The Indian judiciary operates in a society where the maxim "justice denied is justice delayed" is widely accepted. However, even the simplest legal disputes take over ten years to settle. Debates and deliberations on reducing the judicial load without sacrificing the fundamental structural doctrine were started to address this. A Company Law Tribunal modelled after the Income Tax Tribunal was suggested by the Sachar Committee in 1979. However, subsequent efforts to bring the tribunal's concept to reality came to a standstill. Afterwards, as a result of the Eradi Committee's recommendations, the National Company Law Tribunal (NCLT) was added to the Companies Act 1956 by the Companies (Amendment) Act, 2002.
Contents:
- What is NCLT
- Constitutionality
- Jurisdiction
- Composition
- Powers and Functions
- Conclusion
Under the Companies Act, all instances of infringement of legal rights are handled by the quasi-judicial National Company Law Tribunal (NCLT). In compliance with the provisions of the Companies Act of 2013 (Section 408), it was established on June 1, 2016. The Eradi Committee established the National Company Law Tribunal, which the Companies Act of 1956 intends to incorporate into the Indian legal system. On the other hand, NCLT's disclosure under the 2013 Companies Act resulted from a ten-year legal fight about the foundation's legitimacy.
Constitutionality of NCLT:
In response to a 2010 lawsuit challenging the constitutionality of the NCLT, the Supreme Court made it clear that the fundamental structure concept would not be applicable because the case did not involve a constitutional amendment. The Hon'ble SC also declared that the Parliament can create tribunals in accordance with Articles 343A and 343B of the Indian Constitution. Many changes were made to the 2013 Companies Act to maintain its compliance with the 2010 ruling. Consequently, the NCLT's creation and operation are authorized under the constitution.
Jurisdiction of High Court and Civil Courts:
The tribunals are meant to be a complement to the High Courts, not its replacement. Even though the High Courts have given the NCLT extensive authority, the High Courts have all the authority over corporate legal issues. If the circumstances are such that the NCLT is acting outside of its authority or if the issue is one of public interest or national security, the civil courts may intervene. The Calcutta Cricket and Football Club ruled in Karan Singh Grewal v. Secretary that the civil courts' jurisdiction cannot be entirely excluded. The High Courts may intervene if an NCLT proceeding is outside of its jurisdiction.
Composition:
- The Tribunal's Judicial members must be either serving or retired judges of the High Court, serving or retired judges of the District Court, have five years of experience in the judiciary, or be ten-year practising attorneys.
- Qualifications for Technical Members, as opposed to those for Judicial Members, have faced more criticism. The courts advised that though the Technical Members of the Tribunal should be at par with judges of the High Court, they should also have background knowledge in their various fields of discipline after reading the laws applicable to Technical Members of the Tribunal.
- According to the Companies Act, a tribunal will be headed by the president while an appellate tribunal will be controlled by a chairman. Only a serving or retired High Court judge with five years of experience is eligible for the post of President, whereas a Chief Justice of a High Court or a sitting Supreme Court Justice may hold the Chairpersonship of the Appellate Tribunal.
- A Selection Committee of two judges and three bureaucrats will pick the tribunals' members and presiding officers. This Committee's ex officio chairman is the Chief Justice of India.
- Each tribunal member is qualified for a five-year renewable term. The standard minimum age for appointment is fifty, while the retirement age for the Chairperson, Members of the Appellate Tribunal, the President, and Members of the Tribunal is seventy, sixty-seven, sixty-seven, and sixty-five years, respectively.
- Many significant benefits are provided by the NCLT, such as expedited conflict resolution and consistent decision-making.
- The Companies Act governs all proceedings, including arbitration, compromise, reconstruction, and winding up, which are decided by the Tribunal.
- It is in charge of looking into cases of tyranny and poor corporate management. A former employee of the company may also file a claim.
- Until the NCLT has approved the conversion of a public business into a private firm, a challenge cannot be filed.
- It also deals with companies that deduct salaries from their investors and depositors in order to perpetrate fraud and other wrongdoings. These investors and depositors receive compensation from the tribunal.
- It is able to investigate and deregister a business that was falsely or unlawfully registered.
If the NCLT were implemented correctly, it would have several benefits. The establishment of the NCLT as the exclusive tribunal for all matters arising under the Companies Act will undoubtedly reduce, if not entirely eliminate, the agonizingly lengthy delays in company law proceedings. It will also stop multiple lawsuits from being filed before different forums, streamline the appeals process, and relieve the High Courts and District Courts of some of their workload. It will also be beneficial for the Tribunal to have original jurisdiction over disputes, as this will guarantee prompt justice and efficient operation of the legal system. The procedure will also be expedited. Finally, for the strategy to work, the NCLT's independence needs to be preserved.
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About the Author
Anju S Nair
Legal Researcher | LLB, MA English| Corporate Lawyer | Business Enthusiast | Founder & CEO at iLawbook.