The article is written by Shriya Singh. It aims to discuss in detail the constitution, powers, advantages, composition, jurisdiction, etc. of the National Company Law Appellate Tribunal. The article also covers a few of the significant judgments produced by the Appellate Tribunal and some related FAQs.

Table of Contents

Introduction 

When the world transitioned from a police state to a welfare state, the responsibilities of the state increased. Thus, the bifurcation of the judicial system happened which gave light to the existence of tribunals. Tribunals are quasi-judicial institutions that are set up in order to deal with various subjects of law, such as administrative problems, tax-related disputes, etc. It helps to overturn the pendency of cases and reduce the workload on various courts. 

The term tribunal derives its term from the word “tribunes” which means ‘Magistrates of the Classical Roman Republic’. It has all the trappings of the court but it does not strictly follow any rule of evidence which came into existence to combat the pressure on the traditional courts. There is no procedure per se that is required to be followed by the tribunals in a straight-jacket manner but they abide by the principles of the law of natural justice. A lot of tribunals have been established such as the Industrial Tribunal, Revenue Tribunal, Election Tribunal, Rent Control Tribunal, etc. 

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In an infamous case of Bharat Bank Ltd. vs. Employees of the Bharat Bank (1950), the Supreme Court of India observed that the basic test of the tribunal is that it is an adjudicating authority other than a court vested with the judicial powers of the state under a statute or statutory rule. 

Among all the other types of tribunals which are dedicated to a particular section of the law, there exist appellate tribunals to deal with the appeals against the Judgments of the tribunals. In this article, we will understand the National Company Law Appellate Tribunal (NCLAT) in great detail, let us delve into it.

What is the National Company Law Appellate Tribunal (NCLAT) 

The NCLAT is an appellate tribunal formed in order to hear appeals of the aggrieved against the orders of the National Company Law Tribunal (NCLT). It was constituted under Section 410 of the Companies Act, 2013 (hereinafter, referred to as Act, 2013) and it came into effect from 1st June, 2016.

The NCLAT plays a crucial role in providing a forum for parties aggrieved by the decisions of the NCLT to seek redressal and ensure that justice is served. It aims to expedite the resolution of corporate disputes and promote transparency and efficiency in the corporate governance and insolvency processes in India.

Overall, the NCLAT is an important institution in the Indian legal system that adjudicates on appeals related to company law matters and plays a significant role in shaping corporate jurisprudence in the country.

Jurisdiction of the National Company Law Appellate Tribunal (NCLAT)

The NCLAT is not only a company law appellate tribunal but also an appellate tribunal for hearing appeals against the orders passed by the NCLT under Section 61 of the Insolvency and Bankruptcy Code, 2016. This came into effect from 1st December, 2016.

Further, the NCLAT is also the appellate tribunal for an aggrieved against the orders of the Competition Commission of India (CCI). This was led to by an amendment to Section 410 with effect from 26th May 2017 through Section 172 of the Finance Act, 2017.

Additionally, the NCLAT also hears and disposes of appeals of the aggrieved against the orders of the National Financial Reporting Authority. Section 83 of the Companies(Amendment) Act, 2017 brought this amendment to Section 410 and it came into effect from 7th May, 2018.

Section 430 of the Act, 2013 provides that there shall be no jurisdiction of a civil court to hear any suit or proceeding to any matter which the NCLAT has been authorised to determine by or under this Act or any other law for the time being in force. The profession further states that no injunction shall be granted by any Court or other authority in respect of any action that is taken or that ought to be taken by the NCLAT in pursuance of any power conferred on it by or under this Act or any other law for the time being in force. 

Need for the establishment of the National Company Law Appellate Tribunal (NCLAT)

As we all know there were courts existing in order to cater to the disputes, appeals and related matters with regards to the matters that are now taken up by the NCLT and NCLAT. The constitution of both such tribunals and other tribunals was a step towards improving the ease of doing business by bringing all the aspects of particular legal matters under one roof. All the aspects of company law matters were brought under the NCLT and NCLAT. 

Let us understand the need for the establishment of the National Company Law Appellate Tribunal (NCLAT) that arises from several critical factors.

The most significant and prominent advantage of NCLAT is there is a single window for the settlement of all company or related disputes effectively. Because of this, the multiplicity of proceedings before various other authorities or courts is avoided easily. 

  • Due to the mandate to dispose of cases as expeditiously as possible, the whole process becomes a speedy one under the NCLAT. It will not only save time but also the energy and money of the parties. 
  • Another important reason is that it reduces the work of the High Courts. We are all aware of the fact that there are a high number of pending cases before the High Courts. The matters of compromise, arrangement, amalgamation, winding up, etc. now come within the ambit of NCLT and NCLAT, thus, reducing the work of already overburdened High Courts. 

