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CHAPTER
OUERUIEW OF
ADMINISTRATION OF
2
COMPANY LAW
National Company Law Tribunal
National Company Law Appellate Tribunal
> Special Courts
National Company Law Tribunal (NCLT) and National Company
Law Appellate Tribunal (NCLAT)
The Companies Act, 2013 provides for the constitution of the National Company
TAXMANN®
Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT)
and lays down is composition and powers under sections 407 to 434.
National Company Law Tribunal (NCLT) and the National Company Law Appellate
Tribunal (NCLAT) are the quasi-judicial bodies to adjudicate issues and matters
relating to companies in India.)
The Central Government has constituted National Company Law Tribunal (NCLT)
under section 408 ofthe Companies Act, 2013 with effect from 1st June 2016
In the first phase the Ministry of Corporate Affairs has 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. Subsequently more benches at Cuttack, Jaipur, Kochi,
Amravati and Indore have been set up.
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
4. Jurisdiction and powers relating to
Reconstruction.
winding up restructuring and other
such provisions, vested in the High Courts.

21
 COMPANY LAW
22 OVERVIEW OF ADMINISTRATION OF

With the establishment of the NCLT and NCLAT, the Company Law Board under
the Companies Act, 1956 stand dissolved.
The provisions relating to the investigation of a company's accounts, freezing of
assets, class action suits, winding up of companies are governed by the NCIT)
The Tribunal (NCLT) is not bound by the strict judicial rules of evidence and
procedure. It can decide cases by following principles of natural justice. NCL¤T
or "Appellate Tribunal" is an authority provided for dealing with appeals arising
out of the decisions of the Tribunal. Any party dissatisfied by any order of tha
Tribunal may bring an appeal to contest that decision. The Appellate Tribunal
reviews the decisiong of the Tribunal and has power to set aside, modify or
ReConfirm it
The decisions of Appellate Tribuna> can further be challenged in the Supreme
Court.)
Difference between National Company Law Tribunal (NCLT) and National
Company Law Appellate Tribunal (NCLAT)
1. The NCLT has primary jurisdiction whereas NCLAT has appellate
juris
TAXMANN® diction.
2. NCLAT is a higher quasi-judicial(body than NCLT. n
3. Evidence and witnesses are generally
presented before NCLT for taking
the decisions and NCLAT generally reviews decisions of
it on a point of law or fact.
NCLT and checks
4. Fact finding and evidence collection is primarilya task of
the Appellate Tribunal decide cases based on already Tribunal whereas
and witnesses. collected evidence

Composition of the NCLT and NCLAT

The National Company Law Tribunals consist of a President and
Judicial and Technical Members notexceeding sixty-two, as the such number of
deems fit, The qualifications for appointment of the PresidentCentral Government
the Tribunal have been laid down by the Act. and members of
The
Member of the Tribunal shall hold office for a term ofPresident
five
and every other
on which he enters upon his office but shall be years from the date
eligible for re-appointment.
The National Company Law Appellate Tribunal is
members not exceeding eleven for hearing appeals headed by a chairperson and
Tribunal. against the orders of the
Qualification of President and Members [Section 409]
The President shall be a person who is or has
for five years. been a judge of a High Court
 OVERVIEW OF ADMINISTRATION OF COMPANY LAW 23

fudicial MemberO
Ajudicial member shall be person, who -
a is or has been ajudge of a High Court; or
(b is or has been a District Judge for at least five years; or
(c) has for at least ten years as an advocate of a court or held a judicial office
or as member of atribunal.
2/Technical Member
Atechnical member shall be a person who -
has for at least fifteen years been a member of the Indian Corporate Law
Service or Indian Legal Service out of which at least three years as, Joint
Secretary or above; or
is or has been in practice as a chartered accountant for at least fifteen
years; or
(c is or has been in practice as a cost accountant for at least fifteen years;
or

