National Company Law Tribunal (NCLT) (Part -1) - Winding Up, Company Law B Com Notes | EduRev

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National Company Law Tribunal

Definitions​

(a) ‘Appellate Tribunal’ means the National Company Law Appellate Tribunal constituted under Section 410 [Section 2 (4)].

(b) Section 407 of the Companies Act, 2013 provides the definitions of Chairperson, Judicial Members, Member, President and Technical Member as follows:

  1. ‘Chairperson’ means the Chairperson of the Appellate Tribunal [407(a)].
  2. ‘Judicial Member’ means a member of the Tribunal or the Appellate Tribunal appointed as such and includes the President or the Chairperson, as the case may be [407(b)].
  3. ‘Member’ means a member, whether Judicial or Technical of the Tribunal or the Appellate Tribunal and includes the President or the Chairperson, as the case may be [407(c)].
  4. (4) ‘President’ means the President of the Tribunal [407(d)].
  5. (5) ‘Technical Member’ means a member of the Tribunal or the Appellate Tribunal appointed as such [407(e)].

Constitution of National Company Law Tribunal (Section 408)

Section 408 of the Act contains the provisions as to constitution National Company Law Tribunal (NCLT).

According to this Section the Central Government shall, by notification, constitute with effect from such date as may be specified therein, a Tribunal to be known as the National Company Law Tribunal consisting of a President and such number of (Judicial and Technical) members, as the Central Government may deem necessary, to be appointed by notification, to exercise and discharge such powers and functions as conferred on it by or under this Act or any other law for the time being in force.

Qualification of President and Members of Tribunal (Section 409)

Section 409 of the Act contains the provisions as to Qualification of President and Members of Tribunal

According to this Section the qualifications of the President and members of Tribunal are as follows:

(a) Qualification for the President: He shall be a person who is or has been a Judge of a High Court for five years.

(b) Qualification for the Judicial member: A person shall not be qualified for appointment as a Judicial Member unless he is or has been:

  1. a judge of a High Court, or
  2. a District Judge for at least five years, or
  3. an advocate of a court for at least ten years.

(c) Qualification for Technical member: A person shall not be qualified for appointment as a Technical Member unless he:

  1. Has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian Legal Service out of which at least three years shall be in the pay scale of Joint Secretary to the Government of India or equivalent or above in that service, or
  2. Is, or has been, in practice as a Chartered Accountant for at least fifteen years, or
  3. Is, or has been, in practice as a Cost Accountant for at least fifteen years, or
  4. Is, or has been, in practice as a Company Secretary for at least fifteen years, or
  5. Is a person of proven ability, integrity and standing having special knowledge and experience, of not less than fifteen years, in law, industrial finance, industrial management or administration, industrial reconstruction, investment, accountancy, labour matters, or such other disciplines related to management, conduct of affairs, revival, rehabilitation and winding up of companies, or
  6. Is, or has been, for at least five years, a presiding officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947.

Constitution of Appellate Tribunal (Section 410)

Section 410 of the Act contains the provisions as to Constitution of Appellate Tribunal. According to this Section: The Central Government shall, by notification constitute with effect from such date as may be specified therein, an Appellate Tribunal to be known as the National Company Law Appellate Tribunal (NCLAT) consisting of a Chairperson and such number of Judicial and Technical members, not exceeding eleven, as the Central Government may deem fit. NCLAT when constituted will be for hearing appeals against the orders of the Tribunal.

Qualifications of Chairperson and members of Appellate Tribunal (Section 411)

Section 411 of the Act contains the provisions as to Qualifications of Chairperson and members of Appellate Tribunal. According to this Section:

  • Qualifications of Chairperson: The chairperson shall be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court.
  • Qualifications of Judicial member: A Judicial Member shall 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.
  • Qualifications of Technical member: A Technical Member shall be a person of proven ability, integrity and standing having special knowledge and experience, of not less than twenty five years in various specified disciplines related to the management, conduct of affairs, revival, rehabilitation and winding up of companies.

Selection of Members of Tribunal and Appellate Tribunal (Section 412) 

Section 412 of the Act contains the provisions as to Selection of Members of Tribunal and Appellate Tribunal. According to this Section:

(a) The President of the Tribunal and the chairperson and Judicial Members of the Appellate Tribunal shall be appointed after consultation with the Chief Justice of India. [Section 412(1)].

(b) The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee. [Section 412 (2)].

(c) Constitution of selection Committee: The selection committee shall consist of:

  1. Chief Justice of India or his nominee Chairperson.
  2. a senior Judge of the Supreme Court or a Chief Justice of High Court - Member.
  3. Secretary in the Ministry of Corporate Affairs - Member.
  4. Secretary in the Ministry of Law and Justice – Member, and
  5. Secretary in the Department of Financial Services in the Ministry of Finance - Member.

Whereas, the Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection Committee [Section 412 (3)].

 

(d) Functioning of the Selection committee: The Selection Committee shall determine its procedure for recommending persons for the appointment of the members of the Tribunal and the technical members of the Appellate Tribunal [Section 412 (4)].