Functions of the National Company Law Appellate Tribunal (NCLAT)

The major functions of the NCLAT are as follows – 

  • It acts as a link between the NCLT and the Supreme Court of India in respect of the appeals in matters it adjudicates or which come within its jurisdiction.
  • It primarily hears appeals that are filed against the orders of the NCLT. It serves as an appellate authority to the NCLT. 
  • It also plays a crucial role in matters related to insolvency and bankruptcy as it hears appeals for such matters. 
  • It also has its jurisdiction over the appeals that are related to the competition law cases as it hears appeals against the decisions made by the CCI. 
  • It also exercises its authority to review its own orders and the orders that are passed by the NCLT. 
  • It also enjoys advisory jurisdiction when a legal issue has been referred to it by the President of India for opinions and advice.

NCLAT being a quasi-judicial body is responsible for interpreting and applying legal principles towards the cases that are brought before it and thus plays a crucial role. 

Are proceedings of NCLAT judicial in nature

The proceedings of the NCLAT can be considered judicial proceedings. As the NCLAT is a quasi-judicial body established under the Act, 2013 and it functions as an appellate tribunal to hear appeals against the orders of the NCLT.

The NCLAT has the power to accord approval, sanction, consent, confirmation, or recognition in relation to various matters under the Companies Act. It has the authority to regulate its own procedures and has powers similar to those vested in a civil court under the Code of Civil Procedure, 1908. These powers include summoning and examining witnesses, requiring the production of documents, receiving evidence on affidavits, issuing commissions, and more.

Furthermore, any order made by the NCLAT can be enforced in the same manner as a decree made by a court in a suit. The NCLAT can send its orders for execution to the court within the local limits of the jurisdiction where the registered office of the company against which the order is made is situated. The NCLAT follows specific procedures for the institution of appeals, including the presentation of appeals in English or translated into English, the format of pleadings, and the description of parties involved in the appeal.

Thus, it is understood that the tribunal’s quasi-judicial nature, its powers, and the enforcement mechanisms available for its orders. The NCLAT plays a crucial role in the adjudication of appeals related to company law matters and ensures that justice is served in accordance with the provisions of the Act, 2013.

Constitution of the National Company Law Appellate Tribunal (NCLAT)

It was on the recommendations of the Justice Eradi Committee that the journey of the Company Law Board (governed by the Companies Act, 1956) came to an end and eventually NCLAT was established. The committee was set up on law relating to insolvency and winding up of the companies and it led to the setup of the tribunal, a specialised institution for corporate justice. 

Finally, the NCLAT was constituted under Section 410 of the Companies Act, 2013 by the Central Government. The provision purports that the Central Government will establish, by notification, an appellate tribunal which would be known as the NCLAT. Such establishment would be effective on the date that may be specified in such notification. It further states that the tribunal will hear appeals against the orders of the NCLT or the National Financial Authority and will be composed of a chairperson and as many judicial and technical members as it deems appropriate. It was further prescribed that it should not exceed eleven members, appointed by notification by the Central Government.

In light of the above provision, it is noteworthy that the Central Government established the NCLAT, by notification, effective from 1st December 2016.

Composition of National Company Law Appellate Tribunal (NCLAT)

The NCLAT shall consist of a chairperson and as many judicial and technical members as the Central Government deems appropriate. However, the number of judicial and technical members shall never be more than eleven. 

Within the meaning of Section 21 of the Indian Penal Code, 1860, as per Section 427 of the Act, 2013, the chairperson, members, officers and other employees of the NCLAT shall be deemed to be public servants. 

Let us understand the structure of the NCLAT in depth. 

Selection of the members

Section 412 of the Act, 2013 provides that upon consultation with the Chief Justice of India, the chairperson and judicial members of the NCLAT shall be appointed. 

The provision further states that the technical members of the NCLAT are appointed upon the recommendations provided by the Selection Committee. The Selection Committee consists of- 

  • Chief Justice of India or his nominee, who acts as the chairperson of the committee, and 
  • The following would be the members of the Committee –
  1. A senior most judge of the Supreme Court or the Chief Justice of a High Court,
  2. Secretary in the Ministry of Law and Justice, and
  3. Secretary in the Department of Financial Services in the Ministry of Finance.

Additionally, the provision states that the convener of the selection committee shall be the secretary of the Ministry of Corporate Affairs.

Furthermore, it is provided that the Selection Committee will determine its own procedure for the recommendation of the members. 

Also, it is really significant to note that any vacancy or other deficiency in the composition of the NCLAT shall not render an appointment of the NCLAT invalid. 

Qualification of members of the NCLAT

The qualifications of the chairperson and members of the NCLAT are provided under Section 411 of the Act, 2013.

