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NCLT & Nclat

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VIJAY VARADHARAJ
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NCLT & Nclat

Uploaded by

VIJAY VARADHARAJ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The National Company Law Tribunal (NCLT) and the National Company Law Appellate

Tribunal (NCLAT) play critical roles in India’s corporate governance structure, particularly
in relation to corporate insolvency, company law disputes, and ensuring transparency and
fairness in business operations.

1. National Company Law Tribunal (NCLT)

Role:

 Adjudication of Corporate Disputes: NCLT is the quasi-judicial body that handles


disputes related to company laws under the Companies Act, 2013.
 Insolvency and Bankruptcy Code (IBC) Proceedings: NCLT serves as the
adjudicating authority for insolvency resolution processes for companies under the
Insolvency and Bankruptcy Code, 2016. It ensures the efficient resolution of stressed
assets and promotes creditor protection.
 Mergers and Acquisitions (M&A): NCLT approves mergers, demergers,
amalgamations, and restructuring proposals of companies, ensuring compliance with
legal requirements and protecting shareholder and creditor interests.
 Oppression and Mismanagement Cases: It handles complaints of oppression of
minority shareholders and mismanagement in companies, safeguarding the rights of
stakeholders.
 Winding Up of Companies: The tribunal is responsible for approving the liquidation
or winding up of companies.

Significance:

 Corporate Transparency: By resolving disputes and ensuring legal compliance,


NCLT promotes transparency in corporate governance.
 Timely Resolution: Its role under the IBC is critical in reducing delays in the resolution
of bad debts, which directly impacts the health of the financial and banking sectors.
 Accountability: NCLT fosters accountability among companies, directors, and
management, ensuring that corporate actions are in line with legal mandates.
2. National Company Law Appellate Tribunal (NCLAT)

Role:

 Appellate Body for NCLT: NCLAT hears appeals against the orders passed by NCLT,
functioning as the appellate tribunal.
 Appeals under the IBC: NCLAT deals with appeals related to corporate insolvency
resolution and liquidation proceedings decided by NCLT.
 Competition Law Appeals: It also handles appeals against orders passed by the
Competition Commission of India (CCI) concerning anti-competitive practices and
market abuse.
 Other Statutory Appeals: NCLAT also hears appeals under the Companies Act,
SEBI regulations, and other financial legislation impacting corporate governance.

Significance:

 Ensuring Legal Recourse: It provides an appellate mechanism that ensures


companies, creditors, and stakeholders have a fair opportunity to challenge decisions.
 Enhanced Corporate Governance: By reviewing NCLT decisions, NCLAT ensures
that company disputes and insolvency matters are resolved within the framework of
fairness, efficiency, and compliance with law.
 Speeding up Justice Delivery: NCLAT’s appellate function accelerates the process of
justice by reducing the burden on higher courts and offering a specialized forum for
corporate law matters.

Overall Significance in Corporate Governance

 Protecting Stakeholder Rights: Both NCLT and NCLAT play key roles in protecting
the interests of shareholders, creditors, employees, and other stakeholders by ensuring
fair treatment and compliance with corporate laws.
 Promoting Efficient Business Practices: Their roles under the IBC help reduce the
time and costs involved in resolving insolvencies, which is essential for a healthy
corporate ecosystem.

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