National Company Law Tribunal (NCLT)


Author: Anamika M J, NUALS, Kochi


The National Company Law Tribunal was established under section 408 of the Companies Act 2013 by the Central Government. This was established on the basis of a recommendation by the Eradi Committee on laws relating to insolvency and winding up of Companies. All the proceedings under the Companies Act shall be disposed of by the tribunal this includes proceedings relating to arbitration, compromise, arrangements, reconstruction and winding up of companies. The NCLT is chaired by a retired or a serving High Court judge and a technical member who must be from Indian Corporate Law Service.

NCLT was conceptualized by Eradi Committee. It was initially introduced in Companies Act, 1956 in 2002 but the provisions of Companies (Second Amendment) Act, 2002 were not notified as they got mired in the litigation surrounding the constitutionality of NCLT. In the 2013 Act, the concept of NCLT was retained. The powers and functions of NCLT under the 1956 Act and 2013 Act are different. The constitutionality of NCLT related provisions was again challenged and this case was finally decided in May 2015. The Apex Court upheld the constitutionality of the concept of NCLT but some of the provisions on the constitution and selection process were found defective and unconstitutional. The decisions of NCLT can be appealed to the National Company Law Appellate  Tribunal.


Class Action

One of the most important concerns of Company law is the protection of interest of various stakeholders and depositors. There were many cases of fraud and improprieties were the shareholders and depositors were the key losers. The Companies Act, 2013 provided for the remedies where the offenders will be punished and the people who were involved were liable for civil action namely a class action. A class action is a procedural that permits one or more plaintiffs to file and prosecute a lawsuit on behalf of a larger group. Section 245 has been introduced in the Act of 2013 to provide relief to the investors against a large set of wrongful actions. A class action can be filed against any type of company. The act provides an exception for only a banking company.  

Registration of Companies

Under the Companies Act 2013, NCLT is empowered to cancel the registration of the company and also dissolve the company in certain situations. The tribunal can also render the liability of the members of the company as unlimited. NCLT can also re-register the Company if the registration certificate of the COmpany was obtained in an illegal manner initially.

Transfer of Shares

NCLT is also empowered to hear the grievances in case of transferring shares and security by the company under sections 58 and 59 of the Companies Act.


The power to deal with cases under chapter V of the Companies Act is vested with NCLT. Depositors who are not satisfied have a remedy for class action suits for the omissions and acts as part of the company that impacts their rights as depositors. 

Power to investigate

As per the provision of the Companies Act, a 2013 investigation about the affairs of the company could be ordered with the help of an application of 100 members whereas previously the application of 200 members was needed for the same. If a person who isn’t related to a company and is able to persuade NCLT about the presence of conditions for ordering an investigation then NCLT has the power for ordering an investigation. An investigation that is ordered by the NCLT could be conducted within India or anywhere in the world. The provisions are drafted for offering and seeking help from the courts and investigation agencies and of foreign countries.

Freezing assets of a company

NCLT is empowered to freeze the assets of a company for using them at a later stage when such a company comes under an investigation. Such an investigation can also be carried out on the requests of others in a specific condition.

Converting a public limited company into a private limited company

Sections 13-18 of the Companies Act, 2013 read with rules controlling the conversion of a Public limited company into the Private limited company, such conversion needs a confirmation from the NCLT. NCLT has the power under section 459 of the Act, for imposing specific conditions or restrictions and might subject granting approvals to such conditions.


NCLT is a tribunal for only company law that is for the corporates. This will reduce the litigation before different forums and courts in this regard. NCLT has multiple branches at different places across the country. This will help in addressing the issues in that jurisdiction with more precision and at a close range. The NCLT contains both judicial and technical members which were mentioned earlier, this will help in deciding the cases accurately as the legal and other aspects are considered for the decision. Since the NCLT can also wind up the companies under certain provisions, the time taken for winding up of companies is also reduced. It also helps in speedy disposal of cases as compared to other courts.