Difference between NCLT and NCLAT

The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) are the legal entities in India that deal specifically with matters related to company law and corporate affairs. These institutions play a crucial role in the resolution of disputes and legal proceedings involving companies. Both tribunals were established as a part of reforms in India’s Company law. NCLT and NCLAT were established as per the powers granted to the Ministry of Corporate Affairs (MCA) under sections 408 and 410 of the Companies Act, 2013, respectively.

Geeky Takeaways:

• NCLT and NCLAT were established as a part of reforming Companies law.
• The Ministry of Corporate Affairs (MCA) published a notification regarding the constitution of NCLT and NCLAT with effect from June 01, 2016.
• Sections 408 and 410 of the Companies Act, 2013 give a clear explanation to both NCLT and NCLAT.

What is NCLT?

The National Company Law Tribunal (NCLT) is like a special court in India that deals with problems related to companies. It was created under the Companies Act, 2013. NCLT handles various issues such as conflicts between the companies, situations where a company can’t pay its debts, and the process of closing down a company. It has different benches in different places to make it easier for people to access it. NCLT plays a key role in resolving disputes and making decisions about company matters, making sure that things are done properly according to the laws that apply to companies in India.

Section 408 of the Companies Act, 2013 defines NCLT and it specifies that the Central Government shall constitute a tribunal to be known as the National Company Law Tribunal. It consists of the President and other judicial and technical members, to exercise and discharge powers and functions as described by the act or any other power delegated to them by way of any other enactment or any notification by the Ministry of Corporate Affairs (MCA).

What is NCLAT?

The National Company Law Appellate Tribunal (NCLAT) is like a higher court in India for company problems. When people don’t agree with decisions made by the National Company Law Tribunal (NCLT), they can appeal to NCLAT. It functions as a second appeal. NCLAT looks at the appeals and decides if the NCLT’s decision was fair or not. If someone is still not satisfied with the decision of NCLAT, they cannot appeal further since the decision of NCLAT will be final. Established under the Companies Act, 2013, NCLAT ensures there’s a way for people to challenge decisions and make sure everything is done correctly in company matters.

Section 410 of the Companies Act, 2013 defines NCLAT. It states that the Central Government, by way of notification shall constitute an appellate tribunal to be known as the National Company Law Appellate Tribunal comprising of chairperson, and judicial and technical members for hearing appeals against the order of the Tribunal.

Difference between NCLT and NCLAT

Basis	NCLT	NCLAT
Meaning	National Company Law Tribunal (NCLT) is like a special court in India that deals with problems related to companies.	National Company Law Appellate Tribunal (NCLAT) is like a higher court in India for company problems. When people don’t agree with decisions made by the NCLT, they can appeal to the NCLAT.
Main Role	NCLT is like a court that deals with various company issues at the initial level.	NCLAT is a higher court that hears appeals against the decisions made by NCLT.
Jurisdiction	NCLT has the original authority to handle company law cases.	NCLAT has the authority to review and decide on appeals from NCLT decisions.
Hierarchy	It is the first instance where company disputes are addressed.	NCLAT is higher than NCLT, serving as the final appellate authority in these cases.
Establishment	NCLT was set up as per Section 408 under the Companies Act, 2013.	NCLAT was also established as per Section 410 under the Companies Act, 2013.
Benches	NCLT has 16 benches across the country.	NCLAT has multiple benches across the country.
Final Authority	NCLT decisions are subject to review by NCLAT, making NCLAT the final authority.	Decisions of NCLAT are generally final, with limited appeal options to the Supreme Court.
Appeals	Appeals can be made against NCLT decisions.	Appeals can be made to challenge NCLT decisions at NCLAT.
Time Frame	The time it takes to resolve cases in NCLT varies based on the case complexity.	NCLAT aims for timely resolution but depends on the specifics of each appeal.

Background of NCLT

• The National Company Law Tribunal (NCLT) has its roots in the evolution of India’s legal framework for corporate matters. Before NCLT came into existence, the Company Law Board (CLB) was the primary body dealing with company law disputes. However, recognizing the need for a more specialized and efficient resolution mechanism, the government introduced the concept of NCLT.
• The establishment of NCLT was a crucial step toward streamlining the resolution of company-related issues. It was formed under the Companies Act, 2013, and its main purpose is to consolidate and expedite the adjudication process. This move aimed to address the complexities and challenges associated with corporate affairs, providing a dedicated platform for handling company disputes, insolvency matters, and liquidation proceedings.
• The transition from CLB to NCLT marked a paradigm shift in the approach to company law cases. NCLT was envisioned as a quasi-judicial body with multiple benches across the country, ensuring accessibility and a more decentralized resolution mechanism. This transition aimed to enhance efficiency, reduce delays, and cater to the growing demands of a dynamic corporate environment.

Transition from CLB to NCLT and NCLAT

• The change from the Company Law Board (CLB) to the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) was a significant shift in India’s corporate legal system. Before this change, the CLB was the main authority for resolving company law issues. However, recognizing the need for a more streamlined and specialized approach, the government introduced NCLT.
• The primary goal was to create a more efficient system for handling disputes and legal matters related to companies. The Companies Act, 2013, played a crucial role in establishing NCLT and NCLAT by replacing the CLB. NCLT, designed as a quasi-judicial body with multiple benches across the country, aims to make the resolution process more accessible to businesses and individuals involved in company law matters.
• NCLAT, established as the appellate body, allowed parties who were not satisfied with the decision of NCLT to seek a review. This two-tiered structure of NCLT and NCLAT created a more hierarchical and specialized system for addressing company law disputes.
• The transition signalled a shift from the broader functions of the CLB to the more specialized roles of NCLT and NCLAT. It demonstrated a commitment to speeding up the resolution process, reducing delays, and aligning with international best practices in corporate governance and dispute resolution.
• In essence, the change from CLB to NCLT and NCLAT was a strategic move by the government to create a more robust and responsive legal framework, ensuring the timely and effective resolution of company law matters in India.

Conclusion

NCLT and NCLAT together form a crucial part of the legal framework for corporate governance and dispute resolution in India. Both the tribunals have been established to act as a uniform forum for adjudicating disputes relating to the working of companies where adjudicating it in a timely manner will help in the smooth running of the company. While NCLT handles matters at the first instance, NCLAT serves as a higher appellate authority, ensuring a structured and hierarchical approach to the resolution of company law disputes.

Frequently Asked Questions (FAQs)

1. What kinds of issues does the National Company Law Tribunal (NCLT) handle?

Answer:

NCLT deals with different problems related to companies, like disputes between them, situations where a company can’t pay debts, and processes for shutting down a company. It’s like a special court for company matters in India.

2. Can regular people go to the NCLT, or is it just for companies?

Answer:

NCLT mostly deals with company problems, but sometimes, issues involving individuals might also come under its jurisdiction. For instance, cases about personal financial troubles can be addressed by the NCLT.

3. How many places have NCLT offices?

Answer:

NCLT has different offices, called benches, in various parts of India. This setup makes it easier for people and businesses involved in company disputes to access the tribunal.

4. Is there a specific time for finishing cases in NCLT?

Answer:

The time it takes to finish a case in NCLT varies based on how complicated the issue is. While they aim to resolve cases quickly, the duration can differ depending on the details of each dispute.

5. Can you appeal decisions made by the National Company Law Appellate Tribunal (NCLAT)?

Answer:

Usually, decisions made by NCLAT are final. But if someone thinks there’s a specific legal problem, they have a chance to appeal to the Supreme Court of India. The Supreme Court is the highest court in the country, and it’s the last place where you can challenge NCLAT decisions.