Image Source:

In this Article, Rose Mathew pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the jurisdiction of the NCLT and NCLAT.


India has had a range of Company Laws starting from 1600, The East India Company under the Royal Charter, the Joint Stock Company Act, 1857, Companies Act passed in the year 1866 followed by Indian Companies Act, 1913. The Indian Companies Act, 1913 was replaced by Indian Companies Act, 1956 and saw various amendments in the years to come. In the recent year, 2015, the Supreme Court issued the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) as valid. This decree thus formed the foundation of the constitutionalized NCLT & NCLAT, by the Central Government on June 1st, 2016.

Evolution of the NCLT and NCLAT

NCLT, National Company Law Tribunal, is a quasi-judicial structure to regulate and resolve civil corporate disputes. Whereas, NCLAT is the higher forum where appeals from the Tribunal are dealt with, i.e. Appellate Tribunal. The power to establish NCLT and NCLAT has been derived from Article 245 of the Constitution of India.

The Tribunal, the outcome of the Eradi Committee, is institutionalized under the Constitution and practices both authority and power like that of the court of law. At its centre, the Tribunal is required to be objective and pass orders based on natural justice by close scrutiny of facts provided in the cases that are heard.

The transfer of authority from CLB to NCLT was the first among the many steps towards the independent jurisdiction of the latter. Further procedures to forward the transfer included the pending cases under the CLB to be shifted to the NCLT, under Section 434 of the Companies Act. The Central Government passed legal proceedings by which the powers of the High Court, the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and Board of Industrial and Financial Reconstruction (BIFR) to be vested upon the Tribunal along with other new powers and functions. Thereby encompassing the governance of every company registered under the Companies Act, except for banking institutions. Thus NCLT became legally active on June 1st, 2016 with ten benches and one principle bench.

Jurisdiction of the NCLT

Both the Tribunal and Appellate Tribunal follow the Code of Civil Procedure and are subject to any rules formed by the Central Government. The former two entities hold the authority to direct and make-do their own procedural methods.

The jurisdiction of NCLT includes the following:

Class Action

Class Action comes under Section 245 of the Indian Companies Act, takes action against frauds and improprieties where the shareholders and depositors are the main victims. There has been a long chain of cheating where the companies registered under the law drain dry the investments and savings of their investors and shareholders. The Companies Act, 2013 has presented measures to effectively bring down the offenders by subjecting the guilty to punishment, wherein they ought to give compensations to the victims for the losses on account of the fraudulent practices.
click above

One or more plaintiffs can file a lawsuit on behalf of a large group and accelerate the procedure. Thereby representing a whole group of, perhaps, geologically dispersed class of people: shareholders or depositors, who are being wronged. Section 245 has brought great relief to the investors, protecting their assets and safeguarding their rights. Class Action can be filed against both private and public run companies with an exception for banking companies.

Refusal to Transfer Shares

Under Sections 58 and 59, if a company refuses to register a transfer or does any malpractices leading to dissatisfactory of the transferor or transferee, the latter is entitled to appeal to the National Company Law Tribunal, after a period of two months. The two Sections, in effect, give importance to contracts or arrangements for transferring securities entered into by two or more people with respect to valid conditions.

Oppression and Management

Under Section 397 of the Companies Act, 1956 a member could file a complaint only about ongoing instances of oppression and mismanagement. Unlike its predecessor, the Tribunal, under Section 241 grants any member permission to find justice for past and present instances of oppression and mismanagement. Thus, setting forth remedies for any member or ex-member of a company or Central Government subjected to the crime under scrutiny. 

A member can file an application to the Tribunal upon the grounds that the affairs of the company are run in a way prejudicial to public interest, prejudicial and oppressive towards members of the company or prejudicial to the very interest of the company. Section 397 permits the dissolving of the eligibility criteria the condoning of the Tribunal, thus a member not within the eligibility criteria can apply in deserving cases.

Reopening of Accounts and Revision of Financial Statements

The one too many cases of falsification of books of accounts in plain sight during the Companies Act, 1956 led to the addition of several procedures to counter this malfunctioning in the Companies Act, 2013. Section 130 and 131 read along with Section 447 and 448 in the new Act is a measure taken against this menace. These Sections act as provisions that refrain companies from suo muto opening their accounts and revising their financial statements. Section 130 gives the Tribunal power to hold the authority to direct a particular company to reopen its accounts under certain given circumstances. The company is allowed to revise its financial statement under Section 131 but not allowed the reopening of any accounts.


