OUERUIEW OF

CHAPTER
ADMINISTRATION D
2 COMPANY LA)

Nationl Company Law. Tribuna!

Nationaf Company lawAPpellate TribUnal
Special Courts
National Company
National Company Law Tribunal (NCLT) and
Law Appellate Tribunal (NCLAT)
of the National Company
The Companies Act, 2013 provides for the constitution
Appellate Tribunal (NCLAT)
Law Tribunal (NCLT) and the NationalCompany Lawsections 407 to 434.
under
and lays down its compo_ition and powers
NationalCompany Law Tribunal (NCLT) andthe NationalCompany Law Appellate
iasues and matters
Tribunal (NCLAT) are the quasi-judicial bodies to adjudicate
relating to companies in India.
Tribunal (NCLT)
The Central Government has constituted National Company Law
june 2016.
under section 408 of the Companie_ Act, 2013 with effect from 1st
Benches,
In the first phase the Ministry of Corporate Affairs has set up eleven
one Principai Bench at New Delhi and one each Regional Benches at New Delhi,
Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad,
Kolkata and Mumbai. Subsequenthy more benches at Cuttack, jaipur, Kochi,
Amravati and.Indore have been set-up.
The establishment of the National Company Law TribunaB (NCLT) consolidates
the corporate jurisdiction of the following authorities:
1.: Company Law Board.
2. Boàrd for Industrial and Financial Reconstruction.
3. The Appellaté Authority forIndustrial ånd Financial Recon'struction.
4. jurisdiction and powers relating. to winding up restructuring and other
such provisions, vested in.the High Courts..

21
 22
OVERVIEW OFADMINISTRATION OF COMPANYLA"
With te establishment of the NCIT nd NCLAT the Company Law Board u
the: Companies Act, 1956-stand dissolved.
povsions relating to the investioation: of acompany's accounts, freezingO
assets, class action suits, NCLT.
winding up of companies are governed by the
The Tribunal (NCLT) is not bound by the strict iudicial rules of evidenc and
Proceeure. It can decide cases by folowing principles of natural iustice. NCLAI
Cr Appellate Tribunal" is an authority provided for dealing with appeals aris1ing
out of the decisions of the Tribçnal. Any party dissatisfied by any order of the
Iribunal mày bring an appeal to contest that decision. The Appellate. Tribunal
reyiews the decisions of the Tribunal and has power to set aside, nodify or
confirnm it.
The decisions of Appellate Tribunal can further be challenged in the Supreme
Court.
Difference between National Company Law Tribunal (NCLT) and Nationai
Company Law Appellate Tribunal (NCLAT)
1. The NCLT has primary jurisdiction whereas NCLAT has appellate, juris
TAXMANNO diction.
2. NCLAT is a higher quasi-judicial body than NCLT.
3. Evidence and witnesses are generally presented before NLT for taking
the decisions and NCLAT generally reviews decisionsof NCLT andchecks
it on apoint of law or fact.
4. Fact finding and evidence collection isprimarily atask of Tribunal whereas
the Appellate-Tribunal decide cases based on already collected evidence
and witnesses.

Composition of the NCLT and NCLAT

The National Company Law Tribunals consist of aPresident and such number of
ludicialand TechnicalMembers notexceedingsixty-two, as theCentiral Government
deens fit. The qualifications for appointment of the President and members of
the Tribunal have been laid down by the Act. The President
and'every
Member of the Tribunal shall hoBd office for a term of ive years fromn theether
date
on wbich he enters upon his office but shall be eligible.for
re-appointment.
The-National Company Law Appellate Tribunal is headed by a chairperson and
imembers not exceeding eleven for hearing appeals against the orders of the
Tribünal.
Qualification of President and Members (Section 4091
The President shall be a person who is or has-been a Judge of a High
Court
for five years.
 OVERVIEW OF ADMINISTRATION OF COMPANY LAW 23

Judicial Member
Ajudicial member shall be person, who -
(a) is or has been a judge of a Hligh Court; or
(b) is or has been a istrict Judge for at least five years; or
ajudicial office
( ilds for at least ten years as anadvocate ofa court or held
or as member of a tribunal.
Technical Member
A technical member shall be a person who -
Law
(a) has for at least fifteen years been amember of the Indian Corporate Joint
Service or indian Legal Service out of which at least three years as
Secretary or above; or
fifteen
(b) is or-has been in practice as a.chartered accountant for at least
years; or
(c) is or has been in practice as a cost accountant for at least fifteen years;
or

