What Is the National Company Law Tribunal (NCLT)?

The National Company Law Tribunal is the forum that decides company law questions in India. It is where a capital reduction gets confirmed, where a scheme of arrangement gets sanctioned, where minority shareholders bring a class action, and where insolvency proceedings are admitted. If you follow corporate actions in listed companies, the NCLT is the body whose order turns a proposal into a fact.

What the National Company Law Tribunal decides

Section 408 does not list the Tribunal's subjects. It grants a general competence over whatever the Act, or any other law in force, confers on it. In practice that competence turns up throughout the Act in the form of provisions that require the Tribunal's confirmation, sanction or order.

Four examples that shareholders in listed companies actually encounter:

• Reduction of share capital. Section 66(1) makes the reduction subject to confirmation by the Tribunal on an application by the company, and section 66(2) requires the Tribunal to notify the Central Government, the Registrar, SEBI in the case of listed companies, and the creditors.
• Class actions. Section 245(1) routes an application by the members or depositors described in section 245(3) to the Tribunal.
• Squeeze-out of dissenting shareholders. Section 235(2) lets a dissenting shareholder apply to the Tribunal within one month of the transferee company's notice.
• Strike off. Section 248(8) preserves the Tribunal's power to wind up a company whose name has already been struck off the register.

Who sits on it

Section 409(1) requires the President to be a person who is or has been a Judge of a High Court for five years.

Section 409(2) sets three alternative qualifications for a Judicial Member: being or having been a judge of a High Court, being or having been a District Judge for at least five years, or having been an advocate of a court for at least ten years. The Explanation to that clause counts, towards the ten years, any period during which the person held judicial office, or the office of a member of a tribunal, or a post under the Union or a State requiring special knowledge of law, after becoming an advocate.

Section 409(3) sets six alternative Technical Member qualifications, in clauses (a) to (f), and it is where the accounting professions enter:

• (a) Fifteen years in the Indian Corporate Law Service or Indian Legal Service, holding the rank of Secretary or Additional Secretary to the Government of India.
• (b) Fifteen years in practice as a chartered accountant.
• (c) Fifteen years in practice as a cost accountant.
• (d) Fifteen years in practice as a company secretary.
• (e) Proven ability, integrity and standing, with not less than fifteen years of special knowledge and professional experience in industrial finance, industrial management, industrial reconstruction, investment and accountancy.
• (f) At least five years as a presiding officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947.

The rank requirement in clause (a), and the whole of clause (e), were both substituted by Act 1 of 2018, section 82, with effect from 9 February 2018.

The appellate tier

Section 410 constitutes the National Company Law Appellate Tribunal, consisting of a chairperson and such number of Judicial and Technical members as the Central Government deems fit, for hearing appeals against the orders of the Tribunal or of the National Financial Reporting Authority under the Act, and against any direction, decision or order referred to in section 53A of the Competition Act, 2002.

Section 411(1) requires the NCLAT chairperson to be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court. Section 411(2) requires a Judicial Member to be a person who "is or has been a Judge of a High Court or is a Judicial Member of the Tribunal for five years". Section 411(3), substituted by Act 1 of 2018, section 84, requires a technical member to have not less than twenty-five years of special knowledge and professional experience in industrial finance, industrial management, industrial reconstruction, investment and accountancy.

How the Tribunal runs a hearing

Section 424(2) nonetheless gives both Tribunals the same powers as a civil court under the Code of Civil Procedure, 1908 for eight purposes: summoning and enforcing attendance and examining on oath, requiring discovery and production of documents, receiving evidence on affidavits, requisitioning public records subject to sections 123 and 124 of the Indian Evidence Act, 1872, issuing commissions for the examination of witnesses or documents, dismissing a representation for default or deciding it ex parte, setting aside such a dismissal or ex parte order, and any other prescribed matter.

Section 424(3) makes an order enforceable in the same manner as a decree of a court in a pending suit, and permits the Tribunal to send its orders for execution to the court within whose local limits the matter falls.

The four provisions that shape access

Exclusive jurisdiction. Section 430 bars any civil court from entertaining a suit or proceeding in respect of any matter the Tribunal or Appellate Tribunal is empowered to determine, and bars any court or other authority from granting an injunction in respect of any action taken or to be taken in pursuance of a power conferred on either Tribunal.

Vacancies do not invalidate. Section 431 provides that no act or proceeding of either Tribunal shall be questioned or be invalid merely on the ground of the existence of a vacancy or a defect in its constitution.

Representation. Section 432 lets a party appear in person or authorise chartered accountants, company secretaries, cost accountants, legal practitioners or any other person.

Limitation. Section 433 applies the Limitation Act, 1963, as far as may be, to proceedings and appeals before both Tribunals.

Where this sits in the disclosure picture

The Tribunal is a judicial forum, not a filing authority, so its orders are not part of the exchange disclosure feeds Flock reads. A listed company's own filings are where the same events surface first: the board meeting intimation that puts a scheme or capital reduction on the agenda, and the material event disclosure for litigation.

• What is a scheme of arrangement is the most common reason a listed company appears before the Tribunal.
• How to read a board meeting intimation covers the filing that flags such a step in advance.
• Reduction of share capital is the corporate action that cannot complete without a Tribunal order.
• The shareholding pattern is where the result of any of it shows up quarter by quarter.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.