Deregistration of Companies

Section 7(7) under the new Act preserves power upon the Tribunal to deregister or dissolve companies that are found to have attained ‘registered’ status through illegal and wrongful manner. In essence, the procedural errors of registration of companies can be investigated or questioned by the Tribunal, if found suspicious. Also, the court can declare the liability of members unlimited.
click above


Deposits under the Companies Act, 2013 includes any receipt of money in the form of loan or deposit in any other form by a company. It is also to be noticed that deposits are not inclusive of such categories of amounts that may be prescribed in consultation with the Reserve Bank of India (RBI). Chapter V of the 2013 Act and the Companies (Acceptance of Deposits) Rules, 2014 deals with deposits and defines the regulations of deposits. Deposit Rules provide aggrieved depositors with the remedy of class actions so that they can seek justice for the omissions of the companies which hurt their depositor rights.

Power to Investigate

Chapter XIV of the Companies Act, 2013 instils upon the Tribunal the power of investigation. The Tribunal can authorize an investigation into the affairs of any company if or when an application is filed against the particular company by 100 members. The investigation can be extended to the ownership of companies. Also, if a person outside the company is able to provide conditions acceptable to NCLT, the latter holds power to authorize an investigation. The court can in course of action freeze company assets under given conditions and place restriction orders on securities, unlike before.

Conversion of Public Company to Private Company

The Tribunal in accordance with Section 13-18 has a say in the conversion of public companies to private companies. This authority not only includes the consent and confirmation for the conversion, it goes further. Section 459 of the Act maintains that NCLT can impose certain terms and restrictions or grand approval along with certain conditions.

Tribunal Convened General Meetings

‘Annual general meetings’ (AGM) or ‘extraordinary general meetings’ (EOGM) are to be held to revise the opinions of shareholders and provide a general outline of the company workings. These meetings ought to follow procedures provided under the Companies Act, 2013. If for some extraordinary reasons the AGM or EOGM cannot be called, the Tribunal under the provisions of Sections 97 and 98 is empowered to convene a general meeting.

Financial Year

NCLT exercises power to change the financial year of companies registered in India. Under Section 2 (41) the companies in existence should have a uniform financial year ending on 3ist of March.

Jurisdiction of NCLAT

The National Company Law Appellate Tribunal is headed by the Chairperson and consists of not more than eleven members. It is a higher law governing forum than NCLT. The Appellate Tribunal hears appeals filed against the Tribunal court orders. The appeal can be placed within 45 days from the date on which NCLT announces its decisions. The Appellate Tribunal court goes through the evidence transferred from the Tribunal, making changes or confirming the order given by the latter. This process happens within a time span of six months.

Dissatisfaction with Tribunal Orders

If a group or an individual is to be dissatisfied with the orders passed by the Tribunal Court it is obvious to move on to the next, only, option, that is filing an appeal to the Appellate Court where the decisions of NCLT are reviewed and checked from the point of law and facts. The Tribunal Court is in charge of finding and gathering evidence while the Appellate Court decides cases based on the already collected evidence. If the outcome is not satisfactory even then, one should approach the Supreme Court.


The merits of establishing NCLT and NCLAT include exclusive jurisdiction, a decrease in the multiplicity of litigation before courts and the time efficiency with which the cases are heard and decisions passed. Although this is true in theory, the practical side has not entirely been a success since its implementation. From the data collected on the jurisdictive exercising of power, it is safe to say that NCLT has not succeeded, if not laid back, in upholding the fulcrum of concern.

Did you find this blog post helpful? Subscribe so that you never miss another post! Just complete this form…


  1. it is mentioned as follows:

    In the recent year, 2015, the Supreme Court issued the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) as valid. This decree thus formed the foundation of the constitutionalized NCLT & NCLAT, by the Central Government on June 1st, 2016.

    and as follows:

    The power to establish NCLT and NCLAT has been derived from Article 245 of the Constitution of India.

    Herein I would like to state that the NCLT AND NCLAT have their origin in S. 408 and 410 of the Companies Act, 2013, which is not mentioned anywhere throughout the content of the article.

    Please be careful as to what you are posting, dissemination of factually incorrect information especially by our community is not right.

    Otherwise the article is very well researched and educative.