{d) is or has been inpractice as a company secretary for at least fifteen years;
or TAXMANN®
(e) isaperson ofprovenability,integrityand standing having special knowledge
and experience, of not less than fifteen years, in law, industrial finance,
industrial management or administration, industrial reconstruction, in
vestment, accountancy, labour matters, or such other disciplines related
to management, conduct of 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 National Tribunal constituted under the Industrial Disputes
Act, 1947.
Constitution of Appellate Tribunal [Section 410]
The Central Government shall by notification, constitute an National
Law Appellate Tribunal, constituting of a Chairperson and not exceedingCompany,
members for hearing appeals against the orders of the Tribunal) eleven
Qualifications for Appellate Tribunal [Section 411]
The chairpersoh shall be a person who is or has been a Judgeof the
Court orthe Chief Justice of a High Supreme
Court.ol uoan
AJudicial Member shall be a person who is or has been a Judge of a High
or is a Judiciál Member of the Court
ATechnical
Tribunal for five years.
Member shall be a person of proven ability, integrity and standing
havi ng special knowledge and experience, of not less than twenty-five years,
in law,
industrial finance, industrial management or administration, industrial
 COMPANY LAW
ADMINISTRATION OF
24 OVERVIEW OF

or such other o
investment, accountancy, labour matters,
rehabilitation and disciplines
reconstruction,
related to management, conduct of affairs,
revival,
winding
up of companies.
Selection of Memnbers [Section 412]
Tribunal and the chairperson and Judicial Members of the
The President of the consultation with the Chief Justice
shall be appointed after
Appellate Tribunal
of India.
the Technical Members of the Appellata
The Members of the Tribunal andrecommendation of a Selection Commiteo
Tribunal shall bejappointed on the
consisting
of
(a) Chief Justice of India or his nominee Chairperson;
of High Court
(b) a senior Judge of the Supreme Court or a Chief Justice
Member;
(c) Secretary in the Ministry of Corporate Affairs Member;
(d) Secretary in the Ministry of Law and Justice Member; and
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(e) Secretary in the Department of Financial Services in the Ministry of
Finance Member.
The Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection
Committee.
Term of office [Section 413]
The President and every other Member of the Tribunal shall hold office as such
for aterm of five years from the date on which he enters upon his office, but
shall be eligib<e for reappointment for another term of five years.
A Member of the Tribunal shall hold office as such until he attains,
(a) in the case of the President, the age of sixty-seven years; 2
(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
cadre
appointment as Member. The Member may retain his lien with his parent suchfor
or Ministry or Department, as the case may be, while holding office as
a period not exceeding one year.
for a
The chairpersor or a Member of the Appellate Tribunal shall hold officebutshall
term of five years from the date on which he enters upon his office,
be eligible
for re-appointment for another term of five years. attains, -
A Member of the Appellate Tribunal shall hold office as such until he

(a) in the case of the Chairperson, the age of seventy years;

(b) in the case of any other Memnber, the age of sixty-seven years:
 OVERVIEW OF ADMINISTRATION OF COMPANY LAW 25

