National Company Law Appellate Tribunal

The National Company Law Appellate Tribunal (NCLAT) is a significant institution in India’s corporate legal landscape. Since its inception in 2016, the NCLAT has played a vital role in adjudicating appeals related to company law, insolvency, competition law, and financial reporting matters. 

What is the National Company Law Appellate Tribunal (NCLAT)?

The NCLAT is a specialised appellate tribunal constituted by the Central Government under Section 410 of the Companies Act, 2013. It was formally established on 1st June 2016. The primary function of the NCLAT is to hear appeals against the orders passed by the National Company Law Tribunal (NCLT).

Besides company law appeals, the NCLAT also has jurisdiction to hear appeals arising out of insolvency and bankruptcy cases under the Insolvency and Bankruptcy Code (IBC), 2016. Moreover, it hears appeals against the orders passed by the Competition Commission of India (CCI) and the National Financial Reporting Authority (NFRA).

The establishment of the NCLAT was part of a larger effort to reform and streamline India’s corporate dispute resolution system. Earlier, various matters relating to companies, insolvency, and competition were dealt with by different bodies and courts, leading to delays and fragmented adjudication. The NCLAT aims to provide a specialised, single-window appellate forum, making justice delivery faster and more efficient in these complex areas of law.

Historical Background and Need for NCLAT

Before the establishment of the NCLAT and NCLT, company-related disputes were dealt with by bodies like the Company Law Board (CLB) and different courts. The CLB’s processes were often criticised for being slow and ineffective in resolving disputes, particularly those involving sick or insolvent companies.

The Insolvency and Bankruptcy Code (IBC), enacted in 2016, further highlighted the need for a dedicated judicial forum to handle appeals against insolvency-related decisions. Additionally, the Competition Appellate Tribunal (COMPAT), which handled appeals in competition law matters, was merged into the NCLAT to consolidate related appellate functions.

The NCLAT’s creation has been driven by key objectives:

• To establish a single forum for appeals related to company law, insolvency, and competition law.
• To reduce delays by offering specialised adjudication.
• To reduce the burden on High Courts and other judicial bodies.
• To enhance ease of doing business by providing clarity and speed in resolving disputes.

Legal Framework and Establishment of NCLAT

The NCLAT is constituted under Section 410 of the Companies Act, 2013. The section empowers the Central Government to establish the tribunal by notification. The tribunal started functioning from 1st June 2016.

Subsequently, amendments to various laws expanded the NCLAT’s jurisdiction:

• The IBC (Insolvency and Bankruptcy Code), 2016 granted the NCLAT appellate powers over orders from the NCLT on insolvency cases.
• The Finance Act, 2017 amended Section 410 to give the NCLAT appellate jurisdiction over orders of the Competition Commission of India (CCI).
• The Companies (Amendment) Act, 2017 brought appeals against the National Financial Reporting Authority (NFRA) orders under NCLAT’s jurisdiction.

Importantly, Section 430 of the Companies Act bars civil courts from entertaining any suit or proceeding on matters within the NCLAT’s jurisdiction, thus reinforcing its exclusive appellate role.

Composition of the NCLAT

The NCLAT consists of:

• Chairperson
• Judicial members
• Technical members

The total number of members shall not exceed eleven.

Chairperson

The chairperson must be either a serving or retired judge of the Supreme Court of India or a Chief Justice of a High Court. The chairperson holds office for a term of five years or until attaining the age of 70 years, whichever is earlier.

Judicial Members

Judicial members are generally those who have served as judges at the High Court or have considerable judicial experience (at least five years as a district judge or ten years in any judicial capacity). The retirement age is 67 years, and the term of office is five years.

Technical Members

Technical members are persons with expertise and experience in specialised areas such as law, industrial finance, accountancy, management, labour matters, corporate revival, or insolvency. They must have at least 25 years of experience in their respective fields.

Appointment and Qualifications of Members

Appointment Process

• The Chairperson and judicial members are appointed by the Central Government in consultation with the Chief Justice of India.
• Technical members are appointed based on recommendations from a Selection Committee consisting of:
  • Chief Justice of India (or nominee) as Chairperson
  • Senior Supreme Court or High Court judge
  • Secretary, Ministry of Law and Justice
  • Secretary, Department of Financial Services, Ministry of Finance
• The Secretary of the Ministry of Corporate Affairs acts as the convener.
  

Qualifications Summary

Tenure, Resignation and Removal

• The Chairperson and members hold office for five years and may be reappointed for another five-year term.
• Members can resign by submitting a notice to the Central Government.
• The Central Government may remove members for insolvency, conviction of moral turpitude, incapacity, or misconduct. Such removal requires an inquiry conducted by a Supreme Court judge appointed by the Chief Justice of India, and the member is entitled to a fair hearing.

Jurisdiction of the NCLAT

NCLAT’s jurisdiction is wide-ranging and includes:

Appeals against NCLT Orders

• Company law matters (under Companies Act, 2013)
• Insolvency and Bankruptcy Code, 2016 matters (Section 61 appeals)

Competition Law Appeals

Appeals against orders of the Competition Commission of India (CCI)

Financial Reporting Appeals

Appeals against orders passed by the National Financial Reporting Authority (NFRA)

Advisory Powers

It can provide opinions to the President of India on legal questions referred to it.

Powers of the NCLAT

The NCLAT is a quasi-judicial body with powers similar to a civil court under the Code of Civil Procedure, 1908. These include:

• Summoning and examining witnesses
• Requiring the production of documents
• Receiving evidence on affidavit
• Issuing commissions for examination of witnesses
• Enforcing its orders as if they were decrees of a civil court

Moreover, orders of the NCLAT can be sent to district courts for execution.

Procedure to Institute an Appeal

Appeals to the NCLAT must follow prescribed procedural rules, including:

• Language: Documents should be in English, or accompanied by a certified English translation.
• Format: Appeals should be typed, double spaced, paginated, indexed, and properly bound.
• Copies: Three authenticated copies are required, along with one copy for each opposing party.
• Contents: The appeal should clearly specify the parties involved, legal provisions under which the appeal is filed, facts, grounds of appeal, and relief sought.
• Fees: The appropriate filing fee must accompany the appeal.
• Service: Copies of the appeal must be served to all opposite parties.

The NCLAT Registry handles filing and verification of appeals, ensuring all procedural requirements are met before the appeal is admitted for hearing.

NCLAT as Competition Law Appellate Tribunal

Before the NCLAT’s establishment, the Competition Appellate Tribunal (COMPAT) was the appellate authority for CCI orders. The COMPAT was merged with NCLAT in 2017, expanding its jurisdiction.

The NCLAT now handles all competition-related appeals, dealing with important cases that affect market practices and corporate behaviour in India.

Distinction Between NCLT and NCLAT

Perjury in NCLAT Proceedings

Perjury, or giving false evidence under oath, is a serious offence in NCLAT proceedings. The tribunal is considered a “court” under the Criminal Procedure Code for this purpose. Complaints of perjury can be filed before the Magistrate after a preliminary investigation, ensuring the integrity of the judicial process.

Conclusion

The National Company Law Appellate Tribunal is an indispensable pillar of India’s corporate legal framework. It offers a unified appellate forum that strengthens the corporate ecosystem through swift, expert and consistent decisions. As India’s business environment evolves, the NCLAT’s role will only grow in importance, making it essential for all stakeholders to understand its constitution, jurisdiction, powers, and procedures.