Understanding The National Company Law Tribunal

National Company Law Tribunal (NCLT) is a Quasi Judicial body. It was intended to introduce in Indian legal system in 2002 however, due to constitutional validity it took 10 years, therefore, it was notified under section 408 of the Companies Act, 2013 based on the recommendation of the V. Balakrishna Eradi committee on law relating to the insolvency and the winding up of companies.

NCLT shall dispose off all the proceedings under the Companies Act such as arbitration, compromise, arrangements, reconstructions and the winding up of companies. The National Company Law Tribunal is the adjudicating authority for the insolvency resolution process of companies and limited liability partnerships under the Insolvency and Bankruptcy Code, 2016.

NCLT is obliged to be fair and without any biases determine the facts of each case and decide with matters in accordance with principles of natural justice and in the continuance of such decisions, offer conclusions from decisions in the form of orders. NCLT can order for resolving a situation, rectifying a wrong done by any corporate or levying penalties and costs and might alter the rights, obligations, duties or privileges of the concerned parties. 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 under this Act.

The President of a Tribunal shall be a person who is or has been a Judge of High Court or has been a District Judge for at least 5 years or for at least 10 years been an advocate of a Court. According to section 413 of Companies Act, 2013 the President and every other Member of the Tribunal shall hold office for the period of 5 years from the date on which he enters upon his office. However, they are eligible for re-appointment for another 5 years.

Powers and Functions of NCLT

  1. De-Registration of Companies

The NCLT has power to register any company under the Act. However, it has also enabled with the power to question the legitimacy of company because of specific procedural errors during incorporation and registration. The NCLT could even render the liability or charge of members to unlimited.  Therefore, under section 7 (7) of the Companies Act, 2013 NCLT can de-register any company in specific situations when the registration certificate has been obtained by wrongful manner or illegal means.

  • Transfer of shares

NCLT is also empowered to hear grievances of rejection of companies in transferring shares and securities. In Companies Act, 1956 the solution available for rejection of transmission or transfer were limited only to the shares and debentures of a company but as of now the prospect has been raised under the Companies Act, 2013 and the now covers all the securities which are issued by any company.

  • Power to Investigate

As per the 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. An investigation, which is ordered by the NCLT, could be conducted within India or anywhere in the world. The provisions are drafted for offering and seeking help from the courts and investigation agencies and of foreign countries.

  • Freezing assets of a company

The NCLT is not just empowered to freeze 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.

  • Converting a public limited company into a private limited company

The 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. The Tribunal has the power under section 459 of the Act, for imposing specific conditions or restrictions and might subject granting approvals to such conditions.

  • To call a General Meeting

If the company cannot or has not held an Annual General Meeting as required under the Companies Act or a required Extraordinary General Meeting, then the Tribunal has powers to call for a General Meetings.


The order or decision of National Company Law Tribunal can be appealed to National Company Law Appellant Tribunal (NCLAT). Further, can be appealed to the Supreme Court of India on a point of law.


The Companies Act, 2013


National Company Law Tribunal – Powers & Jurisdiction


Aishwarya Says:

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