--fd) is-or has been in practice as a company secretary for at least fifteen years;
Or

(e) isaperson ofproven ability, integrity and standinghavingspecial knowledge

and experience, of not less than fifteen years, in law, industrial finance;
industria! managenent or administration, industrial reconstruction, in:
vestment, accountancy, labour matters, or such other disciplines related
to management, conductof affairs, revival, rehabilitation and winding up
of companies; or
() is,or has been, for at least five years, a presiding.officer of a Labour Court,
Tribunal or Nationai Tribunal constituted under the industriai Disputes
Act, 1947.
Constitution of Appellate Tribunal [Section 410)
The Central Government shall·by notification, constitute an National Cempany
Law Appellate Tribunal, constituting of a Chairperson and not exceeding eleven
members for hearing appeals against the orders of the Tribunal.
Qualifications for Appellate Tribunal [Section 411]
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.
A Judicial Member shal! be a person who is or has been aJudge of a High Coùrt
or is a Judicia! Member of the Tribunal for. five years.
ATechnical Member shall be a person of proven ability, integrity and standing
having special knowledge and experience, of not less than twenty-five years,
in law, industrial finance, industrial management or administration, industrial
 24 oVERVIEW OF ADMINISTRATION OF COMPANY LAW

reconstruction, investment, accountancy, labour matters, or such other disciplines

related to management, conduct of affairs, revival, rehabilitation and winding
up of companies.
Selection of Mebers [Section 412]
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 Seléction Committee
consisting of
(a) Chief Justiçe of India or his nominee
Chairperson;
(b) a senior Judge of the Supreme Court or a Chief justice of High Court
Member;
(c) Secretary in thë Ministry of Corporate Affairs -- Member;
() Secretary in the Ministry of Law and Justice - Member; and.
(e) Secretary in the Department of FinanciaB Services in the Ministry of
TAXMANN
Finance Member.
The Secretary, Ministry of Corpor¥te Affairs shall be the Convener of the Selection
Committee.
Terin of Office Section 413]
The President and every other Member of the Tribunal shall hold office as
for a term of five years from the date on which he enters such
upon his office, but
shall be eligible for reappointmnent for another term of five
years.
AMemnber of the Tribunai shall hold office as such
until he attains,
(a} in the case of the President, the age of
sixty-seven years;
(b) in the case of any-other Member the age of. sixty-five years:
A person who has not. completed fifty years -of age shall not be eligible for
appointrment as Member. The Member may retainhis lien with hËs parent cadre
or Ministry or Department, as the' case may be, while holding office as such for
a period not exceeding one year.
The chairperson or. a Mermber of the Appellate Tribuna! shall hold office for à
term of five years from the date on which he enters upon his office, but shall
be eligible for re-appointment for another term of ive years.
AMember of the AppeliateTribunal shall hold office as such until he attains,
(a) in the case of the Chairperson, the age. of seventy years;
(b) in the case of any other Member, the age of
sixty-seven years:
 OVERVIEW OF ADMINISTRATION OF COMPANY LAW. 25

Aperson who has not completed fifty years of age shall not be eligible for
appoint1nent as Member. The Member may retain his lien with his parent cadre
for
or Ministry or Department, as the case may be, while holding office as such
a period not exceeding one year.

Powers and Procedure

(1) The powers of the Tribunal may be exercised by Benches, constituted by
the President of the Tribunal, out of which one shall be a Judicial Member,
and another shall be a Technical Member.

(2) The Tribunal may, after giving an opportunity of being heard to the parties
orders'thereon ás it thinks fit.
to any proceeding before it, pass such
(3) "The Tribunal shall have power to review its awn orders.
may prefer
(4) Any person aggrieved by an order or decision of the Tribunal
an appeal to the Appellate Tribunal.
(5) The Tribunal and the Appellate Tribunal shall not be bound by the proce
dure laid down in the Code of Civil Procedure, 1908, but shall be guided
by the principles of natural justice. Subject to the other provisions of this
Act and of any rules made by the Central Government, the Tribunal and
TAXMANN®
the Appeilate Tribunal shall have power to regulate their own procedure.
(6) The Tribunal and the Appellate Tribunal shal! have the same powers as
are vested in a civil court under the Code of Civil Procedure, 1908 while
trying a suit in respect of the folowing matters:
(a) surnmoning and enforcing the attendance of any person and
examining him on oath;
(b) requiring the discovery, and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of the Indian Evidence Act, 1372, requi
sitioning any public record or document or copy of such record or
document from any office;
(e) issuing commissions for the examination of witnesses or documents;
) reviewing its decisions;
(g).dismissing arepresentation for default or deciding it ex parte.
(7) Any order nade by the Tribunal or the Appellate Tribunal may be en
forced by that Tribunal in the same manner as if it were a decree made
by a court in asuit pending therein.
(8) All proceedings before the Tribunal or the Appellate
Tribunal shall be
deemed to be judicial proceedings within the Indian Penal
Code.
26
OVERVIEW OF ADMINISTRATION OF COMPANY LAW