The position of chairperson can be served by 

  • A judge of the Supreme Court of India, or
  • Chief Justice of a High Court.

The position of judicial member shall be served by 

  • A judge of the High Court, or 
  • A person who served as a judicial member of the tribunal for 5 years.

A technical member is a person with demonstrated or proven ability, integrity and standing who possesses specialised knowledge and experience of not less than 25 years in the fields mentioned below- 

  • Law,
  • Industrial finance,
  • Industrial management or administration,
  • Industrial reconstruction,
  • Investment,
  • Accountancy,
  • Labour matters,
  • Such other discipline pertaining to management, 
  • Conduct of affairs,
  • Corporate revival, 
  • Rehabilitation of companies, or 
  • Winding up of companies.

Term of office 

Section 413 of the Act, 2013 envisages the provision for the term of office of chairperson and other members of the NCLAT. 

Section 413(3) states that after taking the office of appointment, the chairperson or the members of the NCLAT will remain in that position for a period of 5 years. During the tenure of 5 years, they will be eligible for reappointment for a further term of 5 years. 

Section 413(4)  provides that the members of the NCLAT will remain in that capacity until he or she attains- 

  • The age of 70 years in the case of the chairperson, and 
  • The age of 67 years in the case of any other member.

The provision further provides that to be eligible for appointment as a member a person must have reached the age of 50 years at least. 

Furthermore, the provision purports that while holding office as such, the member will keep his lien with his parent cadre, ministry or department, as applicable, for a maximum period of 1 year. 

Salary and allowances 

Section 414 of the Act, 2013 puts out the provisions for salary, allowances and other terms and conditions of service of members. 

The provision states that the salaries, allowances and other terms and conditions of the members of the NCLAT shall be specified by law as may be prescribed. It further states that following their appointment and during their term, the terms and conditions of employment of the members cannot be changed in a way that would be detrimental or disadvantageous to them, including their salary and allowances. 

Vacancy of members

Section 415 of the Act, 2013 provides for the provisions regarding the chairperson of NCLAT. 

It provides that the senior most member will step into the post of chairperson in the event of a vacancy in those positions due to death, resignation or other likewise cause. This will continue until a new chairperson is appointed in accordance with the provisions of the Act, 2013 to take over the position. 

It further provides that the senior most member will carry out the responsibilities of the chairperson as applicable until the chairperson returns to his or her duties in the event that he or she is unable to do so due to absence, illness or any other reason.

Section 431 of the Act, 2013 envisages a provision regarding the proceedings of the NCLAT in the event of a vacancy of the office. It states that no act or decision that is made by the NCLAT shall be contested or declared invalid just because there has been a vacancy in existence or any other defect pertaining to the constitution of the NCLAT. 

Resignation of Members 

Section 416 of the Act, 2013 provides for the provisions pertaining to the resignation of members of the NCLAT. 

The provision states that the chairperson or any member of the NCLAT may resign from their offices by giving a return notice under their signature that is addressed to the Central Government. Furthermore, the chairperson or the members of the NCLAT will remain in office in accordance with any of the following specifications in order of their first occurrence- 

  • until the end of their term of office, or 
  • 3 months from the date of notice sent to them by the Central Government, or 
  • until a legitimately nominated successor takes over the office. 

Removal of members

Section 417 of the Act, 2013 provides for the provisions regarding the removal of the members or the chairperson of the NCLAT. 

The provision states that the chairperson or any member of the NCLAT can be removed by the Central Government after consultation with the Chief Justice of India, when- 

  • the position holder has been determined to be insolvent, or 
  • he or she has been found guilty of a crime and has been convicted, which in the opinion of the Central Government involves moral turpitude, or 
  • he or she is no longer able to perform the duties of the chairperson or member competently due to physical or mental incapacity, or 
  • he or she has misused the position to such an extent that it is against the public interest for him or her to remain in the office.

However, the chairperson or the members of the NCLAT shall never be removed for any of the reasons that are listed above unless he or she is given a fair opportunity of being heard, owing to the principle of audi alteram partem, of the principle of natural justice. 

Further, no removal from office shall be made except by order of the Central Government based on evidence of proven conduct or incapacity following an investigation conducted by a Supreme Court judge. Such a Supreme Court judge would be appointed by the Chief Justice of India and would be referred to him by the Central Government. During this time period, the chairperson and the members would be informed about the allegations posed against them so that they can be given a fair chance to represent themselves in order to hear both the parties involved. 

Furthermore, the chairperson or any member regarding whom a referral has been made to the judge of the Supreme Court may be suspended from office by the Central Government with the approval of the Chief Justice of India until the Central Government has passed an order upon the receipt of the report submitted by the judge of Supreme Court upon such reference. 