A person who has not completed fifty years of age shall not be eligible for
appointment as Member. The Member may retain his lien with his parent cadre
or Ministry or Department, as the case may be, while holding office as such for
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,óut of which one shall be a Judicial Member,
and another shall be a Technical Member.
(2Y The Tribunal may, after giving an opportunity of being heard to the parties
thinks fit.
to any proceeding before it, pass such ordersthereon as it
(3) The Tribunal shall(have power to review its own orders.
Tribunal may prefer
(4) Any person aggrieved by an order or decision of the
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 Codeof Civil Procedure, 1908, but shall.be guided
by the principles of natural justice. Subject to the other provisions of this
Act and of any tules made by the Central Government, the Tribunal and
TAXMANN®
the Appellate Tribunal shall have power to regulate their own procedure.
(67 are
Thevested
Tribunal and the Appellate Tribunalshall have the same powers as
in a civil court under the Code of Civil Procedure, 1908 while
trying a suit in respect of the following matters:
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) requiring the discovery and production of documents;
boan (c) receiving evidence on affidavits;
(d) subject to the provisions of the Indian Evidence Act, 1872, requi
hdu sitioning any public record or document or copy of suchrecord or
document from any office;
(e) issuing commissions for thÇ examination ofwitnesses or documents;
) reviewing its decisions;
(g) dismissing a representation for default or deciding it ex parte.
( Any order made by the Tribunal or the Appellate Tribunal may be en-.
forced by that Tribunal in the same manner as ifit were a dcree made,
by acourt in a suit pending therein.
(8) All proceedings before the Tribunal or the Appellate
Tribunal shall be U
deemed to be judicial proceedings within the Indian Penal Code.)
 26 OVERVIEW OF ADMINISTRATION OF COMPANY LAW

(9) No civil court shal have jurisdiction to entertain any suit or proceeding
9 nrespect of any matter which the Tribunal or the Appellate Tribunal is
empowered to determine by or under this Act and no injunction shall be
granted by any court or other authority in respect of any action taken or
under this Act.
to be taken in pursuance of any power conferred by or
Tribunal
(10) Any person aggrieved by any decision or order of the Appellate
days from the date
may file an appeal to the Supreme Court within sixty
Appellate Tribunal to
of communication of the decision or order of the
such decision or order.
him on any question of law arising out of
Powers of National Company Law Tribunal (NCLT)
NCLT are as follows:
Some of the important powers that are presently vested with
1 Declare the liability of members unlimited.elparea
when there is
2. De-registration of companies in certain circumstances
registration of companies is obtained in an illegal or wrongful manner.
3. Remedy of oppression and mismanagement.
a4. Power to hear grievance of refusal of companies to transfer securities
TAXMANN® and rectification of register of members.
5. Protection of the interest of vafious stakeholders, especially non-promoter
shareholders 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 have 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 companý to reopen its accounts or allow the compaty
to revise its financial statement but do not permit reopening of account
The company can itself also approach the Tribunal through its direco
for revision of its financial statement.
Power to investigate or for initiating investigation proceedings. to
provided
investigation can be conducted even abroad. Provisions are with respect
countries
assist investigation agencies and courts of other
to investigation proceedings.
10. Power to investigate into the ownership of the company.
11. Power to freeze assets of the company.
L2rower to impose restriction on any securities of the company
Meeting as
13. If the Company cannot or has not held an Annual General General
Extraordinary
required under the Companies Act or a required General Meetings.
Meeting, then the Tribunal has powers to call for a
 COMPANY LAW 27
OVERVIEW OF ADMINISTRATION OF

14. Power to alter the financial year of a company registered in India.

15. Powers under the Insolvency & Bankruptcy Code, 2016

Special Courts
The Companies Act, 2013 has provision tó form "special courts" for the purpose.
of
providingspeedy trial and disposal ofoffences punishable under the
Act, 2013 with Imprisonment of two years or more. Sections 435 to Companies
COmpanies Act, 2013 contain provisions on the special courts
446 of the

Establishment of Special Court

AS per section 435(1) of the Companies Act, 2013, the
may establish or designate as many special Central Government
provide speedy trial of offences punishable undercourts as may be necessary to
the Companies Act, 2013 with
lmprisonment of two years or more. Provided that all other offences shall be
tried as the case may be by a Metropolitan
of the First Class Magistrate or a Judicial Magistrate
havingurisdiction
any previous company law.
to try any offence under this Act or under
A Special Court shall consist of a single Judge who
/Central Government with the concurrence of the Chiefshall be appointed by the
TAXMANN
Justice of the High Court
within whose jurisdiction the Judge to be appointed is working [Section 435(2)]
The Judge offa "special court" must be a person holding an office of a Sessions
Judge or an Additional Sessions Judge. [Section 435(3)].
In exercise of the powers conferred by the Companies At, the Central 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,
Madhya Pradesh,Chhattisgarh, West Bengal, Gujarat, Rajasthan, Punjab, Manipur,
Meghalaya and Union territory of Andaman and Nicobar Islands, and Dadra and
Nagar Haveliand Daman and Diu, Chandigarh, Puducherry, Delhi and Coimbatore
(Tamilnadu) have been designated as Special Courts for the purposes of trying
courts
offences under the Companies Act, 2013. As per the notification, these
punishable under the
have been designated for the purposes of trial of offencesmore.
Companies Act, 2013 with imprisonment of 2 years or

