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CORPORATE

LAW

AMENDMENT

BOOK LET

COMPILED BY

CA. ASEEM

TRIVEDI

FOR NOV 2017 EXAM

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Chapter 1 NCLT

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Chapter 1

NCLT

Q.1. What do you mean by Tribunal?

Tribunal is a body established to settle certain types of dispute. Keeping in view the pending legal

matters, 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. It is an alternate dispute resolution system in India.

Q.2. What is history of Alternate Dispute Resolution Mechanism in India for Companies?

Till 2002 amendments to the Companies Act, 1956, significantly, the dispute resolution mechanism was

vested with the Company Court and the Company Law Board. Company Court was nothing but High

Court having jurisdiction to entertain certain company matters like winding-up and amalgamation

petitions etc. Again, a Company Law Board was a dispute resolution mechanism constituted under

section 10E of the Companies Act, 1956 and was regulated by Company Law Board Regulations, 1991.

Q.3. What is NCLT and NCLAT and why they formed instead of CLB?

With the object of establishing a specialized dispute resolution mechanism at one place and without

running to various forums for various issues, a National Company Law Tribunal was proposed to be

constituted under Companies Act, 1956. The Companies (Amendment) Act 2002 introduced the NCLT

as a dedicated Tribunal to handle certain matters under the companies Act 1956 and allied laws which

were being handled by BIFR, CLB and High Courts. NCLT is finally a reality in 2016 a long journey of 14 years after it was conceived. The aim of establishing the National Company Law Tribunal (NCLT) is to

consolidate the corporate jurisdiction of the following authorities:

Company Law Board

Board for Industrial and Financial Reconstruction.

The Appellate Authority for Industrial and Financial Reconstruction

Jurisdiction and powers relating to winding up restructuring and other such provisions, vested in the High Courts.

Now lets talk about NCTL The NCLT or Tribunal is a quasi-judicial authority created under the Companies Act, 2013 to handle corporate civil disputes arising under the Act. It is an entity that has powers and procedures like those vested in a court of law or judge. NCLT is obliged to objectively

determine facts, decide cases in accordance with the principles of natural justice and draw conclusions

from them in the form of orders. Such orders can remedy a situation, correct a wrong or impose legal

penalties/costs and may affect the legal rights, duties or privileges of the specific parties. The Tribunal is

not bound by the strict judicial rules of evidence and procedure. It can decide cases by following the

principles of natural justice.

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NCLAT or Appellate Tribunal is an authority provided for dealing with appeals arising out of the decisions of the Tribunal. It is formed for correcting the errors made by the Tribunal. It is an intermediate

appellate forum where the appeals lie after order of the Tribunal. The decisions of Appellate Tribunal

can further be challenged in the Supreme Court. Any party dissatisfied by any order of the Tribunal may

bring an appeal to contest that decision. The Appellate Tribunal reviews the decisions of the Tribunal

and has power to set aside, modify or confirm it.

Q.4. What is Difference between NCLT and NCLAT?

The NCLT has primary jurisdiction whereas NCLAT has appellate jurisdiction. NCLAT is a higher forum

than NCLT. Evidence and witnesses are generally presented before NCLT for taking the decisions and

NCLAT generally reviews decisions of NCLT and checks it on a point of law or fact. Fact-finding and

evidence collection is primarily a task of Tribunal whereas the Appellate Tribunal decide cases based on

already collected evidences and witnesses.

Q.5. Who shall Constitute NCLT and What shall be Its Constitutuion?

By the powers given in section 408 of the Companies Act, 2013, the Central Government had

constituted NCLT by giving notification on1st June 2016. According to this the NCLT will be consisting of a President and such number of (Judicial and Technical) members, as the Central Government may deem

necessary to exercise and discharge such powers and functions as conferred on it by or under this Act or

any other law for the time being in force.

Q.6. What shall be the qualification of President and Members of NCLT?

The NCLT consist of a president, Judicial Members and Technical Members. According to Section 409

following are the qualification of such persons

President: He shall be a person who is or has been a Judge of a High Court for five years.

Qualification for the Judicial member: A person shall not be qualified for appointment as a Judicial

Member unless he is or has been

A judge of a High Court; or

A District Judge for at least five years; or

An advocate of a court for at least ten years.

In computing the period for which a person has been an advocate of a court, there shall be included

any period during which the person has held judicial office or the office of a member of a tribunal or

any post, under the Union or a State, requiring special knowledge of law after he become an advocate.

Qualification for Technical member: A person shall not be qualified for appointment as a Technical

Member unless he

Has been a member of the Indian Corporate Law Service or Indian Legal Service for at least fifteen years out of which at least three years shall be in the pay scale of Joint Secretary to the Government

of India or equivalent or above in that service; or

Is or has been in practice as a chartered accountant, or a cost accountant , or as a company secretary for at least fifteen years

Chapter 1 NCLT

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Is a person of proven ability, integrity and standing having special knowledge and experience, of not less than fifteen years, in industrial finance, management or administration, reconstruction,

investment, accountancy, labour matters or such other disciplines which are related to the

management of the affairs including reconstruction, rehabilitation and winding up of companies,

Is or has been a presiding officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947 for at least five years.

Q.7. How NCLAT shall be constituted and What shall be its composition?

As per section 410, the Central Government shall, by notification constitute with effect from such date ( CG notified on1ST June 2016), an Appellate Tribunal to be known as the National Company Law Appellate Tribunal (NCLAT) consisting of a chairperson and such number of judicial and technical members, not exceeding eleven, as the Central Government may deem fit. NCLAT will be for hearing appeals against the orders of the Tribunal.

Q.8. What should be thee qualification of Chairperson and Members of NCLAT?

According to Section 411 Following shall be the qualification of persons of NCLAT.

Chairperson: The chairperson shall be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court.

Judicial Member: He shall be a person who is or has been a Judge of a High Court or is a Judicial Member of the Tribunal for five years.

Technical Member: - he shall be a person of proven ability, integrity and standing having special knowledge and experience, of not less than twenty-five years in various specified disciplines related to the management, conduct of affairs, revival, rehabilitation and winding up of companies.

Q.9. Who shall appoint the Members of Tribunal and Appellate Tribunal?

Section 412 deals with the selection of the members of the Tribunal and Appellate Tribunal.

The President of the Tribunal and the chairperson and Judicial Members of the Appellate Tribunal shall be appointed after consultation with the Chief Justice of India.

The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee.

Q.10. What is Constitution of such selection committee?

According to Section 412(4) The Selection Committee shall determine its procedure for recommending

persons for the appointment of the members of the Tribunal and the technical members of the Appellate

Tribunal .The selection committee shall consist of

Chief Justice of India or his nomineeChairperson;

A senior Judge of the Supreme Court or a Chief Justice of High Court Member;

Secretary in the Ministry of Corporate AffairsMember;

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Secretary in the Mi