Additionally, the provision empowers the Central Government to establish regulations to govern the process for the investigation of apparent misconduct or incompetence of the chairperson or members of the NCLAT. The Central Government will establish such regulations after consultation with the Supreme Court.

Staff of the National Company Law Appellate Tribunal (NCLAT)

Section 418 of the Act, 2013 provides for the provisions about the staff of the NCLAT. It states that the officers and other staff that may be required for the NCLAT to exercise their respective powers and carry out their functions will be provided by the Central Government after consultation with the NCLAT. 

Further, it is provided that under the general supervision and control of the chairperson or any other member to whom the authority has been delegated for exercising such supervision and control, the officer and other staff members of the NCLAT will carry out their duties. 

Furthermore, the officers and other staff members of the NCLAT will receive the salaries, allowances and other terms of employment that may be specified.

Institution of an appeal 

The National Company Law Tribunal Rules, 2016 provides for the rules and regulations to be followed regarding the procedure to be followed in the initiation of appeal in the NCLAT and all the other ancillary particulars related to it. 

Let us discuss them in detail.

Procedure to institute an appeal in the NCLAT

Criminal litigation

In the manner given below, an appeal must be instituted before the NCLAT-

  • All documents submitted to the tribunal, including appeals, petitions, applications, caveat petitions, objections, and counters, must be in English. 
  • If the documents are in another Indian language, a copy translated into English must be included. 
  • The documents must be fairly and legibly typewritten, lithographed, or printed in double line spacing, on one side of standard petition paper, with an inner margin that is approximately four centimetres wide on top, and with left and right margins of five and two centimetres respectively, appropriately paginated, indexed, and bound together in the form of a paper book. 
  • The appeal, petition, application, reply, and objections should all be organised into paragraphs and numbered sequentially. 
  • Each paragraph should, to the greatest extent possible, include a distinct fact, accusation, or claim.  
  • When using Saka or other dates, the appropriate Gregorian calendar dates must also be provided.  
  • The following details must be provided at the beginning of the appeal, petition, or application- full name, parentage, age, description of each party, address, and, if a party is being sued or sued on behalf of another party, these details need not be repeated in any further proceedings involving the same appeal, petition, or application. 
  • Each party’s name and description should be given their own line, and the names of the parties must be numbered sequentially. 
  • These numbers cannot be altered, and in the event that a party passes away while the appeal, petition, or matter is pending, the names of that party’s legal representatives or legal heirs, if any, will be indicated by sub-numbers. 
  • When new parties are added, they may be numbered in the order that they were added inside the specific category.
  •  Every proceeding must specify the legal provision under which it is preferred right after the cause title.

Particulars to be set out in the address for service

The address for summons delivery must be included with every appeal, petition, application, or caveat submitted on behalf of a party, and it must, to the greatest extent feasible, include the following-

  • the address of the home, including the name of the street, lane, municipal door, municipal division, or ward;
  • the village or town’s name;
  • the PIN Code, postal district, and post office;
  • any other details required to find and identify the recipient, including, if applicable, a working email address, cell phone number, or fax number.

Presentation of appeal 

The appeal shall be presented in the following manner-

  • Each appeal must be filed in triplicate at the filing counter using the prescribed form and the required fee. Failure to comply with this requirement may be a legitimate reason not to consider the appeal. This can be done in person by the appellant, applicant, petitioner, or respondent, as applicable, or through his legally authorised representative or an advocate duly appointed in this capacity.
  • Documents properly certified from the originals by the authorised person or advocate filing the petition, application, or appeal may be included to any appeal.
  • Every document submitted to the tribunal must include a triplicate index that includes the contents of each document as well as the fee that was paid for it.
  • In accordance with these requirements, an adequate number of copies of the appeal must also be filed and served on the opposing party.
  • Along with the memorandum of appeal, the processing fee specified by these regulations, the necessary number of large enough envelopes, and notification forms must be filled out.

Number of copies to be filed

The party making the appeal, petitioner, applicant, or respondent must file three authenticated copies of the appeal, petition, application, counter, or objections, as applicable, and provide one copy to each opposing party.

Endorsement and verification

Every petition, appeal, and pleading must include the authorised representative’s name and signature at the bottom. Each petition or appeal must be signed and validated by the relevant party in accordance with the NCLT Rules.

Translation of document 

Any document intended for use in a tribunal proceeding, which is in a language other than of English, must be submitted to the Registry with an English copy that has been approved by both parties or certified as a true translation by an authorised representative acting on behalf of the parties involved or by any other advocate or authorised representative, whether or not they are involved in the case. If the advocate or authorised representative involved in the case authenticates the certificate, it must be prepared by a translator the Registrar has approved for the purpose in exchange for fees that he may specify. The hearing of an appeal, petition, or other case cannot be scheduled unless all parties have confirmed that all of the documents they want to rely on are in English or have been translated into the language and that the necessary number of copies have been lodged with the tribunal.

