National Company Law Appellate Tribunal (NCLAT)

The constitution of the National Company Law Tribunal and the National Company Law Appellate Tribunal (NCLAT or the Appellate Tribunal) was recommended by Justice Eradi Committee in 1999 and was subsequently carried out by an amendment in 2002. However, upon a challenge to its validity in the Madras Bar Association case of 2010, it was stopped in its tracks. Upon notification of the 2013 Act, on 1^st June 2016, the NCLAT came into power as the supreme appellate authority in corporate disputes.

This article describes the formation and the workings of the NCLAT in details.

I. Introduction

The NCLAT is a quasi-judicial authority formed under the power of Section 410 of the Companies Act, 2013 (‘the Act’) to hear appeals from the NCLT. However, as the years passed by, it has seen considerable addition in its powers as it now hears appeals from the Competition Commission of India (CCI) and under matters of Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) as well.

The NCLAT is the highest tribunal of appellate jurisdiction, and appeals from its decision lie only to the Supreme Court. With the advent of the Act, powers and jurisdiction in these matters of the High Court, the Company Law Boards, the Board for Industrial and Financial Reconstruction and the Appellate Authority for Industrial and Financial Reconstruction were all transferred to the NCLT and the NCLAT accordingly in a phased manner.

II. Composition, Selection & Tenure

Chapter XXVII of the Act lays down the provisions relating to the Appellate Tribunal. Under Section 410, the NCLAT is composed of a Chairperson and a number of Judicial Members and Technical Members as prescribed by the Central Government. The maximum number of members is 11. The Appellate Tribunal has only one functional bench as of now, situated in New Delhi. Another Bench in Chennai is to begin soon.

Section 411 lays down the qualifications required to be the Chairperson and other members of the Appellate Tribunal. The Chairperson should be or have been the Chief Justice of the High Court or a Judge in the Supreme Court. The Judicial Members are required to be a judge in a High Court or a judicial member for five years. The Technical Member can be one who is of “proven ability, integrity and standing” and has special knowledge, the experience of at least twenty-five years in any filed given in 411(3). Further, the members and the chairperson should be minimum of 50 years of age.

Section 412 lays down the selection procedure for the members. The Chairperson and the Judicial members are selected after consultation with the Chief Justice of India. The rest of the members are appointed by a Selection Committee consisting of –

• The Chief Justice of India or a person nominated by him for the purpose as— Chairperson;
• a senior Judge in the Supreme Court or Chief Justice of High Court as— Member;
• Secretary, Ministry of Corporate Affairs as—Member;
• Secretary, Ministry of Law and Justice as—Member; and
• Secretary, Department of Financial Services under the Ministry of Finance as— Member.
• The Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection Committee

A vacancy in the above selection committee does not render an appointment invalid.

Section 413 states the tenure of the members of the Appellate Tribunal. The Chairperson and all the members of the NCLAT hold office for a period of 5 years from the date of joining office. Both are eligible for reappointment for another 5 years. There is an upper age limit of 70 years for the Chairperson and 67 years for the Members after which they cannot continue to hold office. Before this tenure, a member may resign by giving notice in writing to the Central Government and may be removed on the grounds given in Section 417.

In any event, in case of absence of the Chairperson due to death, resignation or any other reasons, or him being unable to discharge his functions, the senior-most member of the Appellate Tribunal acts as an Acting Chairperson and discharges the functions till the need is obviated (Section 415).

Under Section 414, the salary and allowances of the members of the body are prescribed by the central government, only subject to the condition that they shall not be varied in their disadvantage during tenure.

The Tribunal has been functional since 2016; the first team itself is holding office currently, as follows:

Name of Member	Office Held Currently
Justice S J Mukhopadhaya	Chairperson
Balvinder Singh	Technical Member
Justice A I S Cheema	Judicial Member
Justice Bansi Lal Bhat	Judicial Member
Kanthi Narahari	Technical Member
Justice Venugopal M	Judicial Member
Justice Jarat Kumar Jain	Judicial Member
Vijay Pratap Singh	Technical Member
Dr Ashok Kumar Mishra	Technical Member

III. Functions of the NCLAT

The nature of the NCLAT’s functions is to listen to cases in an appeal from specified lower tribunals within limitation, and pass such orders either upholding, modifying or overturning the lower tribunal’s decision as it deems fit. It hears cases in appeals from 3 bodies as of now:

Appeals from the NCLT under Companies Act

This is the original function with which the body was established and the solitary function before the 2017 amendment. Under Section 421 of the Act, the NCLAT sits in appeal to orders passed by the NCLT provided that the appeal is filed within forty-five days of the order having been communicated.

On sufficient cause being shown, the Appellate Tribunal is authorized to admit appeal in condonation of any delay. However, this delay cannot exceed another forty-five days, i.e. the Appellate Tribunal is barred from taking appeal filed after ninety days of the communication of the order of the lower Tribunal. Section 421(2) further states that in an order passed by consent of disputing parties, no appeal lies.

Appeals from the NCLT under the IBC, 2016

From 1^st December 2016, it was brought to effect that the NCLAT will also hear appeals against any order passed by the NCLT under Section 61 of the IBC, 2016. This appeal needs to be filed within thirty days of the order. A further delay of fifteen days may be allowed by the tribunal if satisfied with a good reason for delay.

Appeals from the IBBI

The NCLAT sits in an appeal against orders passed by the Insolvency and Bankruptcy Board of India (IBBI) in matters covered by Sections 202 and 211 of the IBC, 2016.

Appeals from the CCI

On 26^th May 2017, part XIV of the Finance Act, 2017 came into effect. The Act has the effect of combining several tribunals into one. Section 172 of the Finance Act amended Section 410 of the Companies Act to add the Competition Commission of India alongside the NCLT.

Similarly, Section 53A of the Competition Act, 2002 was amended to replace the appellate authority in competition matters to NCLAT. This means that Section 410 now states that all appeals from all orders, decisions and directions of the NCLT and the CCI will now be heard by the NCLAT following the required procedures laid in the Competition Act, 2002. With this move, the NCLAT has taken over the COMPAT (Competition Appellate Tribunal).

It is pertinent to note that with respect to appeals in competition law disputes, only the relevant venue has changed and the substantive provisions remain the same. The party would have a right to seek compensation from the NCLT, as they would have from the COMPAT before.

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References

1. Companies Act, 2013 with Amendments by the Finance Act, 2017. Available Here
2. Company Law, Avtar Singh

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