Offences triable by SpecialCourts

provisions of the Companies Act, 2013 (Section 36A), following
As per the Special-Courts:
offences are triable by Code of Criminal Procedure.
Notwithstanding anything contained in the
1973 (2 of 1974)] punishable with imprisonment
l offences under this Act which are shallbe triable only by the
(a) All than three years
for a term of more
28 OVERVIEW OF ADMINISTRATION OF COMPANY LAW

has been
Special Court constituted for the area in which the offence one for
committed or where there are more Special Courts than behalf
specified in this
such area, by such one of them as may be
by the Government;
of the commission of an
(b) Where a person accused of or suspectedMagistrate under sub-sec.
offence under this Act is forwarded to a
the Code of Criminal
tion (2) or sub-section (2A) of section 167 of may authorise the
Procedure, 1973 (2 of 1974), such Magistrate thinks fit for a
detention of such person in such custody as he
period not exceeding fifteen days in the whole where such Magistrate
whole where such
is a Judicial Magistrate and seven days in the
Magistrate is an Executive Magistrate:
Provided that in cases which are triable by theSpecial Court where
such Magistrate considers
0 when such person is forwarded to him as aforesaid; or
(ii) 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
der such person tÕ be forwarded to the Special Court having
SEURe jurisdiction;
(c The Special Court 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;
o dy A Special Court may, (upon perusal of police report of the facts
constituting an offence under this Act or upon complaint made
dae 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 trial.
(2) When tryingan offence under this Act, a Special
Court may also try an
offence other than an offence under this Act with which
under the Code of Criminal Procedure, 1973, be charged the accused may
at the same trial,
(3) Nothing contained in this section shall be
deemed to affect the special
powers of the High Court regarding bail under section 439 of the Code ol
Criminal Procedure, 1973, and the High Court may
including the power under clause (b)of sub-section exercise such powers
(1) of that section a5
if the reference to "Magistrate" in that section
to a Special Court constituted under included also a reference
section 36.
 OVERVIEW OF ADMINISTRATION OF COMPANY LAW
29

(4) In respect of persons açcused of an offence punishable under section

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 thereofto "ninety days", where they occur, shall
be construed as reference to /'one hundred and eighty days":
Provided that, ifit is not possible to complete the investigation withinthe
said period ofone hundred and eighty days, the Special Court may extend
the said period up to one year on the report of the Public Prosecutor
indicating the progress af the investigation and the specific reasons for
the detention of the accused beyond the said period of one hundred and
eighty days.
(S) Notwithstanding anything contained in the Code of Criminal Procedure,
1973, the offences punishable under this Act with imprisonment for a
term of not more than three years may be tried summarily.J
Appeal/Revisions from Special Courts to HighCourts
For appeal and revision, (the High Court have been granted jurisdiction, as if
the Special Court within the local limits of the jurisdiction of the High Court
TAXMANN®
were a Court of Session trying cases within the local limits of the jurisdiction
of the High Court.

Compounding under Special Courts

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

REVIEW QUESTIONS
1. Write a short note on National Company Law Tribunal.
2. What are the powers of NCLT?
3. What is the composition of NCLT?
4. Differentiate between NCLT and NCLAT.
courts?
5. What are the offences triable by special