NCLAT as Competition Law Appellate Tribunal

The Competition Appellate Tribunal (COMPAT) which was a specialised independent appellate tribunal which heard appeals against the ruling of the CCI now stands superseded by the NCLAT. The NCLAT now has a much wider and broader scope as it handles appeals from 3 different statutes, namely- the Act, 2013, the Insolvency and Bankruptcy Code code, 2016 and the Competition Act, 2002.

Ambuja Cements Limited vs. Competition Commission of India( 2017) which is also referred to as the seminal cement cartel case, was one of the first decisions involving competition law to be resolved by the NCLAT. The case had come up in an appeal for the second time. In the last appeal, the COMPAT had remanded the matter for the CCI to rehear on the grounds that the CCI had violated the principles of natural justice. In the second ruling, the CCI concluded that 11 cement companies had engaged in anti-competitive agreements, fixed cement prices, restricted and managed the supply in the market as well as the production was being controlled. This ruling of the CCI was affirmed by the NCLAT after it examined the pricing of the cement producers, production and statistics of the dispatch. The NCLAT had approved the largest cumulative penalty in the history of India, in this case, which was a total of Rs. 6300 Crore. 

Another significant case decided by the NCLAT is the All India Online Vendors Association vs. competition Commission of India (2019). In this case, the NCLAT reversed the decision of the CCI to reject information against Flipkart Private Limited and instructed the CCI to look into the possible misuse by the company of its dominant position in the market. Consequently, Flipkart became the subject of an investigation by the CCI on claims of abuse of power and anti-competitive behaviour. 

The difference in the methods and approach adopted by COMPAT and NCLAT is noteworthy. The NCLAT has concentrated on the important issues surrounding competition law over the straight-jacketed strict adherence that was followed by the COMPAT of the principles of natural justice. 

Difference between NCLT and NCLAT

Both NCLT and NCLAT are established by virtue of the Act, 2013 in the light of the same ideology. There are certain differences between them which are provided under 

BasisNCLTNCLAT
Which provision established the tribunals?The NCLT was established under Section 408 of the Act, 2023. The NCLAT was established under Section 410 of the Act, 2023. 
What are their jurisdictions?The jurisdiction of the NCLT is the original one.The NCLAT is a body which enjoys appellate jurisdiction.
Jurisdiction over competition law-related matters. The NCLT does not have any jurisdiction over the cases that involve the competition law matters. The NCLAT, on the other hand, is designated as an appellate authority for the orders that are passed by the National Financial Reporting Authority and Competition Commission of India. 
Replacement for the Competition Appellate TribunalThe NCLT has not replaced it. The NCLAT has replaced and taken over the Competition Appellate Tribunal in toto. 
How many benches? The NCLT has 16 benches throughout the country. The NCLAT has 2 benches throughout India. 

Perjury in National Company Law Appellate Tribunal (NCLAT)

Perjury is the intentional act of providing false information or lying under oath in a legal proceeding. In the context of the NCLAT, perjury would involve knowingly providing false information or making false statements while under oath during a hearing or trial before the NCLAT. Perjury is a serious offence as it undermines the integrity of the legal system and can lead to miscarriages of justice.

In the legal context, perjury is considered a criminal offence and can result in severe consequences for the individual found guilty of committing perjury. These consequences may include fines, imprisonment, and damage to one’s reputation and credibility. Perjury is taken very seriously in legal proceedings as the truthfulness and accuracy of the information provided are crucial for the fair and just resolution of disputes.

It is essential for all parties involved in legal proceedings before the NCLAT to provide truthful and accurate information. Any attempt to deceive the tribunal through false statements or misrepresentation of facts can have serious legal repercussions. The NCLAT, like other judicial bodies, relies on the honesty and integrity of the information provided by the parties involved to make informed decisions and deliver justice.

It can be concluded that perjury can be applicable in NCLAT proceedings if a party intentionally provides false information or makes false statements under oath. However, it is crucial to consider the specific facts and circumstances of the case and follow the procedure prescribed under Section 195 and Section 340 of the Criminal Procedure Code, 1973 before initiating perjury proceedings.

Notably, the NCLAT is regarded as a “court” for the purposes of, among other things, Section 340(1) CrPC. Upon an application under the aforesaid provision and following a preliminary investigation, one can file a complaint with the Magistrate of the First Class, who has jurisdiction over the commission of the perjury crime in the NCLAT. The Magistrate of the First Class will then handle the complaint in the same manner as they would in a typical criminal trial. The same has time and again been observed in a number of cases, one of the important ones is Lalji Haridas vs Income-Tax Officer And Anr (1961) in which the Supreme Court of India reiterated the same.

