Sections 419-434 are related to this tribunal that is established and includes the above mentioned
qualifications. The Central Government may notification decide the number of Benches of the
Tribunal. The Principal Bench of the Tribunal shall be at New Delhi and shall be presided over by the
President. The Power of Tribunal shall be exercisable by Benches consisting of two members out of
whom one shall be a Judicial Member and another Technical Member. However, Tribunal may
authorise a single Judicial Member bench to exercise certain matters by general or special order.
However, at any stage the Member may refer the matter to President to transfer to a two Member
Bench. The Tribunal may after giving reasonable opportunity to the parties to the proceeding, pass
any order as it thinks fit. The Tribunal may, at any time within two years from the date of the order
may rectify any mistake, if the mistake brought to its notice. No rectification shall be made in an order
against which an appeal has been preferred. The Tribunal and the Appellate Tribunal shall have same
jurisdiction, powers and authority in respect of Contempt of themselves as the High Court has under
the provision of the Contempt of Courts Act, 1971. The Tribunal or Appellate Tribunal may by
general or special order direct any of its officers or employee or any other person to inquire into any
matter connected with any proceeding or appeal before it and to report to it. The President, Members,
officers and other employees of the Tribunal and the Chairperson, Members, officers and other
employees of the Appellate Tribunal shall be deemed to be public servants under Section 21 of the
Indian Penal Code. No civil court shall have jurisdiction to entertain any suit or proceeding in respect
of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under
this Act or any other law for the time being in force. No act or proceeding of the Tribunal or the
Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence of any
vacancy or defect in the constitution of the Tribunal or the Appellate Tribunal. The provisions of the
Limitation Act, 1963 shall apply to proceedings or appeals before the Tribunal or the Appellate
Tribunal. The Central Government may by notification decide date to transfer following proceedings
(a) All matters, proceedings or cases before the Company Law Board immediately before the notified
date shall transfer to the Tribunal;
(b) All proceedings including arbitration, compromise, arrangement, reconstruction and winding up,
pending before any District Court or High Court shall stand transferred to the Tribunal from Notified
date;
(c) Any reference or inquiry pending before the Board of Industrial and Financial Reconstruction or
any appeal or proceeding before Appellate Authority for Industrial and financial Reconstruction shall
stand abated. The company may make such reference or appeal before the Tribunal within one
hundred and eighty days.

POWERS AND FUNCTIONS

Some of the important powers that are presently vested with NCLT are as follows:
1. Class Action:
Protection of the interest of various stakeholders, especially non-promoter shareholders and
depositors, has always been the concern of company law. There were several frauds and improprieties
that were noticed where the key losers were the shareholders and depositors. The shareholders who
invested in listed companies saw their investments and savings drying up when the companies that
they invested in cheated the investors.
The Companies Act, 2013 has provided a very good combination of remedies where the offender will
be punished and the people who are involved (whether it is the company or directors or auditor or
experts or consultants) will be liable even for a civil action (namely class action), wherein they have
to compensate the shareholders and depositors for the losses caused to them on account of the
fraudulent practices or improprieties.
A class action is a procedural device that permits one or more plaintiffs to file and prosecute a lawsuit
on behalf of a larger group, or “class”. It is in the nature of a representative suit where the interest of a
class is represented by a few of them. A huge number of geographically dispersed
shareholders/depositors are affected by the wrongdoings. It is a useful tool where a few may sue for
the benefit of the whole or where the parties form a part of a voluntary association for public or
private purposes, and may be fairly supposed to represent the rights and interests of the whole.
Section 245 has been introduced in the new company law to provide relief to the investors against a
large set of wrongful actions committed by the company management or other consultants and
advisors who are associated with the company.
Class action can be filed against any type of companies, whether in the public sector or in the private.
It can be filed against any company which is incorporated under the Companies Act, 2013 or any
previous Companies Act. The Act provides only one exemption i.e. banking companies.

2. Deregistration of Companies:
The procedural errors at the time of registration can now be questioned at any time. The Tribunal is
empowered to take several steps, including cancellation of registration and dissolving the company.
The Tribunal can even declare the liability of members unlimited. Sec 7(7) provides this new way for
de- registration of companies in certain circumstances when there is registration of companies is
obtained in an illegal or wrongful manner. Deregistration is a remedy that is distinct from winding up
and striking off.

