NCLT Litigation Matter


It is a quasi-judicial authority incorporated to deal with corporate disputes arising under the Companies Act that are of a civil nature. However, a difference in NCLT's powers and functions under the preceding Companies Act and the 2013 Act could be seen. The NCLT's constitutional validity and specified allied provisions contained in the Act were re-challenged. The NCLT's constitutional validity had been retained by the Supreme Court but particular clauses were found as a breach of constitutional principles.

NCLT works on the lines of a normal court of law in the country and is obliged to determine the facts of each case fairly and without any bias, and to decide on matters in accordance with the principles of natural justice and to offer conclusions from decisions in the form of orders in the continuation of such decisions. The orders thus formed by NCLT could help resolve a situation, rectify a mistake committed by any company or impose penalties and costs, and could alter the rights, obligations, duties, or privileges of the parties concerned. The Tribunal is not obliged to adhere to the strict rules regarding the assessment of any evidence or procedural law.

Litigation matter which may be litigate at NCLT

Registration of Company

 On application to ROC a person can get its company register or de-register but due to some reason if the company does not register or de-register it maybe appeal to NCLT for resolving the query. NCLT was allowed to take several steps, including canceling a company's registration to dissolving any business. The Tribunal may also unlimitedly make the members' liability or charge. Under this method, NCLT will de-register any company under section 7(7) of the Companies Act, 2013 in particular circumstances where the certificate of registration has been obtained by unlawful manner or by illegal means.

Share Transfer

NCLT is also empowered to hear complaints of company rejection in the sale of shares and assets, and pursuant to section 58-59 of the Act which was originally under the jurisdiction of the Company Law Board. Going back to the Companies Act, 1956, the option available to refuse transmission or transfer was limited only to a company's shares and debentures, but from now on the prospect has been expanded under the Companies Act, 2013, and now it includes all the securities issued by any firm.

Deposit issue

Chapter V of the Act deals with deposits and has been informed several times in 2014, and the Company Law Board has been the primary authority to deal with the cases under that clause. Now, these powers have been vested on NCLT under chapter V of the Act. The provisions on deposits pursuant to the Companies Act, 2013 were notified before the NCLT was created. Unhappy depositors now have a remedy of class action suits to seek redress for the company's omissions and actions that impact their rights as depositors.

Investigation Power

According to the provisions of the Companies Act, an inquiry into the company's affairs in 2013 could be ordered with the help of a 100-member application while the application of 200 members was previously required for the same. Moreover, if an individual who is not linked to a company and can persuade NCLT of the existence of conditions for ordering an investigation then NCLT has the power to order an investigation. An investigation ordered by the NCLT could be carried out inside India or anywhere in the world. The provisions are drafted for the courts and investigation agencies as well as foreign countries to offer and seek support.

The NCLT is not only allowed to freeze a company's assets for use at a later point while that business is under investigation or inspection, that inquiry may also be directed under particular conditions at the request of others.

Conversion of Company

Sections 13-18 of the Companies Act, 2013 read with rules that control the conversion of a Public Limited Company into a Private Limited Company, requiring an earlier NCLT confirmation of such conversion. NCLT has the power to impose specific conditions or restrictions under section 459 of the Act and may be subject to such conditions for granting approvals.

Merger and Amalgamation

Section Compromises, Arrangements, and Amalgamations is dealt with in Chapter XV of Companies Act, 2013. Under this clause, the need to seek approval from other authorities, such as the National Company Law Tribunal ( NCLT), and if the Company is a Listed Company, SEBI permission must be taken from it for approving compromise and arrangement.

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