Landmark judgments by the honourable National Company Law Appellate Tribunal (NCLAT)

Naren Seth Liquidator Of Ciemme Jewels Ltd. vs. Sunrise Industries (2023)

Facts of the case

In this case, the two appellants filed two appeals under Section 61 of the IBC against the impugned ruling of the Mumbai bench, NCLT which set aside the adjudicating authority’s e-auction, dated April 8th, 2022, of the corporate debtor’s only property. 

Issues raised

The issue that was raised in the case was that the liquidator published a notice on 2nd April 2022 about the sale of the assets. The notification specified an online option on 8th April 2022 from 2 pm to 4 pm. The notice also erroneously stated that the deadline for submitting an expression of intent by the interested bidders was 15th April 2022 at 5 pm and that the earnest money deposit payment deadline was 16th April 2022 at 5 pm. 

The liquidator contended that these contradictory dates were only a typographical error and thus, the error should not be made a big issue. 

Judgment

It was held that the entire e-auction was conducted in a hurry and the adjudicating authority had rightly observed that there were hardly any sufficient gaps in dates in the application and completion of the e-auction. The NCLAT further mentioned that it is not ethical and appropriate for the appellant to reject a bid that is more than the liquidation value just because of a typographical error in the notice. 

Finally, the tribunal was of the view that there was no error in the impugned order where the auction was set aside and the liquidator was held responsible to bear all the expenses incurred by that auction. In addition, the NCLAT pointed out that it does not appreciate the conduct of the liquidator in the entire process. 

Ashok Kriplani vs. Ms. Ramanathan Bhuvaneshwari RP (2023)

Facts of the case

The facts of this case are such that the adjudicating authority had rejected the interlocutory application which sought to intervene on the grounds that the corporate insolvency resolution process cost was still owed by virtue of the contested order. Thus, the appeal.

Issues raised

The issue is such that by the decision, a corporate insolvency resolution process was commenced against Dreamz Infrastructure India Ltd., the corporate debtor. The appellant was designated as an insolvency resolution professional and thereafter as a resolution professional. He claimed that the adjudicating authority ordered the resolution process to be conducted on a project-wise basis. As a result, the appellant was forced to file an interlocutory application requesting the adjudicating authority’s direction to determine the amount of unpaid corporate insolvency resolution process cost that must be paid to the appellant before admitting the case regarding another project of the same corporate debtor. 

Judgment

The NCLAT observed that the appellant was already removed from the capacity of resolution professional and was replaced. Thus, he holds neither the position of interim resolution professional nor the position of resolution professional, which is why he was not eligible to seek any unpaid fees or costs from the members of the committee of creditors of another project of the corporate debtor. 

MEL Windmills Pvt. Ltd. vs. Mineral Enterprises Ltd & Anr. (2019)

Facts of the case

In this case, the facts are such that there was a demerger that was in question. A company application for the disbursement of the members or creditors meeting was submitted to the Bangalore bench of NCLT. Upon evaluation of the merit of the scheme and taking into account the ongoing investigations, the NCLT rejected the application. Thus, an appeal against the order was filed with the NCLAT.

Issues raised

The issues raised in the case are as follows- 

  • There was a demerger plan which involved a corporation that had some ongoing enquiry about its mining operations.
  • There was no demerger of the mining industry.

Judgment

The order was set aside by the NCLAT and it observed that- 

  • It is evidently clear that the tribunal is not obligated to analyse the merits of the plants in relation to the proposed compromise or arrangement at the time of the meeting of the creditors or the members for consideration of the scheme of compromise or arrangement. Any such intelligence on the part of the tribunal would be unconstitutional and outside the purview of Section 230(1) of the Act, 2013.
  • The firms may amalgamate with other firms under the Act, 2013. However, the Limited Liability Partnership Act, 2008 allows the amalgamation of limited liability partnerships with other limited liability partnerships.
  • While the merging of a foreign body corporate or foreign limited liability partnership with an Indian company is explicitly authorised, the cross-merger of an LLP and a company is neither permitted nor forbidden.

Rajat Metaal Polychem Pvt. Ltd. vs. Neeraj Bhatia Resolution Professional(2021)

Facts of the case

In this case, the Appellant filed an Appeal against the order passed by the NCLT, New Delhi. The order rejected the application filed by the appellant, which raised the grievance that the Resolution Professional did not accept his claim in full and discredited the interest amount.

Issues raised

The issue raised in the case is whether the appellant’s claim can be considered despite the rejection by the Resolution Professional.