3. Oppression and Mismanagement:

The remedy of oppression and mismanagement is retained in 2013 Act. The nature of this remedy has
however changed to certain extent and it needs to be seen in light of the changes made to the
Companies Act, 2013. The 2013 Act has reset the bar for oppression to a little lower level but has set
the bar of mismanagement a little higher by applying the test “winding up on just and equitable
grounds” even to mismanagement matters. The Act permits dilution of the eligibility criteria with the
permission of Tribunal, where a member below the eligibility criteria can apply in deserving cases.
4. Refusal to Transfer shares:
The power to hear grievance of refusal of companies to transfer securities and rectification of register
of members under Section 58 and 59 of the new Act were already notified and were being taken up by
CLB. Now. The same are transferred to NCLT. The remedy for refusal to transfer or transmission
were restricted only to shares and debentures under 1956 Act. The provisions for refusal to transfer
and transmit under Companies Act, 2013 Act extends to all securities. These sections gives express
recognition to contracts or arrangements for transfer of securities entered into between two or more
persons with respect to shares of a public company and thus clears any doubts about the enforceability
of these contracts.
5. Deposits:
Chapter V dealing with deposits was notified in phases in 2014 and powers to deal with the cases
under it were assigned in CLB. Now the said powers will be vested in NCLT. The law on deposits is
quite distinct under the Companies Act, 2013 as compared to the Companies Act, 1956. The provision
for deposits under 2013 Act were already notified. Aggrieved depositors also have the remedy of class
actions for seeking redressal for the acts/omissions of the company which hurt their rights as
depositors.
6. Reopening of Accounts & Revision of Financial Statements:
Several instances of falsification of books of accounts were noticed under the Companies Act, 1956.
To counter this menace, several measures have been provided in the Companies Act, 2013. One such
measure is the insertion of Section 130 and 131 read with sec 447, 448 in the new Act. Section 130
read with sec 131 are newly inserted provisions that prohibit the company from suo motu opening its
accounts or revising its financial statements. This can be done only in the manner provided in the Act.
Section 130 and 131 provides the instances where financial statements can be revised/reopened.
Section 130 is mandatory, where the Tribunal or Court may direct the company to reopen its accounts
when certain circumstances are shown. Section 131 allows company to revise its financial statement
but do not permit reopening of accounts. The company can itself approach the Tribunal under sec 131,
through its director for revision of its financial statement.

7. Tribunal Ordered Investigations:

Chapter XIV provides several powers to the Tribunal in connection with investigations. The most
important powers that are conferred to the Tribunal are:
a) power to order investigation: Under the Companies Act, 2013, only 100 members (as against 200
members required under the Companies Act, 1956) are required to apply for an investigation into the
affairs of a company. Further, the power to apply for an investigation is given to any person who is
able to convince the Tribunal that circumstances exist for initiating investigation proceedings. An
investigation can be conducted even abroad. Provisions are made to take as well as provide assistance
to investigation agencies and courts of other countries with respect to investigation proceedings.
b) power to investigate into the ownership of the company
c) power to impose restriction on securities: The restriction earlier could be imposed only on shares.
Now, the Tribunal can impose restrictions on any security of the company.

d) power to freeze assets of the company: The Tribunal is given the power to freeze assets of the
company which can not only be used when the company is under investigation, but can also be
initiated at the insistence of a wide variety of persons in certain situations.

8. Conversion of public company into private company

Sections 13, 14, 15 and 18 of the Companies Act, 2013 read with rules regulate the conversion of
public limited company into private limited company. It requires approval from the NCLT. Approval
of the Tribunal is required for such conversion. The Tribunal may at its discretion impose certain
conditions subject to which approvals may be granted (sec 459).

9. Tribunal Convened AGM:

General meetings are required to assess the opinion of shareholders from time to time. The Act
mandatorily requires one meeting to be called, which is termed as the “annual general meeting” or
‘AGM’. Any other general meeting is termed as “extra ordinary general meeting” or ‘EOGM’. If the
AGM or EOGM cannot be held, called or convened in the manner provided under the Act or the Rules
by the Board or the Member due to certain extraordinary circumstances, then the Tribunal is
empowered under Section 97 and 98 of 2013 Act to convene general meetings under the Companies
Act, 2013. The provisions for convening an annual general meeting and extra ordinary general
meeting in the Companies Act, 2013 are almost similar to the provision provided in the Companies
Act, 1956. However, the draft rules have inserted an additional provisions that require intimation of
such cases to be given to ROC.

10. Compounding of Offence:

Provisions of compounding under the 2013 Act were notified before the constitution of NCLT and
were assigned to CLB. This power will now be vested with NCLT, and all compounding matters
which are above the prescribed monetary limit will be approved by NCLT.

