NATIONAL COMPANY LAW TRIBUNAL (Syllabus: GS Paper 3 - Economy)

News-CRUX-10     14th August 2023        
output themes

Context: Benches of the National Company Law Tribunal (NCLT) should not get into questioning a company’s default once it is established by the creditors, particularly financial creditors, for admission to the corporate insolvency process. 

  • This is one of the key themes of the draft guidelines for the NCLT, which are being finalised by the Ministry of Corporate Affairs (MCA).

National Company Law Tribunal

  • It is a quasi-judicial body in India that adjudicates issues relating to Indian companies.
  • The tribunal was established under the Companies Act 2013 and was constituted on 1 June 2016 by the government of India and is based on the recommendation of the V. Balakrishna Eradi committee on law relating to the insolvency and the winding up of companies.
  • All proceedings under the Companies Act, including proceedings relating to arbitration, compromise, arrangements, reconstructions and the winding up of companies shall be disposed off by the National Company Law Tribunal. 
  • The NCLT bench is chaired by a Judicial member who is supposed to be a retired or a serving High Court Judge and a Technical member who must be from the Indian Corporate Law Service, ICLS Cadre.
  • The National Company Law Tribunal is the adjudicating authority for the insolvency resolution process of companies and limited liability partnerships under the Insolvency and Bankruptcy Code, 2016.
  • The National Company Law Tribunal has the power under the Companies Act to adjudicate proceedings:
    • Initiated before the Company Law Board under the previous act (the Companies Act 1956);
    • Pending before the Board for Industrial and Financial Reconstruction, including those pending under the Sick Industrial Companies (Special Provisions) Act, 1985;
    • Pending before the Appellate Authority for Industrial and Financial Reconstruction; and
    • Pertaining to claims of oppression and mismanagement of a company, winding up of companies and all other powers prescribed under the Companies Act.