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What is NCLT and its function?

National Company Law Tribunal (NCLT) and its Functions

Introduction to NCLT

The National Company Law Tribunal (NCLT) is a quasi-judicial body established under the Companies Act, 2013 in India. It was formed to consolidate and replace multiple tribunals and forums, such as the Company Law Board (CLB), the Board for Industrial and Financial Reconstruction (BIFR), and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). NCLT is a significant judicial institution that plays a crucial role in matters related to corporate laws, company disputes, and insolvency and bankruptcy proceedings.

Establishment and Composition of NCLT

The NCLT was constituted by the Ministry of Corporate Affairs (MCA) through a notification issued on June 1, 2016. It has various benches located in different cities across India. The composition of NCLT consists of judicial and technical members. The judicial members are retired judges of the High Court or Supreme Court, while the technical members are professionals with expertise in fields like law, finance, management, or accountancy.

Jurisdiction of NCLT

The NCLT has extensive jurisdiction over matters concerning companies, including cases related to insolvency, mergers and acquisitions, oppression and mismanagement, winding up, and various other corporate disputes. It has the power to adjudicate cases involving both public and private companies, as well as limited liability partnerships (LLPs).

Functions and Powers of NCLT

  1. Adjudication of Corporate Disputes: One of the primary functions of the NCLT is to adjudicate corporate disputes and provide a platform for the resolution of such disputes in a fair and impartial manner. It has the power to hear and decide cases related to oppression and mismanagement, class actions, and derivative actions.
  2. Approval of Mergers and Acquisitions: The NCLT plays a crucial role in overseeing the process of mergers and acquisitions (M&A) involving companies. It has the power to sanction schemes of arrangement, amalgamation, or compromise between companies. The NCLT ensures that such M&A activities are conducted in accordance with the law and in the best interests of the stakeholders involved.
  3. Insolvency and Bankruptcy Proceedings: With the introduction of the Insolvency and Bankruptcy Code, 2016, the NCLT has been entrusted with the responsibility of handling insolvency and bankruptcy cases. It acts as an adjudicating authority for initiating and overseeing the resolution process of insolvent companies and individuals. The NCLT has the power to admit or reject insolvency applications, appoint insolvency professionals, and monitor the entire insolvency resolution process.
  4. Winding up of Companies: The NCLT has the authority to hear and decide petitions for winding up of companies. It can order the winding up of a company if it is unable to pay its debts or if it is just and equitable to wind up the company. The NCLT ensures a systematic and legal process for the winding up of companies, protecting the interests of creditors and other stakeholders.
  5. Conversion of Companies: The NCLT also deals with matters related to the conversion of companies. It can allow companies to convert from one form to another, such as from a private company to a public company or vice versa, subject to compliance with the applicable provisions of the Companies Act.
  6. Investigation and Prosecution: The NCLT has the power to order investigations into the affairs of a company if it believes that the company’s affairs have been conducted in a fraudulent or unlawful manner. It can direct the Serious Fraud Investigation Office (SFIO) or any other investigative agency to conduct such investigations. Based on the investigation report , the NCLT can initiate prosecution against the individuals or entities involved.
  7. Review of Decisions: The NCLT has the authority to review its own decisions and rectify any mistakes or errors. Parties aggrieved by the orders of the NCLT can file appeals before the National Company Law Appellate Tribunal (NCLAT) and, subsequently, before the Supreme Court of India.

Procedural Aspects of NCLT

The NCLT follows a prescribed procedure for the filing and disposal of cases. Any person or entity aggrieved by an order, decision, or resolution can approach the NCLT by filing a petition or an application, as per the nature of the case. The NCLT has its own set of rules and regulations, known as the National Company Law Tribunal Rules, 2016, which lay down the procedure for the conduct of proceedings before the tribunal.

The filing fee and other procedural requirements differ depending on the nature of the case. The NCLT has the power to condone delays in filing applications or petitions, provided sufficient cause is shown. It conducts hearings and gives parties an opportunity to present their arguments and produce evidence in support of their claims. The NCLT has the authority to pass orders, issue directions, and make necessary provisions to ensure effective resolution of disputes.

Challenges and Impact of NCLT

The establishment of the NCLT has brought about significant changes in the corporate legal landscape of India. However, it has also faced certain challenges. The NCLT benches are burdened with a large number of cases, leading to delays in the disposal of matters. The infrastructure and manpower at various NCLT benches need further improvement to handle the increasing workload effectively.

Nevertheless, the NCLT has played a crucial role in promoting a more streamlined and efficient resolution process for corporate disputes and insolvency cases. It has provided a specialized forum for resolving complex legal issues and has helped in reducing the burden on the regular courts. The NCLT’s decisions have had a significant impact on the corporate sector, shaping the jurisprudence and providing clarity on various legal provisions.


The National Company Law Tribunal (NCLT) is an important quasi-judicial body established under the Companies Act, 2013. With its wide jurisdiction and diverse functions, the NCLT plays a crucial role in adjudicating corporate disputes, overseeing insolvency proceedings, approving mergers and acquisitions, and ensuring compliance with the law. Despite some challenges, the NCLT has emerged as a key institution in India’s corporate legal system, contributing to the effective and efficient resolution of complex corporate matters.

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