Judgment

The NCLAT held that there is no provision to file an appeal against the rejection of the claim by the Resolution Professional. However, the court set aside the order of the Adjudicating Authority and disposed of the appeal with the observation that the Adjudicating Authority should consider the objection of the appellant while considering the approval of the Resolution Plan.

The tribunal did not express any opinion on the merits of the objection filed by the appellant. It stated that it is for the Adjudicating Authority to consider and take an appropriate decision in accordance with the law.

M/s. Hasmukh N. Shah & Associates vs. M/s. Victoria Entertainment Pvt. Ltd.(2021)

Facts of the case

In this case, the appellant filed appeals before the NCLAT.

Issues raised

The main issue in the case was whether the appeals were filed within the prescribed time limit or if they were barred by limitation. The appellant argued that there was no delay in filing the appeals and that they were within time. 

Judgment

The NCLAT dismissed all the appeals as barred by time. The reasoning behind the dismissal of the appeals was that Section 61 of the IBC provides for appeals and the appellate authority. Initially, the filing of appeals to the Appellate Tribunal was governed by the provisions of the Act, 2013. Rule 50 of the NCLT Rules, which is part of the general procedure, obliges the registry to send a certified copy of the final order to the parties concerned free of cost. However, Section 61 of the I&B Code read with Rule 50 of the NCLT Rules does not suspend the limitation period until the free copy is received by a party.

Conclusion 

The legal system is a long and drawn-out procedure and it might take years for a suit to be granted an order, tribunals follow a much shorter process and provide their decisions on disputes. Tribunals may be more proficient at gathering evidence using flexible criteria or standards and exercising discretionary powers. It serves to experience the administration of justice while simultaneously lessening the workload of the higher courts.

The previous regime which involved the Company Law Board was ineffective in resolving the disputes timely and efficiently which led to its failure. In addition, the previous system had a lot of delays and bottlenecks which did not help to revive the sick companies and also led to a drag of cases.

Thus, the NCLAT was created to serve as a standardised forum for resolving disputes pertaining to the working of companies where adjudicating it promptly helps not only save time but also smoothens the operation of the economy. 

Frequently Asked Questions (FAQs) 

What is a tribunal?

A tribunal is an administrative body that is established for the purpose of discharging the duties which are quasi-judicial in nature. It is generally understood as any person or institution which has the authority to judge, adjudicate, and determine claims or disputes. 

In the State of Gujarat vs. Gujarat Revenue Tribunal Bar Association (2012), it was declared that tribunals basically deal with the cases that come within the ambit of special laws which is why they provide special adjudication outside courts. 

What is the difference between a tribunal and a court?

It is understood that the difference between a court and a tribunal basically pertains to their manner of deciding a dispute. In Virendra Kumar Satyavadi vs. The State of Punjab (1956), the honourable Supreme Court observed that, “What distinguishes a court from a quasi judicial tribunal is that it is charged with a duty to decide disputes in a judicial manner and declare the rights of parties in a definitive Judgment.”

Following are the differences between a court and a tribunal-

S. no.CourtTribunal
1.A court has the duty to decide disputes in a judicial manner and declare the rights of parties by giving a judgment.A tribunal basically deals with cases under special law, therefore, they provide special adjudication outside the courts.
2.It is a judicial body.It is a quasi-judicial body, which means that they are similar to courts. 
3.They are formed by constitutional, civil and criminal laws.These are always governed by some special laws.
4.The scope of a court is wider as it can take different matters under different acts within its purview.They can take matters only related to some special laws and thus, they have a narrow scope.
5.It follows procedures written under the procedural laws. They make their own rules and abide by the principles of natural justice.
6.Only advocates can practise in courts.Advocates, practising company secretaries, practising chartered accountants, and even practising cost accountants are allowed to practise in a tribunal.

What are the principles of natural justice that NCLAT abides by?

The two most celebrated and acceptable principles of natural justice that even the, NCLAT follows are given as under-

  1. Audi alterem partem, which means that both the parties must be heard and no judgment must be made only after hearing one party.
  2. Nemo judex in causa sua, which means that a judge should not be a judge of his own matter or case as intentionally or unintentionally there is bias involved. 

Following are the norms of natural justice that are laid down by the Committee on Minister’s Power or which is commonly known as the Frank Committee– 

  • One should not determine one’s own case,
  • No one should be judged and convicted without being heard, 
  • A party has the right to know all the causes of the decision, and
  • A copy of the statutory report must be made accessible. 

Who is a public servant?

A public servant is a person who is employed or engaged by any public body in the conduct and supervision of any examination recognised or approved under any law. 