11. Change in Financial Year:

Section 2 (41) also has been already notified on 1 April 2014. The Act requires that every company or
body corporate, new or existing, must have a uniform financial year ending on 31 March. It provides
an exception where certain companies can apply to the Tribunal to have a different financial year. A
company or a body corporate can make an application to the Tribunal. As the Tribunal was not
notified at the time when this section was notified, the power to alter the financial year on application
was granted to the CLB. The regulation provides the manner for making the application to CLB. The
same has notified on the site of CLB vide order dated 28 January 2015. All the application that are not
disposed of at the time when NCLT provisions are notified, will also be transferred to the Tribunal

JURISDICTION
The jurisdiction of newly constituted 11 benches of National Compnay Law Tribunal(NCLT) will be
as below :
1. NCLT, New Delhi Bench – State of Haryana, Rajasthan and Union Territory of Delhi; and
NCLT, Principal Bench, New Delhi.
Exclusive Monetary Jurisdiction has been created by Notification dated 29th June 2016 ,under
which all issues of companies with paid up capital of more than Rs 50 Lakhs will be listed
before NCLT, New Delhi Bench and/or NCLT, Principal Bench,New Delhi.
The Principal Bench will handle those issues which shall be ordered to be listed by the Honourable
President of NCLT.
2. NCLT, Ahmedabad Bench – State of Gujarat, Madhya Pradesh, Union territory of Dadra and Nagar
Haveli;
3. NCLT, Allahabad Bench – State of Uttar Pradesh and Uttarakhand;
4. NCLT, Bengaluru Bench – State of Karnataka;
5. NCLT, Chandigarh Bench – State of Himachal Prades, Jammu and Kashmir, Punjab and Union
Territory of Chandigarh;
6. NCLT, Chennai Bench – State of Kerala, Tamil Nadu, Union territory of Lakshadweep and Union
territory of Puducherry;
7. NCLT, Guwahati Bench – State of Arunachal Pradesh, Assam, Manipur, Mizoram, Meghalaya,
Nagaland, Sikkim, and Tripura
8. NCLT, Hyderabad Bench – State of Andhra Pradesh and Telengana;
9. NCLT, Kolkata Bench – State of Bihar, Jharhand, Odisha, West Bengal, and Union Territory of
Andaman and Nicobar Islands;

10.NCLT, Mumbai Bench – State of Chhatisgarh, Goa and Maharastra .

While provisions relating to mergers, restructuring and winding-up have not been notified yet, the
NCLT, once fully functional, will consolidate the corporate jurisdiction of the

1. CLB;
2. Board of Industrial and Financial Reconstruction;
3. Appellate Authority for Industrial and Financial Reconstruction and;
4. Jurisdiction and powers relating to winding up, restructuring and other such provisions, currently
vested in the High Courts.Once notified, the provisions relating to mergers, restructuring and winding
up will no longer be under the jurisdiction of the High Court.

Appeals
Appeals from the NCLT will go the NCLAT, and thereafter with the Supreme Court. The High Courts
and all Civil courts have been eliminated from the chain of appeals as mentioned in Section 268
Ousting of Civil Court and jurisdiction
Under the old regime, there was no express provision ousting the jurisdiction of the Civil Courts, and
various judicial pronouncements have time and again reiterated the requirement of an express
provision for ousting Civil Court jurisdiction.
Putting an end to the debate, Section 430 the Act expressly ousts the jurisdiction of Civil Courts.

Criminal Jurisdiction
Criminal Jurisdiction is not barred from the purview of the Company Law Tribunal and must meet the
following requirements
A Special court judge should be immediately before appointment, holding office of a sessions appeal
as a High Court judge or as an additional sessions judge – Sec.435 (3)
All matters of appeal shall lie with the respective High court (revision or appeal) Sec.437
Scope of Services for Practising Company Secretaries under NCLT