(e) No appointment of members shall be invalid: No appointment of the Members of the Tribunal or the Appellate Tribunal shall be invalid merely by reason of any vacancy or any defect in the constitution of the Selection Committee. [Section 412(5)]. 

Therefore, the President of the Tribunal and the Chairperson and the Judicial Members of the Appellate Tribunal shall be appointed after consultation with the Chief Justice of India. The members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on recommendation of a Selection committee. The constitution of the selection committee has been provided in the Act. Convener to Selection Committee shall be the Secretary, Ministry of Corporate Affairs.

Selection Committee has been allowed to determine its procedure for recommending persons.

Term of office of President, Chairperson and other Members (Section 413)

Section 413 of the Act contains the provisions as to Term of office of President, Chairperson and other Members NCLT and NCLAT. According to this Section:

(a) The President and every other Member of the Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office, but shall be eligible for re-appointment for another term of five years.

(b) A Member of the Tribunal shall hold office as such until he attains:

  1. the age of sixty seven years (in the case of the President).
  2. the age of sixty five years (in the case of any other Member).

Provided that a person who has not completed fifty years of age shall not be eligible for appointment as Member.

Provided further that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be, while holding office as such for a period not exceeding one year.

(c) The chairperson or a Member of the Appellate Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office, but shall be eligible for re-appointment for another term of five years.

(d) A Member of the Appellate Tribunal shall hold office as such until he attains: 

  1. the age of seventy years (in the case of the Chairperson).
  2. the age of sixty seven years (in the case of any other Member).

Provided that a person who has not completed fifty years of age shall not be eligible for appointment as Member.

Provided further that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be, while holding office as such for a period not exceeding one year.

Salary, allowances and other terms and conditions of service of Members (Section 414)

Section 414 of the Act contains the provisions as to Salary, allowances and other terms and conditions of Members. According to this Section:

The salary, allowances and other terms and conditions of service of the Members of the Tribunal and the Appellate Tribunal shall be such as may be prescribed.

Provided that, neither the salary and allowances nor the other terms and conditions of service of the Members shall be varied to their disadvantage after their appointment.

Acting President and Chairperson of Tribunal or Appellate Tribunal (Section 415).

Section 415 of the Act contains the provisions as to Acting President and Chairperson of Tribunal or Appellate Tribunal. According to this Section:

(a) In the event of the occurrence of any vacancy in the office of the President or the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the President or the Chairperson, as the case may be, until the date on which a new President or Chairperson appointed in accordance with the provisions of this Act to fill such vacancy enters upon his office.

(b) When the President or the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member shall discharge the functions of the President or the Chairperson, as the case may be, until the date on which the President or the Chairperson resumes his duties.

Resignation of Members (Section 416)

Section 416 of the Act contains the provisions as to Resignation of Members of NCLT and NCLAT. According to this Section:

The President, the Chairperson or any Member may, by notice in writing under his hand addressed to the Central Government, resign from his office.

Provided that the President, the Chairperson, or the Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Central Government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is earliest.

Removal of Members (Section 417)

Section 417 of the Act contains the provisions as to Removal of Members. According to this Section:

The Central Government may, after consultation with the Chief Justice of India, remove from office the President, Chairperson or any Member, who:

  1. has been adjudged an insolvent, or
  2. has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude, or
  3. has become physically or mentally incapable of acting as such President, the Chairperson, or Member, or
  4. has acquired such financial or other interest as is likely to affect prejudicially his functions as such President, the Chairperson or Member, or
  5. has so abused his position as to render his continuance in office prejudicial to the public interest.

Provided that the President, the Chairperson or the Member shall not be removed on any of the grounds specified in clauses (b) to (e) without giving him a reasonable opportunity of being heard.

Staff of Tribunal and Appellate Tribunal (Section 418)

Section 418 of the Act contains the provisions as to Staff of Tribunal and Appellate Tribunal. According to this Section:

  1. The Central Government shall, in consultation with the Tribunal and the Appellate Tribunal, provide the Tribunal and the Appellate Tribunal, as the case may be, with such officers and other employees as may be necessary for the exercise of the powers and discharge of the functions of the Tribunal and the Appellate Tribunal.
  2. The officers and other employees of the Tribunal and the Appellate Tribunal shall discharge their functions under the general superintendence and control of the President, or as the case may be, the Chairperson, or any other Member to whom powers for exercising such superintendence and control are delegated by him.
  3. The salaries and allowances and other conditions of service of the officers and other employees of the Tribunal and the Appellate Tribunal shall be such as may be prescribed.

Benches of Tribunal (Section 419)

Section 419 of the Act contains the provisions as to Benches of Tribunal. According to this Section:

  1. The Central Government by notification may constitute such number of Benches of the Tribunal.
  2. The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over by the President of the Tribunal.
  3. The powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member.

The Central Government also constituted 11 (eleven) Benches of the NCLT in exercise of its powers under Sub-Section (1) of Section 419 of the new Companies Act, 2013. Of the said 11 benches, two shall be situated in New Delhi and one each at Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai.

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