Section 21 of the Indian Penal Code defines it and provides an inclusive list, given as under-

  • Any officer with an appointment in the armed forces, air forces or navy of the country. 
  • Any judge or designated person who possesses the legal authority to carry out any adjudicatory duties either independently or in conjunction with other bodies of persons.
  • Any Court of Justice official whose duty lies with investigating or reporting on any matter of law. Any officer designated by the court with the authority to carry out these tasks is the officer who is permitted to maintain the case file or to assume responsibility for disposing of property, carry out legal proceedings, administer oaths or maintain code orders.
  • Every juryman, assessor or member of the panchayat, who supports and assists the public servant or the court of justice.
  • Any and every arbitrator who is designated by the court to hear a case that has been assigned for decision making as well as any other qualified public official who is a competent authority. 
  • Any person who is competent to hold a position of authority which gives him the empowerment to imprison or confine someone. 
  • Any officer whose responsibility is to keep the public well and safe, to report crimes or to prevent them from happening and to also prosecute the offenders in the light of the well-being of the society.
  • Any and every officer whose duties include taking, receiving on maintaining property expansion on behalf of the government, conducting survey assessment or contacts, carrying out revenue procedures, conducting investigations or reporting on matters affecting the financial interest of the government, stopping the breaking of any law in order to safeguard the financial interests of the government. 
  • Any officer, the responsibility of whom is to take. receive or maintain property expansion, conduct service or assessments or impose taxes on any village municipality or district for secular common purposes.
  • Every person holding the position is endowed with the authority to organise, publish, maintain and amend an electoral roll as well as to oversee and conduct elections. 
  • Any person who is employed by the government and is paid by it or compensated by fees or commission for carrying out any official government duties. 
  • Any individual employed by a municipal government, a corporation operating under a federal state or local authority or as further defined as specified in Section 67 of the Companies Act, 1956.

Who can represent in NCLAT?

Section 432 of the Act, 2013 provides that the parties involved in any proceeding or appeal before the NCLAT choose to represent their case- 

  • In-person, or 
  • Through the use of one or more- 
  1. Chartered accountants, or
  2. Company secretaries, or
  3. Cost accountants, or
  4. Legal practitioners, or 
  5. Other representatives, as the case may be. 

How many benches does NCLAT have?

The NCLAT has 2 functioning benches, stated below-

  1. Principal bench– 2nd & 3rd Floor of Mahanagar Doorsanchar Sadan (M.T.N.L. Building), 9, CGO Complex, Lodhi Road, New Delhi — 110003. (Near Scope Complex), and 
  2. Chennai bench– 6th Floor, Ezhilagam Annex, Chepauk, Chennai – 600005.

Where does the appeal against the order of the NCLAT lie?

Section 423 of the Act, 2013 states that a person who feels aggrieved by the order of the NCLAT has 60 days from the day the order was sent to them to file an appeal with the Supreme Court of India over any question of law arising from such order. However, if the Supreme Court of India is satisfied that there is any sufficient cause because of which the appellant was precluded from submitting his or her appeal, then it can allow the appeal to be submitted within an additional period of 60 days. 

Does the NCLAT have the power to punish for contempt?

Section 425 of the Act, 2013 provides that the NCLAT shall have the same jurisdiction, power and authority, as the High Courts, in respect of contempt of themselves, as provided under the Contempt of Courts Act, 1971.

.However, there would be certain modifications when it comes to the power of the NCLAT. They are stated below- 

  • The reference given to the high court shall be construed as including the reference to the NCLAT, under the said Act, and 
  • The reference of advocate general under the said Act shall be deemed to construe the reference to such law officers as the Central Government specifies on that behalf.

Can the NCLAT delegate its powers?

Section 426 of the Act, 2013 provides that the NCLAT may direct any of its officers or employees or any other person authorised by it to enquire into any matter connected with any proceedings or appeal before it and to report it. Such direction shall be made by either general or special order and it may be subject to conditions deemed appropriate by the NCLAT. 

Does the provision of the Limitations Act, 1963 apply to the proceedings under the NCLAT?

Section 433 of the Act, 2013 provides that the provisions of the Limitation Act, 1963 will apply to the appeals before the NCLAT, as applicable. 

What is the lodging caveat?

Lodging caveat does not mean surrendering but it means that a person is requesting and maintaining that no action should be taken on him or her before any notice is served to him or her. 

Any person can lodge a caveat in triplicate in any appeal or petition by paying the prescribed fees. It must be in the prescribed form and shall contain the required details and particulars pertaining to the orders, directions and details of authority against whose order or direction the appeal of petition or application is being instituted by the expected applicant or petitioner or applicant with full address of service on the other side. The caveat shall be valid for a period of 90 days from the date of its filing.

Are decisions of the NCLAT binding?

The decisions made by the NCLAT shall be dutifully binding on the NCLT. 

References 

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