(9) No civil court shall have entertain any suit or proceeding

jurisdiction to Tribunal is
e or any matter which the Tribunal or theAppellate
injunction shall be
empowered to determine by or under this Act and no
Elted by any court or other authority in respect of any action taken o
tO oe taken in pursuance of any p0wer conferred by or under tnts ht
(10) Any person aggrieved by any decision or order of the Appellate Tribunal
may nte an appeal to the Supreme Court within sixty days trom tne dte
OT communication of the decision or order of the Appellate Tribunal to
him on any question of law arising out of such decision or order.
Powers of NationalCompany Law Tribunal (NCLT)
Some of the important powers that are presentiy vested with NCLT are as follows:
1. Declare the liability of members unlimited.
2. De-registration of companies in certain circumstances when there is
registràtion of companiesis obtained in an illegal or wrongfu! mañner.
3. Remedy of oppression and mismanagement.
4. Power to hear grievance.of refusal of companies to transfer securities
and rectification of register of members.
5. Protection of the interest of various stakeholders, especially non-promoter
sharehoBders and depositors.
6. Power 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.
7. Aggrieved depositors h¡ve the remedy of class actions for seeking re
dressal for the acts/omissions of the company which hurt their rights as
depositors.
8. Powers to direct the company to reopen its
accounts or allow the company
to revise its financial statement but do not permit
reopening of
The company can itself also approach the Tribunal through itsaccounts.
director
for revisionof its financial statement.
9. Power to investigate or for initiating
investigation can be conducted even abroad.investigatibn proceedings. An
Provisions are provided to
assist investigation agencies and courts of other countries with resnect
to investigation proceedings.
10. Power to investigate intothe ownership of the company.
11.- Power to freeze assets of the company.
12. Power to impose restriction on any securities of the company.
13. If the compahy cannot or has hot held 'an Annual General Meeting
required under the Companies Act or a required Extraordinary General
Meetinp, then the Tribunal has powers to. call for a General Meetings
 OVERVIEW OFADMINISTRATION OF COMPANY LAW
27
14. Power to alter the financial year of a company registered in India.
15. Powers under the Insolvency & Banlkruptcy Code, 2016
Special Courts
The Companies Act,2013 has provision to form "special courts" for thepurpose
ofproviding speedy trial and disposal of offencespunishable under the Companies
Act, 2013 with imprisonment of two years or more. Sections 435 to 446 of the
Companies Act, 2013 contain provisions on the special courts.
Establishment of Special Court
As per section 435(1) of the Companies Act, 2013, the Central Government
may establish or designate as many speclal courts as may be necessary to
provide speedy trial of offences punishable under the Companies Act, 2013 with
imprisonment of two yèars or mnore. Provided that ali other offencés shall. be
tried as the case may be by a Metropolitan Magistrate or a JudicialMagistrate
of the First Class having jurisdiction to try any offence under this Act or under
any previous company law.
A Special Court shall.cansist. of.a singBe-Judge who shall be appointed by the
TAXMANN0
Central Government with the concurrence of the Chief justice of the High Court
within whose jurisdiction the Judge to be appointed is wörking [Section 435(2).
The Judge of a"special court" must be a person holding an office of a Sessians
judge or an Additional Sessions Judge. [Section 435(3)]
Inexercise of thepowers conferred by the Companies Act, the Centra! Government
after obtaining the concurrence of the respective Chief Justices of High Courts,
existing courts in' the State. of Maharashtra, Jammu and Kashmir, Goa, Gujarat,
MadhyaPradesh, Chhattisgarh, West Bengal, Gujarat, Rajasthan, Punjab, Manipur,
Meghalaya and Uion territory of Andarman and Nicobar Isl¡nds, and Dadra and
Nagar Haveli and Daman and Diu,Chandigarh, Puducherry, Delhi and Coimbatore
(Tamilnadu) have been designated as SpecialCourts for the purposes of trying
offences under the Companies Act, 2013. As per the notification, these courts
have been designated for the purposes of trial of offences panishable under the
Companies Act, 2013 with imprisonment of 2 years or more.
Offences triable by Special Courts
As per the provisions of the Companies Act, 2013 (Section 36A), following
offences are triable by Special-Courts:
(1) Notwithstanding anything contained in the Code of Criminal Procedure,
1973 (2 of 1974)]
(a) Alloffences under this Act which are punishable with imprisonment
for a term of more than three years shall be triable only by the
 28 OVERVIEW OF ADMINISTRATION OF COMPANY LAW

