National Company Law Tribunal And Appellate Tribunal

Constitution and Structure

National Company Law Tribunal (NCLT)

The Central Government establishes the National Company Law Tribunal (NCLT) through notification. The NCLT consists of a President and a number of Judicial and Technical members as deemed necessary by the Central Government.

Structure:

1. The NCLT operates through Benches, with the number of Benches specified by the Central Government.
2. The Principal Bench is located in New Delhi and is presided over by the President of the Tribunal.
3. Typical Benches consist of two Members: one Judicial Member and one Technical Member.
4. Single-member Benches (Judicial Member) may be authorised for specific classes of cases.
5. The Central Government may establish additional Benches to exercise jurisdiction as Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016.

Decision-making:

• Decisions are made by majority opinion.
• In case of a tie, the President refers the case to one or more other Members for resolution.

National Company Law Appellate Tribunal (NCLAT)

The Central Government establishes the National Company Law Appellate Tribunal (NCLAT) through notification. The NCLAT consists of a Chairperson and a number of Judicial and Technical Members as deemed fit by the Central Government.

Jurisdiction: The NCLAT hears appeals against:

1. Orders of the NCLT or the National Financial Reporting Authority under the Companies Act.
2. Certain directions, decisions, or orders under the Competition Act, 2002.

Qualifications, Appointment, and Terms of Office

Qualifications

President and Members of the Tribunal

1. President: Must be a person who is or has been a Judge of a High Court for five years.
2. Judicial Member: Must meet one of the following criteria:
   • Is or has been a judge of a High Court
   • Is or has been a District Judge for at least five years
   • Has been an advocate of a court for at least ten years
3. Technical Member: Must meet one of the following criteria:
   • Has been a member of the Indian Corporate Law Service or Indian Legal Service for at least fifteen years, holding the rank of Secretary or Additional Secretary to the Government of India
   • Has been in practice as a chartered accountant for at least fifteen years
   • Has been in practice as a cost accountant for at least fifteen years
   • Has been in practice as a company secretary for at least fifteen years
   • Has special knowledge and professional experience of not less than fifteen years in industrial finance, industrial management, industrial reconstruction, investment, and accountancy
   • Has been a presiding officer of a Labour Court, Tribunal, or National Tribunal for at least five years

Chairperson and Members of the Appellate Tribunal

1. Chairperson: Must be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court.
2. Judicial Member: Must be a person who is or has been a Judge of a High Court or has been a Judicial Member of the Tribunal for five years.
3. Technical Member: Must have special knowledge and professional experience of not less than twenty-five years in industrial finance, industrial management, industrial reconstruction, investment, and accountancy.

Appointment Process

1. The President of the Tribunal and the Chairperson and Judicial Members of the Appellate Tribunal are appointed after consultation with the Chief Justice of India.
2. Members of the Tribunal and Technical Members of the Appellate Tribunal are appointed on the recommendation of a Selection Committee consisting of:
   • Chief Justice of India or their nominee (Chairperson)
   • A senior Judge of the Supreme Court or Chief Justice of High Court (Member)
   • Secretary in the Ministry of Corporate Affairs (Member)
   • Secretary in the Ministry of Law and Justice (Member)
3. The Secretary of the Ministry of Corporate Affairs serves as the Convener of the Selection Committee.
4. The Selection Committee determines its own procedure for recommending persons.
5. Appointments remain valid even if there are vacancies or defects in the constitution of the Selection Committee.

Terms of Office

Tribunal Members

1. The President and other Members hold office for a term of five years and are eligible for re-appointment for another five-year term.
2. Age limits:
   • President: Must retire at the age of sixty-seven years
   • Other Members: Must retire at the age of sixty-five years
3. Minimum age for appointment as a Member is fifty years.

Appellate Tribunal Members

1. The Chairperson and Members hold office for a term of five years and are eligible for re-appointment for another five-year term.
2. Age limits:
   • Chairperson: Must retire at the age of seventy years
   • Other Members: Must retire at the age of sixty-seven years
3. Minimum age for appointment as a Member is fifty years.

Salary, Service Conditions, and Powers

Salary and Allowances

The salary, allowances, and other terms and conditions of service for Members of the Tribunal and Appellate Tribunal are prescribed by the Central Government. Importantly, these terms cannot be altered to the disadvantage of Members after their appointment, ensuring job security and stability.

Appointment and Tenure

Acting President and Chairperson

In case of a vacancy in the office of the President or Chairperson, the senior-most Member acts in that capacity until a new appointment is made. Similarly, if the President or Chairperson is unable to discharge duties due to absence, illness, or other reasons, the senior-most Member assumes these responsibilities temporarily.