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 for the first time be eligible to appear for matters which were
hitherto dealt with by the High Court viz. mergers, amalgamations under Section 391-394 and
winding up proceedings under the Companies Act, 1956.
Areas opened up for company secretaries in practice under NCLT are briefly stated hereunder: - A
Practicing Company Secretary can be appointed as a Technical Member of NCLT, provided he has 15
years working experience as secretary in whole-time practice. Appearance before National Company
Law Appellate and as stated earlier a Practicing Company Secretary has been authorized to appear
before National Company Law Appellate Tribunal. Currently, the law does not support effective
participation of professionals and experts in the Insolvency process. There is no shortage of quality
professionals in India. Disciplines of chartered accountancy, company secretaryship, cost and works
accountancy, law etc can act as feeder streams, providing high quality professionals for this new
activity. In fact, private professionals can play a meaningful role in all aspects of process.
Insolvency practice can also open up a new field of activity for service professionals while improving
the quality of intervention at all levels during rehabilitation/winding up/liquidation proceedings. Law
should encourage and recognize the concept of Insolvency Practitioners (Administrators, Liquidators,
Turnaround Specialists, Valuers etc). Greater responsibility and authority should be given to
Insolvency Practitioners under the supervision of the Tribunal to maximize resource use and
application of skills.’ The National Company Law Tribunal has also been empowered to pass an order
for winding up of a company. Therefore Practicing Company Secretaries may represent the winding
up case before the Tribunal.
With the establishment of NCLT, a whole new area of practice will open up for Company Secretary in
Practice with respect to advising and assisting corporate sector on merger, amalgamation, demerger,
reverse merger, compromise and other arrangements right from the conceptual to implementation
level. Company Secretaries in practice will be able to render services in preparing schemes, appearing
before NCLT/NCLAT for approval of schemes and post merger formalities.
With respect to sick companies:
(a) Timely detection of sick company: The Practising Company Secretary can identify the sickness
of the company as defined under the Act and place the matter before the Board of Directors of the
company to take necessary action for making reference to the Tribunal for revival and rehabilitation of
the Company.
(b) Making a reference of sick industrial company to NCLT: Practising Company Secretary may
assist and advise the Sick Company in making reference to the Tribunal, preparing scheme of
rehabilitation, seeking various approvals from the Tribunal as may be required. Reference is to be
made to the NCLT within a period of 180 days from the date on which Board of Directors of the
company or the Central Government, Reserve Bank of India or State Government or a Public
Financial Institution or a State level institution or a Scheduled Bank as the case may be come to know
of the relevant fact giving rise to causes of such reference or within 60 days of final adoption of
accounts whichever is earlier.
 Winding up The National Company Law Tribunal has also been empowered to pass an order for
winding up of a company. Therefore Practising Company Secretaries may represent the winding up
case before the Tribunal. Unlike the earlier position allowing only government officers to act as
Official Liquidators, now professionals like Practising Company Secretaries have been permitted to
act as Liquidator in case of winding up by the Tribunal.
Reduction of Capital As per amended section 100 of the Companies Act, subject to confirmation by
the Tribunal, a company limited by shares or a company limited by guarantee and having a share
capital may if so authorized by its articles by special resolution reduce its share capital. The Practising
Company Secretaries will be able to represent cases of reduction of capital before the Tribunal.
A Practising Company Secretary can be appointed as a Technical Member of NCLT, provided he has
15 years working experience as secretary in whole-time practice.
As stated earlier a Practicing Company Secretary has been authorized to appear before National
Company Law Appellate Tribunal.

CONCLUSION

The Companies (Second Amendment) Act, 2002 provides for the setting up of a National Company
Law Tribunal and Appellate Tribunal to replace the existing Company Law Board (CLB) and Board
for Industrial and Financial Reconstruction (BIFR). The setting up of the NCLT as a specialized
institution for corporate justice is based on the recommendations of the Justice Eradi Committee, a
committee set up to examine the existing law relating to winding up proceedings of companies in
order to re-model it in line with the latest developments and innovations in the corporate law and
governance and to suggest reforms in the procedure at various stages followed in the insolvency
proceedings of companies to avoid unnecessary delays in tune with the international practice in this
field. The setting up of the NCLT and NCLAT are part of the efforts to move to a regime of faster
resolution of corporate disputes, thus improving the ease of doing business in India. NCLT and
NCLAT will also pave the way for the faster implementation of the bankruptcy code. Their setting up
is expected to reduce the burden on courts. Government data revealed that 48,418 civil cases were
pending before the Supreme Court of India as of mid-February 2016, 3.116 million civil cases
pending before the high court as of December 31, 2014 and 8.234 million civil cases pending before
the district and subordinate courts.
The establishment of the National Company Law Tribunal (NCLT) consolidates the corporate
jurisdiction of the following authorities:
1. Company Law Board
2. Board for Industrial and Financial Reconstruction.
3. The Appellate Authority for Industrial and Financial Reconstruction
4. Jurisdiction and powers relating to winding up restructuring and other such provisions, vested in
the High Courts.
With the establishment of the NCLT and NCLAT, the Company Law Board under the Companies Act,
1956 will stand dissolved.
While provisions relating to the investigation of a company's accounts, freezing of assets, class action
suits, conversion of a public company to a private company will now be governed by the NCLT, and
appeal therefrom would be before NCLAT instead of High Court, those relating to compromise,
amalgamation and capital reduction will continue to be under the purview of the High Courts.
Gradually powers of High Court under the Companies Act 2013 / 1956 relating to reduction of share
capital, winding-up and compromise or arrangement (merger, demerger, settlement) would get
transferred to NCLT under specific directions issued by the MCA

REFERENCES

1. Justice Eradi Committee on Law Relating to Insolvency and Winding up of Companies.

2. R. Gandhi, President, Madras Bar Association v. Union of India.
3. 115, 121, 223 and 124 Reports of Law Commission of India .
4. The Companies Act, 1956
5. The Companies (Second Amendment) Act, 2002.
6. http://www.nclt.gov.in/
7. NCLT – Powers & Functions under Cos. Act, 2013- http://lawstreetindia.com/experts/column?
sid=164
8. https://aishmghrana.me/2014/01/17/power-and-function-of-national-company-law-tribunal/
9. http://www.icsi.edu/WebModules/Programmes/PCS/7PCS/BG%20PCS-6-Grover.pdf