Special Court constitüted for the area in which the offence has been
committed or where there are more Special Courts than one for
such area, by such one of them as may be specified in this behalr
by the Government;
(b) Where a perSon accused of or suspected of the commission of an
offence under this Act is forwarded to a Magistrate under sub-sec
tion (2) or sub-section (2A) of section 167 of the Code of Criminal
Procedure, 1973 (2 of 1974), such Magistrate may authorise the
detention of such person in such custody as he thinks fit for a
period notexceeding fifteen days in the whole where such Magistrate
is a Judicial Magistrate and seven days in the whole where such
Magistrate is an Executive Magistrate:
Provided that in ca_es which are triable by th» Special Courtwhere
such Magistrate considers
() when such person is forwarded to him as aforsaid; or
(i) upon or at any time before the expiry of the period of deten
tion authorised by him,
that the detention of such person is unnecessary, he shall or
oNNVWXV.I. der such personto be forwarded to the Special Court having
jurisdiction;
(c) Fhe SpeciaiCoutrt may exercise, in relation to the person forwarded
to it under clause (b), the same power which a Magistrate having
jurisdiction to try a case may exercise under section 167 of the
Code of Criminal Procedure, 1973, in relation to an accused person
in such case who has been forwarded to him under that section;
() A Special Court may, upon perusal of police report of the facts
constituting an offence under this Act or upon complaint made
by an officer of the Central Government or a State Government
authorised in his behalf, take cognizance of that offence without|
the accused being committed to it for rial.
(2) When trying an offence under this Act, a Special Court may also try an
offence other than an offence under this Act with which the accused may,
under the Code of Criminal Procedure, 1973, be charged at the same trial.
(3) Nothing containedin this section shall be deemed to affect the special
powers of the,High Court regarding bail under section 439 of the Code of
Criminal Procedure, 1'973, and the High Court mày exercise such powrs
including the power under clause (b)of sub-section (1) of thàt section as
if the reference to "Magistrate", in that section inciuded also a reference
to a Special Court constituted under section 36.
 OVERVIEW OF ADMINISTRATION OF COMPANY LAW 29

under section
(4) In respect of persons accused of an offence punishable
19 or section 24 or section 27A or for offences involving commercial
quantity the references in sub-section (2) of section 167 of the Code of
Criminal Procedure, 1973 thereof to"ninety days", where they occur. shall
be construed as reference to "one hundred and eighty days":
within the
Provided that, if it is not possible to complete the investigationmay
Court extend
said period of one hundred and eighty days, the Special
the said period up to one year on
the report of the Public Prosecutor
reasons for
indicating theprogress of the investigation and the specific
said period of one hundred and
the detention of the accused beyond the
eighty days.
the Code of Criminal Procedure,
(5) Notwithstanding anything contained inthis Act with imprisonment for a
1973, the offences punishable under
summariy.
term of not more than three years may be tried

Appeai/Revisions from Special Courts to High Courts

been granted jurisdiction, as if
For appeal and revision, the High Court have jurisdiction of the High Court
the Special Court within the local timits of the local limits of the jurisdiction
the
were a Court of Session rying cases within
of the High Court.

Compounding under Special Courts

The offences under the act, for which the punishnent is "imprisonment or fine,
only with the
or with imprisonment or fine or with both" are compoundable
permission of the special court.

1. Write ashort note on National Company Law Tribunal.

2. What are the powers of NCET?
3. What is the composition of NCLT?
4. Differentiate between NCLT and NCLAT.
5. What are the offences triable by special courts?