NCLAT’S JURISDICTION (Syllabus: GS Paper 2 – Governance)

News-CRUX-10     31st October 2023        

Context: Recently, the Supreme Court granted a pardon to the two members of the National Company Law Appellate Tribunal (NCLAT) bench who had been held in contempt of court case.

Background of Issue

  • The origins of the recent action by the Supreme Court can be traced back to a dispute involving Finolex Cables, a prominent participant in the Indian cable and wire industry.
  • The conflict brought before the NCLAT revolved around accusations of corporate mismanagement and various legal matters.

National Company Law Appellate Tribunal (NCLAT)

  • About: This is a quasi-judicial body designed to address civil corporate disputes under the Companies Act, 2013.
  • Establishment: It came into existence on June 1, 2016, in accordance with the Companies Act, 2013.
  • Formation Basis: The formation of this authority was a result of the Balakrishna Eradi committee's recommendations on laws concerning insolvency and company winding-up.
  • Composition: It comprises a President and the necessary complement of Judicial and Technical Members.
  • Functions

o Adjudicating appeals against NCLT orders in accordance with Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC).

o Hearing and resolving appeals related to directives, decisions, or orders issued by the Competition Commission of India (CCI).

o Examining and resolving appeals concerning orders issued by the National Financial Reporting Authority.

Contempt of Courts

  • In India, the offence of contempt of court is committed when a person either disobeys a court order (civil contempt), or when a person says or does anything that scandalizes, prejudices, or interferes with judicial proceedings and the administration of justice (criminal contempt).
  • Contempt of court can be punished with imprisonment or a fine, or both.
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