NATIONAL COMPANY LAW TRIBUNAL
1. Context
Observing that the National Company Law Tribunal and National Company Law Appellate Tribunal “have got down to a rot now”, the Supreme Court recently issued notice to two NCLAT members, asking them to show cause as to why contempt of court proceedings should not be initiated against them for allegedly defying its directions in a dispute relating to Finolex Cables.
2. National Company Law Tribunal (NCLT)
- The National Company Law Tribunal is a quasi-judicial body in India established under the Companies Act, 2013.
- NCLT primarily deals with matters related to corporate disputes, insolvency, restructurings, and liquidation.
- Its functions include adjudicating on issues related to companies, hearing insolvency and bankruptcy cases, overseeing the liquidation process, approving or rejecting schemes of arrangement, and handling class action suits or minority shareholder disputes.
- NCLT has multiple benches across the country, and it comprises both judicial and technical members with expertise in corporate and financial matters.
3. National Company Law Appellate Tribunal (NCLAT)
- The National Company Law Appellate Tribunal is an appellate body established under the Companies Act, 2013, and it functions as an appellate authority to hear appeals against the orders passed by the National Company Law Tribunal (NCLT).
- NCLAT provides a forum for parties to challenge NCLT's decisions.
- It primarily deals with appeals related to corporate and insolvency matters and aims to ensure the correct interpretation and application of the law.
4. Difference between the National Company Law Tribunal and the National Company Law Appellate Tribunal
| Aspect | National Company Law Tribunal (NCLT) | National Company Law Appellate Tribunal (NCLAT) |
|---|---|---|
| Primary Function | Primary adjudicating authority, handling original cases related to corporate disputes, insolvency, and restructurings. Conducts hearings and issues initial judgments. | Appellate tribunal responsible for hearing appeals against orders and decisions made by the NCLT. Reviews NCLT's decisions, does not conduct original hearings. |
| Hierarchy | First level of adjudication. Initial cases are filed with the NCLT, where disputes are heard and decided. | Higher appellate forum. Parties dissatisfied with NCLT's decisions can file appeals with the NCLAT for a review of those decisions. |
| Composition | Comprises both judicial and technical members, including judges and experts in corporate and financial matters, enabling it to conduct hearings and issue judgments. | Consists of judicial and technical members, with the primary focus on reviewing the correctness of NCLT's decisions. NCLAT does not conduct original hearings. |
| Nature of Cases | Handles original cases, conducts hearings and makes initial judgments. Deals with a wide range of matters, including company law, insolvency, mergers and amalgamations, and more. | Deals with appeals. Does not conduct original hearings. Its role is to review and reconsider the decisions made by the NCLT, ensuring that the law is applied correctly and justly. |
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For Prelims: National Company Law Tribunal, National Company Law Appellate Tribunal, Companies Act, 2013,
For Mains:
1. Describe the role and functions of the National Company Law Tribunal (NCLT) in India. How does NCLT contribute to the resolution of corporate disputes and insolvency cases? (250 Words)
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