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MCA constitutes NCLT and NCLAT and notifies
certain provisions of Companies Act, 2013 to make
The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT)
have been constituted by Central Government with effect from 1 June, 2016. This would effectively
dissolve the Company Law Board (CLB) as constituted under the Companies Act, 1956 from the same
The NCLT will start functioning with eleven Benches –two at New Delhi and one each at Ahmedabad,
Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and
Mumbai. The Principal Bench of the NCLT will be at New Delhi
Some provisions of the Companies Act, 2013 (mainly pertaining to powers of the CLB) relating to powers
of Tribunal have also been notified by the Government (which were not effective due to non‐
constitution of NCLT) except provisions pertaining to compromise and arrangement, winding up etc.
The Ministry of Corporate Affairs, (MCA) has, vide notifications dated 1 June, 2016 notified the
constitution of NCLT and NCLAT by Central Government under the provisions of the Companies Act,
2013 (the 2013 Act). MCA has further notified certain provisions of the 2013 Act, thereby making the
functioning of NCLT and NCLAT operative from 1 June, 2016. The table below summarises the key
provisions of the 2013 Act notified by MCA to be operative from 1 June, 2016:
Incorporation of Company
Power of NCLT to pass orders, where a company has been
incorporated by furnishing any false information/suppressing any
material fact or information or by any fraudulent action.
1. The power to remove the name the company from the register of
companies would still continue with the Registrar of Companies;
2. The power to orders for winding up of the company would still
continue with the High Courts.
Damages for FraudFailure of the company to repay the deposit along with interest
within the time limit (extension if any granted by the Tribunal as per
section 74) or acceptance of deposit with an intention to defraud
the depositors, or for any other fraudulent purposes. See Note 1
Removal of Directors Powers of Tribunal in relation to removal of director.
Freezing of assets of company
on inquiry and investigation
Imposition of Restrictions
Tribunal to have powers for the said sections.
Investigation into company’s
affairs in other cases Powers of Tribunal to investigate into company’s affairs in
Investigation of ownership
of the com
Powers of Tribunal to investigate into of the ownership of the
Protection of employees during
Approval of Tribunal required for any action proposed against the
employee Protection of employees during Investigation. Power of Tribunal to grant inspection of minutes book of a general
meeting as requested by a member in a situation of refusal or
Re-opening of accounts and
voluntary revisions of financial
statements or Board’s reportRe‐opening of accounts to be done only on approval of Tribunal.
Approval of the Tribunal required for Voluntary revision of financial
statements or Boards Report
Removal, resignation of
auditor and giving special
noticePowers granted to Tribunal to remove the auditor suo moto or on
application made by the Central Government.
Alteration of Articles
Alteration of articles having the effect of conversion of a public
company into a private company.
Issue & redemption of
Preference SharesIssue of fresh redeemable preference shares where the company is
not in a position to redeem preference shares and to pay dividend.
Alteration of share capitalConsolidation and division of share capital results in changes in
voting percentage of shareholders.
Further issue of share capitalConversion of debentures issued or loan obtained from
Government by a Company into shares – If terms of conversion not
acceptable to the Company, appeal can be made with the Tribunal.
DebenturesPetition to be filed with the Tribunal on failure by the company to
redeem the debentures or pay interest on them.
AGMs, meeting of members Power of the Tribunal to call annual general meeting, meetings of
members in specified cases.
Inspection of minutes book of
Compounding of Offences Power of NCLT to compound offences. See Note 2. below
1. The reference to Tribunal is arrived from section 74. However, section 74 has not been notified to
include NCLT as the regulatory authority for granting extension in the time limit
2. Offences where the fine exceeds INR 0.5 million will be dealt by NCLT and offences with fine below
INR 0.5 million will dealt by officer authorized by Government or Regional Director
While notifying these provisions, the MCA has not considered the Companies (Amendment) Bill 2016
(pending before the Parliamentary Standing Committee) which provides for amendments to the
Companies Act, 2013, including amendment to be made on constitution of NCLT and NCLAT in line with
the judgement of the Supreme Court in Madras Bar Association’s2 case.
The MCA may gradually notify provisions relating to powers of High Court under the Companies Act
2013/ 1956 in respect of reduction of share capital, winding‐up and compromise or arrangement
(merger/ demerger) and
these matters may get transferred to NCLT later on.
It appears that provisions relating to reduction of share capital, winding‐up and compromise or
arrangement (merger/demerger), etc., will remain under the jurisdiction of High Court till the time these
provisions are made effective. Further, one will to wait for rules to be notified.
National Company Law
Tribunal & Appellate
Detailed provisions in relation to operation, functioning of the
Tribunal and its members.
By CS. Sandip Singh