NCLT – Quasi-judicial Adjudicating Authority under Companies Act, 2013

NCLT is an original-side quasi-judicial adjudicating authority constituted under Companies Act, 2013 to adjudicate all company related disputes covered under Companies Act. The constitution of the NCLT was marred by  series of litigations before the High court and Supreme Court even though the same was initially and originally for the first time proposed to be constituted under Companies (second amendment) Act 2002. Now, with its improvement, thanks to the suggestions from the Hon’ble Madras High Court and the Hon’ble Supreme Court made in various cases, it came into being finally in the month of June, 2016 with the appointment of its President and Chairman of NCLAT.

The original-side jurisdiction hitherto exercised by CLB, High Court and District Court under Companies Act, 1956, BIFR under the SICA, 1985 and DRT under RDDBFI Act, 1993 and SARFAESI Act, 2002 are now subsumed to NCLT to facilitate speedy and effective adjudication of Company Disputes and avoid overlapping layered jurisdiction amongst various forums. In short, NCLT seeks to achieve one-stop single-layer speedy and efficacious adjudication of company disputes including Insolvency, liquidation and Bankruptcy cases. Accordingly, no civil court hence forth will exercise any jurisdiction over those company related disputes.

Since issues and disputes pertaining to the company will involve “common legal questions” as well as “special regulatory provisions” inter alia under Companies Act, all benches of the NCLT and NCLAT will comprise of at least one “judicial member” and one ”technical member”. This mechanism of division bench of NCLT/NCLAT is designed to apply effectively and efficiently “common law” and various “special laws” principles. It is for this purpose, practitioners of CS, CA and CMA, who have proven track record of in-depth knowledge of special law, are also entrusted with the duty/responsibility to appear and represent parties before it. At the stage, while lawyers, who are the natural pleader before any judicial and quasi-judicial forum, are to develop special skill-set to imbibe the grasping of the special laws and its contours, the professionals such as CS,CA and CMA are expected to develop the prowess in common law principles and the ability to appear and argue before quasi-judicial forum such as NCLT and NCLAT.

Even if the proceedings before NCLT and NCLAT are not bound by the provisions of CPC, 1908, it cannot be immune from its application from time to time, in cases-to-cases and in circumstance-to-circumstances in as much as, the procedure under CPC also covers some of the legal principles developed by courts in due course till date such as doctrine of res judicata, concept of locus, cause of action and jurisdiction etc. The proceedings before NCLT and NCLAT will be guided by the principles of natural justice and respective guidelines to be framed by NCLT/NCLAT. The experience of similar quasi-judicial forum under different special statutes with the similar provision clearly shows that one cannot totally avoid the application of CPC, not in ‘form’ but in ‘substance’. Therefore understanding the broad contours of the legal principles emanating from the concept of jurisprudence inert alia embodied under CPC will continue to have significant relevance. Those decided cases will continue to pave the path of adjudication before NCLT/NCLAT.

In order to bring urgency, efficacy and effectiveness in the proceeding of NCLT and NCLAT, they are packed with judicial and technical experience and expertise. But to assist NCT/NCLAT, similar matching expertise is warranted in the skill-set of representatives such as advocates, CS, CA, CMA.

It is pertinent to note that India is a fast growing economy with huge expectation. Due to obvious paucity of resources, our per-capita grievance redressal forum numbers are abysmally low as compared to anywhere in the world. This brings enormous responsibility on all the stakeholders including, in particular, the judicial apparatus involving courts and practitioners.

While “fair justice” is the main-stay for any healthy society and for which adequate opportunity and time is paramount, a “speedy delivery of justice” is also equally important thereby pitting one directly against the other. Thus the concept of “Justice hurried is justice buried” and “justice delayed is justice denied” is well known and developed. This quandary is expected to be solved through participation and involvement of quality professionals putting enormous responsibility on them. It is significant to note that proceedings before the NCLT/NCLAT are to be expeditiously disposed of within three months from its presentation and, at most, the same can be extended for additional three months which requires expertise, effectiveness and speed. Otherwise, the remedy will be worse than the problem.

With the development and recognition of legal concepts like “class action suit”, “deficiency in service”, “law of tort” etc., the services rendered by the practitioners will not be completely immune from commercial and professional consequences. This also warrants urgency of efficiency and purpose.


Lex Bolster 
on 25 June 2016
Published in Corporate Law
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