National Company Law Tribunal (NCLT): Powers and Functions

Corporate disputes in India used to drag on for years across multiple forums. The Company Law Board, the Board for Industrial and Financial Reconstruction, and various High Courts all handled overlapping matters. That changed in 2016 when the National Company Law Tribunal (NCLT) became operational. Today, NCLT is the single adjudicating authority for most corporate disputes, insolvency proceedings, and company law matters under the Companies Act, 2013, and the Insolvency and Bankruptcy Code (IBC), 2016. Understanding NCLT powers and functions is essential for directors, compliance professionals, and anyone dealing with company dispute resolution in India.

Whether you are a promoter facing an oppression claim, a creditor initiating insolvency proceedings, or a company secretary managing regulatory filings, NCLT plays a central role in resolving the matter. This guide covers everything you need to know, from jurisdiction and bench composition to the step-by-step process of filing a case. If your company is registered as a private limited company, a public company, or even a Section 8 company, the NCLT has authority over disputes involving your entity.

What is NCLT

The National Company Law Tribunal is a quasi-judicial body established under Section 408 of the Companies Act, 2013. It replaced the Company Law Board (CLB) and absorbed the functions of the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). NCLT started functioning on 1st June 2016, with its principal bench located in New Delhi.

NCLT operates through multiple benches across India, including in cities like Mumbai, Chennai, Kolkata, Hyderabad, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Cuttack, Guwahati, Jaipur, Kochi, and Amaravati. Each bench hears cases related to companies whose registered offices fall within its territorial jurisdiction. Appeals against NCLT orders go to the National Company Law Appellate Tribunal (NCLAT), which sits in New Delhi and Chennai.

Composition of NCLT Benches

Every NCLT bench comprises a Judicial Member and a Technical Member. The Judicial Member is typically a person who has served as a High Court judge or a District Court judge for at least five years. The Technical Member is someone with at least 15 years of experience in corporate affairs, law, finance, or administration. This dual composition ensures that both legal and commercial aspects of disputes receive due consideration.

The President of NCLT oversees the allocation of cases and the functioning of all benches. For matters involving insolvency resolution under the IBC, the bench composition remains the same. However, certain categories of cases can be heard by a single member, depending on the nature of the application. The Central Government appoints members based on recommendations from a selection committee, ensuring that the tribunal is staffed with qualified professionals.

Key Powers of NCLT Under the Companies Act

The NCLT powers and functions span a wide range of corporate and insolvency matters. These powers are derived primarily from the Companies Act, 2013, and the Insolvency and Bankruptcy Code, 2016. Here is a detailed look at the major areas of jurisdiction.

Oppression and Mismanagement (Sections 241 to 246)

Members holding at least one-tenth of the total share capital, or one-tenth of the total number of members, can file an application alleging oppression or mismanagement. NCLT can pass orders to regulate the company's affairs, remove or appoint directors, modify the articles of association, or even direct the purchase of shares by other members. These provisions protect minority shareholders from being sidelined by the controlling group.

Compromises, Arrangements, and Amalgamations (Sections 230 to 240)

NCLT sanctions schemes of compromise, arrangement, merger, and amalgamation between companies. Any scheme of merger requires NCLT approval after creditors and members vote on it. This includes cross-border mergers, demergers, and acquisitions. Companies undergoing restructuring, whether they are LLPs converting to private limited companies or public entities merging with subsidiaries, often find their matters routed through NCLT.

Winding Up of Companies (Sections 271 to 365)

NCLT has exclusive jurisdiction to order the winding up of a company. A winding-up petition can be filed by the company itself, its creditors, contributories, or the Registrar of Companies. Grounds for winding up include inability to pay debts, a special resolution by members, or directions from the tribunal if the company was formed for fraudulent or unlawful purposes. Once an order is passed, a liquidator is appointed to manage the process.

Insolvency Resolution Under IBC, 2016

The IBC empowered NCLT as the adjudicating authority for insolvency resolution of corporate debtors. Financial creditors, operational creditors, or the corporate debtor itself can initiate the Corporate Insolvency Resolution Process (CIRP) by filing an application. NCLT admits or rejects the application, appoints an Interim Resolution Professional (IRP), declares a moratorium, and oversees the entire resolution process. If no resolution plan is approved within the stipulated period, NCLT orders liquidation.

Class Action Suits (Section 245)

Members or depositors of a company can file class action suits before NCLT if they believe the company's affairs are being conducted in a manner prejudicial to their interests. This is a powerful tool for collective shareholder remedies. NCLT can restrain the company from committing the alleged act, claim damages, or pass any other order it deems appropriate.

Summary of NCLT Jurisdiction

How to File a Case at NCLT

Filing a case before NCLT follows a structured procedure. The process begins with identifying the correct bench based on the registered office of the company involved. Here is the step-by-step process.

First, determine the applicable provision under the Companies Act or IBC that gives rise to your claim. Draft the petition or application in the prescribed format under the National Company Law Tribunal Rules, 2016. Attach all supporting documents, including board resolutions, financial statements, share certificates, correspondence, and any evidence supporting your claim.

Next, pay the prescribed fee based on the nature of the application. Fees vary depending on whether you are filing for oppression, winding up, insolvency, or a scheme of arrangement. File the application with the appropriate NCLT bench. The application must be served on all respondents. After admission, the tribunal schedules hearings and both parties present their arguments. NCLT then passes its order, which is binding unless appealed before NCLAT. Companies with robust compliance frameworks and proper secretarial audit records are better positioned to defend against claims or present their case effectively.

NCLT vs High Court: Key Differences

Before NCLT came into existence, High Courts handled a significant portion of company law matters, including winding up petitions and schemes of arrangement. The creation of NCLT centralised these functions under a specialised tribunal. Unlike High Courts, which handle a vast variety of civil and criminal cases, NCLT deals exclusively with company law and insolvency matters. This specialisation results in faster resolution and more consistent jurisprudence.

High Courts still retain certain powers, such as hearing writ petitions against NCLT orders in rare situations. However, the standard appellate route for NCLT orders is through NCLAT, not the High Court. From NCLAT, further appeals lie before the Supreme Court of India. This tiered structure ensures that corporate disputes are resolved through a dedicated pipeline without overburdening the regular courts.

Recent Developments and NCLT Workload

Since the IBC came into effect, NCLT's caseload has grown substantially. Thousands of insolvency applications are filed each year, and the tribunal plays a critical role in India's financial recovery ecosystem. The government has increased the number of NCLT benches and members to manage this volume. Virtual hearings, introduced during the pandemic, continue to be available for certain categories of cases, making the tribunal more accessible.

NCLT has also been actively involved in high-profile insolvency cases that reshaped sectors like steel, power, telecom, and real estate. The tribunal's orders in these matters have established important precedents for how the IBC operates. For companies planning registrations or restructuring, understanding NCLT's role is as important as understanding the company registration process itself.

Conclusion

The National Company Law Tribunal has fundamentally transformed how corporate disputes and insolvency matters are resolved in India. With exclusive jurisdiction over company law cases, a specialised bench structure, and the backing of both the Companies Act and the IBC, NCLT powers and functions cover nearly every facet of corporate adjudication. From protecting minority shareholders to overseeing billion-rupee insolvency resolutions, the tribunal serves as the backbone of India's corporate dispute resolution framework.

For directors, promoters, and compliance professionals, staying informed about NCLT's jurisdiction and procedures is not optional. It is a business necessity. Whether you are defending against an oppression petition or seeking approval for a merger, understanding how this tribunal works gives you a significant advantage. If your company needs assistance with corporate compliance, statutory audits, or registration matters, working with qualified chartered accountants and company secretaries ensures you stay prepared for any eventuality.