Resignation

Members, including the President and Chairperson, can resign by submitting a written notice to the Central Government. They are required to continue in office for three months from the date of notice receipt, until a successor is appointed, or until their term expires, whichever comes first.

Removal from Office

The Central Government, in consultation with the Chief Justice of India, can remove a Member, President, or Chairperson from office under specific circumstances:

1. Adjudged insolvency
2. Conviction of an offense involving moral turpitude
3. Physical or mental incapacity
4. Acquisition of financial or other interests likely to affect their functions
5. Abuse of position detrimental to public interest

The removal process includes providing the individual with a reasonable opportunity to be heard. Additionally, a more rigorous process involving an inquiry by a Supreme Court Judge can be initiated for removal on grounds of proved misbehavior or incapacity.

Staff and Administrative Support

The Central Government, in consultation with the Tribunal and Appellate Tribunal, provides necessary officers and employees. These staff members work under the general superintendence and control of the President, Chairperson, or delegated Members.

Powers and Jurisdiction

Contempt Powers

The Tribunal and Appellate Tribunal possess the same jurisdiction, powers, and authority in respect to contempt as a High Court. They can exercise these powers under the Contempt of Courts Act, 1971, with necessary modifications.

Delegation of Powers

The Tribunal or Appellate Tribunal can delegate powers to its officers, employees, or other authorized persons to inquire into matters connected with proceedings or appeals and report back.

Benches of Appellate Tribunal

The Appellate Tribunal’s powers can be exercised by Benches constituted by the Chairperson. Each Bench must include at least one Judicial Member and one Technical Member. While these Benches ordinarily sit in New Delhi, the Central Government can establish additional Benches in other locations as needed.

Functioning and Orders of the Tribunal

Tribunals play a crucial role in the legal system, offering a specialized forum for resolving disputes and administering justice. This article delves into the key aspects of how tribunals function, focusing on their procedures, powers, and the appeal process.

Decision-Making Process

Tribunals are designed to provide a fair and efficient means of resolving disputes. The process typically involves the following steps:

1. Hearing: The tribunal gives parties involved in a proceeding a reasonable opportunity to be heard.
2. Deliberation: After considering the evidence and arguments presented, the tribunal makes a decision.
3. Order: The tribunal passes orders based on its assessment of the case.

Powers of the Tribunal

Tribunals are empowered with various capabilities to ensure effective functioning:

1. Rectification: Within two years of passing an order, a tribunal can amend it to rectify any apparent mistake in the record.
2. Communication: The tribunal is required to send a copy of every order to all concerned parties.
3. Procedural Flexibility: While not bound by the Code of Civil Procedure, tribunals are guided by principles of natural justice and have the power to regulate their own procedures.

Civil Court Powers

For discharging their functions, tribunals are vested with powers similar to those of a civil court, including:

• Summoning and enforcing attendance of individuals
• Requiring discovery and production of documents
• Receiving evidence on affidavits
• Requisitioning public records or documents
• Issuing commissions for examination of witnesses or documents
• Dismissing representations for default or deciding ex parte
• Setting aside dismissal orders or ex parte orders

Appeal Process

The appeal process from tribunal decisions is structured to ensure fairness and accessibility:

1. First Appeal: Aggrieved parties can appeal to the Appellate Tribunal within 45 days of receiving the tribunal’s order.
2. Consent Orders: No appeal is allowed against orders made with the consent of parties.
3. Time Extension: The Appellate Tribunal may entertain appeals filed within an additional 45 days if sufficient cause for delay is shown.
4. Appellate Decision: After hearing the parties, the Appellate Tribunal can confirm, modify, or set aside the appealed order.
5. Supreme Court Appeal: Further appeals can be made to the Supreme Court within 60 days on questions of law.

Expeditious Disposal

Tribunals and Appellate Tribunals are mandated to dispose of cases expeditiously:

• Cases should ideally be disposed of within three months of presentation.
• If this timeline is not met, reasons must be recorded.
• The President or Chairperson may extend the period by up to 90 days if necessary.

Enforcement of Orders

Tribunal and Appellate Tribunal orders can be enforced as if they were decrees made by a court in a suit. They can send orders for execution to the court within whose jurisdiction:

• The registered office of a company is situated (for orders against companies)
• The person concerned resides, carries on business, or works for gain (for orders against individuals)

Legal Status of Proceedings

All proceedings before Tribunals and Appellate Tribunals are deemed to be judicial proceedings. This status grants them certain legal protections and powers under various sections of the Indian Penal Code and the Code of Criminal Procedure.