National Company Law Appellate Tribunal (NCLAT): Functions, Powers and Significance

The National Company Law Appellate Tribunal (NCLAT) is a quasi-judicial body that has the mandate to hear appeals in matters concerning company laws, insolvency, competition law, and financial reporting. The establishment of NCLAT was through Section 410 of the Companies Act of 2013, and it started its operations on 1 June 2016. It plays a critical role in ensuring quick corporate dispute resolution, transparency, and efficiency of India’s corporate and insolvency governance framework.

What Is NCLAT?

The National Company Law Appellate Tribunal (NCLAT) is an appellate body whose primary mandate is to hear appeals against orders made by the National Company Law Tribunal (NCLT).

It is established under the Companies Act of 2013 to ensure an effective appellate mechanism for corporate and insolvency related cases. The headquarters of NCLAT is in New Delhi.

The tribunal ensures the quick resolution of disputes in relation to companies, insolvency and bankruptcy, competition and financial reporting.

Functions of NCLAT

There are various key functions of the NCLAT, including,

1. Appeal against Orders of NCLT

• NCLAT takes up appeals against any order made by the National Company Law Tribunal under the Insolvency and Bankruptcy Code (IBC), 2016, and Section 61.

2. Appeal against IBBI Orders

• This body takes up appeals against some of the orders passed by the Insolvency and Bankruptcy Board of India (IBBI) under the Insolvency and Bankruptcy Code.

3. Competition Law Appeals

• The NCLAT also acts as the Appellate authority for appeals from the orders made by the Competition Commission of India (CCI).

4. NFRA Appeals

• The NCLAT also considers any orders passed by the National Financial Reporting Authority (NFRA), which is an authority in charge of setting accounting and auditing standards.

5. Advisory Function

• NCLAT also renders opinions if any question of law is referred to it by the President of India.

Composition of NCLAT

NCLAT comprises of a Chairperson, Judicial Members and Technical Members.

Membership in the tribunal is done by the Central Government taking into account the expertise and experience of the members in fields like,

• Law
• Finance
• Accountancy
• Administration
• Corporate affairs

The presence of judicial and technical expertise in the tribunal facilitates the handling of complex disputes in the areas of corporations, finance and insolvency.

Powers of NCLAT

NCLAT wields considerable powers in terms of adjudication and execution of its decisions.

It has the power to,

• Regulate its procedure.
• Exercise the same powers as that of a civil court under the Code of Civil Procedure, 1908, in certain specific cases.
• Summon and compel attendance of witnesses.
• Take evidence on affidavits.
• Call for documents and other relevant material.
• Issue commissions for examining witnesses and documents.
• Execute its decrees according to law.

Decrees of NCLAT are executed in the same way as that of a civil court decree.

Appeals Against NCLAT Orders

One of the features of the NCLAT system is that it allows for further judicial review.

One may make appeals against the order of the NCLAT regarding the questions which are allowed to be raised under the applicable laws to the Supreme Court of India.

It is worth mentioning that civil courts have no jurisdiction over matters which come under the statutory jurisdiction of NCLAT and tribunal system.

Moreover, the law prohibits courts and authorities from giving any order of injunction against the decisions taken by the NCLAT through its powers.

Importance of NCLAT

The NCLAT is one of the institutions which is crucial to India’s corporate and insolvency world. Through the provision of specialized forums of appeal, NCLAT makes the procedure of disputes faster for companies and insolvency.

This point is especially true for the reason that delays in these types of cases could have consequences for creditors, investors, employees and the whole country. Specialized tribunal could have the possibility to combine legal and technical knowledge in such cases.

Thus, this institution is crucial to corporate governance, investor protection, insolvency and ease of doing business.

Disposal of Appeals Within Time

According to NCLAT structure, it highlights prompt disposal of cases. Appeals should be disposed of within a period of six months of receiving, which will help achieve the general aim of timely dispute resolution of corporates and insolvency.

NCLAT and NCLT Comparison

One of the crucial factors in competitive exams to know is the difference between NCLAT and NCLT as shown below: