Published on: 27 Feb, 2026 13]5:17 IST
By Surbhi Jain
Introduction
In India, miscellany bodies act as an expeditious and advantageous alternative to Courts of law, with additions to the list being the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).
As the two tribunals have been recently established with an aim to regulate and resolve disputes between civil corporations, there is not much awareness about quasi-judicial body like these.
Meaning
The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) is a successor of the Company Law Board which was set up under the Companies Act, 1956.
It was established by the Central Government in the year 2016 under section 408 of the companies Act 2013, which was recommended by the V.Balakrishna Eradi Committee and it was later constituted on June 1, 2016. Since then a difference could be witnessed in the functions and powers of NCLT under the previous Companies Act and present Act of 2013.
The government has appointed 11 benches all over India with the Appellate Tribunal located in New Delhi. Members of this Tribunal are selected by a selection committee headed by the secretary of the Corporate Affairs Ministry (MCA).
NCLT
National Company Law Tribunal is a Quasi-judicial authority incorporated to deal with the corporate disputes which are of civil nature and are aroused under the Companies Act.
NCLT is authorized to work in the footsteps of the normal court of law in the country and is obliged to fairly and without any biases regulate the facts of every case and to decide each matter in accordance with principles of natural justice.
The Order formed by NCLT assists to resolve a situation, correct a wrong done by and corporate, can put penalties, and has the power to alter the rights, duties, obligations, privileges of the concerned parties.
STRUCTURE OF NCLT
THE QUALIFICATIONS OF THE PRESIDENT AND MEMBERS OF NCLT
PRESIDENT
The president of the NCLT must have served as a Judge of the High Court for at least 5 years and should be at least 50 years old, but not more than 67 years.
JUDICIARY MEMBER
A judicial member of the NCLT must have served as a Judge for at least 5 years or must have served as a district judge for 5 years and above or must have been an advocate with over 10 years experience. He/she must be at least 50 years old but not more than 65 years.
TECHNICAL MEMBERS
A Technical Member of the NCLT can be any of the following:
- Someone that must have served as a member of the Indian Corporate Law Services for at least 15 years.
- Someone that must have practised CA for at least 15 years.
- Someone that must have practised CS for at least 15 years.
- Someone that must have practised CMA for at least 15 years.
- Someone that must have served as a presiding officer of Tribunal or Labour Court National Tribunal for at least 5 years.
- Must be somebody with integrity and should be above 50 years old but not more than 65 years as of the time of appointment.
TERMS OF OFFICE OF THE PRESIDENT AND THE MEMBERS OF NCLT
PRESIDENT
The NCLT president can only serve for a period of 5 years from the appointment date and can be re-appointed for another 5 years.
JUDICIAL MEMBER
The NCLT Judicial members can only serve for a period of 5 years from the appointment date and can be re-appointed for another 5 years.
TECHNICAL MEMBER
The NCLT Technical Members can only serve for a period of 5 years from the appointment date and can be re-appointed for another 5 years.
NCLAT
An appeal against the decision of NCLT can be filed at National Company Law Appellate Tribunal (NCLAT). This Authority was formed under the Companies Act, 2013, for hearing appeals against the judgment given by NCLT Judgement.
It also entertains the appeals against the orders passed by the Insolvency and Bankruptcy Board of India (IBBI). And if still, someone is not satisfied with the decision given out by NCLAT, one can appeal in front of the Supreme Court of India.
STRUCTURE OF NCLAT
THE QUALIFICATIONS OF THE CHAIRPERSON AND MEMBERS OF NCLAT
CHAIRPERSON
The NCLAT chairman must have served as a Judge of the Supreme Court or as a Chief Justice of the High Court and should be at least 50 years old but not more than 70 years.
JUDICIAL MEMBER
An NCLAT judicial member must have served as a Judge of the High Court or must have been a judicial member of the Tribunal for at least 5 years and must be at least 50 years but not more than 67 years.
TECHNICAL MEMBER
A Technical Member of the NCLAT must be someone with integrity and must have 25 years of special knowledge or experience in specialist areas. He/she must be at least 50 years but not more than 67 years.
NCLT HOURS OF SITTING
The National Company Law Tribunal is usually open from 9:30 A.M to 6 P.M on all working days, except on Saturdays, Sundays and Public holidays.
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.
Background of NCLT
The need for a uniform code for adjudicating corporate disputes was first suggested by the Justice Eradi Committee which was set up by Central Government in the year 1998 for reforming the law related to insolvency of companies and winding up.
The Committee submitted its report in the year 2000 and as per the recommendation of the Committee, Companies (Second Amendment) Act, 2002 was passed and the amendment stated that there is a need to constitute National Company Law Tribunal and National Company Law Appellate Tribunal which will act as a Uniform body for Adjudicating Corporate Disputes.
There were various legal challenges to it and the constitution of NCLT and NCLAT under Companies (Second Amendment) Act, 2002 were challenged on ground that it is unconstitutional.
However, the constitution bench of Supreme Court in the case of Union of India v. R. Gandhi[1] upheld the constitutionality of NCLT and NCLAT by giving guidelines relating to number of judicial members, number of technical members and tenure of members to be followed during the constitution of NCLT and NCLAT.[2]
Though the Union Government did not notify the Constitution of NCLT and NCLAT and instead incorporated it by way of Companies Act, 2013, even then another legal challenge came in way of establishment of NCLT and NCLAT in the case of Madras Bar Association vs. Union of India & Anr[3]where the petitioners challenged the constitution of NCLT and NCLAT under Companies Act,2013 on ground that the constitution of NCLT and NCLAT does not incorporate and follow the guidelines given by Hon’ble Supreme Court in the case of Union of India v. R. Gandhi.
The Supreme Court of India upheld the constitutionality of NCLT and NCLAT and stated that following Guidelines needs to be followed while constituting NCLT and NCLAT:
- Qualifications and other terms of the President and Members of the NCLT
The Supreme Court was concerned with the qualifications of the technical Members of the NCLT as the court in the case of Union of India v. R. Gandhi stated that “only officers who are holding the ranks of Secretaries or Additional Secretaries alone should be considered for appointment as technical members of the NCLT” whereas Section 409(3) of Companies Act, 2013 Act states that Secretary to the Government of India or equivalent officers are eligible for appointment as technical members of NCLT and NCLAT.
Therefore, SC stated that corrections need to be made to Section 409(3) of Companies Act,2013 so that it follows guidelines made in Union of India v. R. Gandhi.
- Structure of selection committee for the appointment of members
Supreme Court was concerned with selection committee and powers granted to it under S. 412 (2) Of 2013 act which provided for a 5-member selection committee without a casting vote to the Chief Justice of India (or nominee) as it was against observations made by SC in sub-para (viii) of para 120 of Union of India v. R. Gandhi where it stated a 4-member committee to be headed by the Chief Justice of India (or nominee) with a casting vote.
And it thus it held Section 412(2) of the Act, 2013 were not valid and issued direction is issued to remove the defect.
Transition from CLB to NCLT and NCLAT
As seen earlier the Journey from Company Law Board (“CLB”) to National Company Law Tribunal (“NCLT”) has not been smooth and has been full of legal challenges in various cases as well as procedural bottlenecks.
Even after legal challenges were overcome by the Judgement of Supreme Court in the case of Madras Bar Association vs. Union of India & Anrwhere the Apex Court held that constitution of both NCLT and NCLAT is constitutionally valid and under Indian Constitution, it is open for the legislature to establish tribunals as alternatives to the Courts as a forum for adjudication on specialized matters, provided the tribunal in question has all qualitative trappings and competence of the court sought to be replaced.
Even then there were questions regarding the status of pending matters before CLB, BIFR, AAIFR and matters relating to company’s accounts, freezing of assets, class action suits, conversion of a public company to a private company which were pending at different High Courts, when their jurisdiction was transferred to NCLT, the power from existing bodies to NCLT and NCLAT was transferred gradually by the way of notification.
However, cases initiated before the CLB under Companies Act, 1956 were immediately transferred to the NCLT.
- Proceedings pending before the Board for Industrial and Financial Reconstruction (BIFR), Sick Industrial Companies (Special Provisions) Act, 1985 (SIC Act”) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR)would be abated and need to be referred to NCLT within 180 days of the formation of NCLT for the continuance of old proceedings.
- Competition Appellate Tribunal (“COMPAT”) which used to deal with the appeal of orders passed by the Competition Commission of India which has been bestowed upon NCLAT by the passage of Part XIV of Chapter VI of the Finance Act, 2017. This exercise was done with an intention to rationalise the working of tribunals. Though there have been concerns over increasing load over NCLAT, the government has gone ahead with it. A possible solution could be having a dedicated bench at NCLAT to oversee appeals from the Competition Commission of India.
Case law
Tata Vs Cryrus Mistry[4]
The Supreme Court observed that unless the removal of a person as a chairman of a company is oppressive or mismanaged or done in a prejudicial manner damaging the interests of the company, its members or the public at large, the Company Law Tribunal cannot interfere with the removal of a person as a Chairman of a Company in a petition under Section 241 of the Companies Act, 2013.
The court held that mere removal of a person as Chairman of the Company is not a subject matter under Section 241 unless it is shown to be “oppressive or prejudicial”. The Court held that Sections 241 and 242 of the Companies Act, 2013 do not specifically confer the power of reinstatement.
Therefore, The Supreme Court set aside the December 18, 2019 order of the National Company Law Appellate Tribunal (NCLAT) to reinstate Cyrus Mistry as executive chairman of Tata Sons.
The bench also held that there was never a case, to begin with, the only dispute that arise was the removal of Cyrus Mistry as chairman of Tata Sons Limited and the companies were padding up their actual grievance with various historical facts.
Conclusion
NCLT and NCLAT have been established to act as a uniform forum for adjudicating disputes relating to working of companies where adjudicating it in a timely manner will help in smooth running of the economy. The earlier regime of the Company Law Board failed miserably because they were not useful in adjudicating disputes in an effective and time bound manner.
The earlier regime had a lot of bottlenecks which did not help to revive Sick Companies and instead led to prolongation of cases. Though NCLT and NCLAT are doing great work in streamlining the system, a lot more needs to be done.
There is a need for improving the infrastructures at these Tribunals, increasing the Number of Benches as well as sanctioning of judges which will help in deciding cases in a time bound and effective manner and thus would reduce precious time and resources of companies which can be used by companies in growth of economy of India.
- Union of India v. R. Gandhi [2010] 11 SCC 1 ↑
- .indialawjournal.org ↑
- Madras Bar Association vs. Union of India & Anr (2015) 8 SCC 583 ↑
- Tata Vs Cyrus Mistry 26 March 2021 ↑