Chapter XXVII of Companies Act – National Company Law Tribunal and Appellate Tribunal

Section 408 to 418

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 Introduction

What is NCLT and NCLAT

Adjudicate issued related to matters in

1. Company Law
2. Insolvency resolution and liquidation for corporates under section
61 of Insolvency and Bankruptcy Code, 2016
NCLT

It’s a Quasi Judicial Body

Company

Example: If director of company is appointed though he is disqualified then this would be adjudicated by NCLT as in
whether he was really disqualified or not and NCLT will decide the punishment in case of any wrongdoing

Quasi Judicial Body: It is an entity such as an arbitrator or tribunal board which has powers and procedures resembling
those of a court of law or judge

Note: Only the insolvency resolution and liquidation for corporates under Insolvency and Bankruptcy Code, 2016 is handled
by NCLT, the insolvency resolution and liquidation for Partnership firms and individuals is handled by Debt Recovery
Tribunal
 Introduction

What is NCLT and NCLAT

Adjudicate issued related to matters in Company Law and

insolvency resolution and liquidation for corporates under
NCLT Insolvency and Bankruptcy Code, 2016

Appeals Against orders of NCLT are made to NCLAT. Its just like appeals of high
court being challenged in supreme court
Company

1. NCLAT is also the Appellate Tribunal for hearing appeals against the orders
passed by Insolvency and Bankruptcy Board of India under Section 202 and
NCLAT Section 211 of IBC
Appeals Against orders
2. NCLAT is also the Appellate Tribunal to hear and dispose of appeals against
of IBB and CCI and
order passed by the Competition Commission of India (CCI) under section 53N
NFRA
of competition Act

3. NCLAT is also the Appellate Tribunal for Orders passed by NFRA (National
Financing Reporting Authority)
 Introduction

What is NCLT and NCLAT

NCLT NCLT was set up as a result of Eradi Committee

In 1999, a committee constituted by the Government of

India under Justice V. Balakrishna Eradi suggested the
setting up of NCLT as one of the steps for faster
resolution of disputes and winding up related to
companies

The setting up of NCLT was challenged in various courts

and due to such delays, it got legal validity only much
later in 2016
 Companies Act 2013 -> Section 408 – NCLT and NCLAT

Constitution of Tribunal also known as NCLT

Central Government on notification

Constitutes NCLT
(Notification came on 1st June , 2016)

The number of members shall be decided by

What are Technical or Judicial Members? the government
1. Judicial Members means a person with experience in
Judiciary like a judge of High Court
It shall consist of 2 types of members
1. Technical Members
2. Technical Member means person with experience in
2. Judicial Members
company law i.e. who understands company law to the
core or has experience in CA or Cost Accounting
There should be a president appointed for
NCLT

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 Companies Act 2013 -> Section 409 – NCLT and NCLAT

Qualification of Members and President of NCLT

For President

A person who is or has been a Judge of a High Court for five years

Question: Can a person with 5 years of experience in Supreme court be eligible for this post?

Ans: The law does not mention about this, but logical inference shall be that anybody having higher qualification
shall also be eligible

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 Companies Act 2013 -> Section 409 – NCLT and NCLAT

Qualification of Members and President of NCLT

Judicial Member

1. A judge of a High Court at present or in the past or

2. District Judge for at least five years at present or in the past or

3. Advocate of a court for at least ten years

For 3rd point, the experience of person in holding any judicial office or as a member of any tribunal shall also be
counted

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 Companies Act 2013 -> Section 409 – NCLT and NCLAT

Qualification of Members and President of NCLT

Technical Member

1. Member of the Indian Corporate Law Service or Indian Legal Service for at least fifteen years and has been
holding the rank of Secretary or Additional Secretary to the Government of India or

2. Practice as a chartered accountant for at least fifteen years or

3. Practice as a cost accountant for at least fifteen years or

4. Practice as a company secretary for at least fifteen years or

5. Person who is capable and has professional experience of not less than fifteen years in industrial finance,
industrial management, industrial reconstruction, investment and accountancy or

6. Presiding officer of a Labor Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act,
1947 for at least 5 years

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 Companies Act 2013 -> Section 409 – NCLT and NCLAT

Qualification of Members and President of NCLT

Important Inference President (Judicial Member)

Judicial Technical
Members Members

If we analyze the qualification of President,

we can say that President is one of the
Judicial Member

If we use the term member, in includes

President as well

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 Concept Check

NCLAT is appellate Tribunal for hearing orders passed by

1. NCLT under company Law and section 61 of Insolvency and Bankruptcy Code
2. Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC
3. Competition Commission of India
4. All the above
Ans: Option 4

NCLT was set up as result of which committee

1. Justice V. Balakrishna Eradi Committee

2. Injeti Srinivas Committee
3. Tapan Ray Committee
4. M. Ganguly Committee

Ans: Option 1

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 Concept Check

Which of the following is min qualification for a person to be appointed President of NCLT?
1. Judge of District Court for 10 Years
2. Judge of Hight Court for 5 Years
3. Judge of High Court for 10 years
4. Either 1 or 2
Ans: Option 2

Which of the following cannot be appointed as the Technical Member of NCLT?

1. Practice as a chartered accountant for at least fifteen years

2. Practice as a cost accountant for at least fifteen years
3. Member of the Indian Corporate Law Service or Indian Legal Service for at least fifteen years
4. Professional experience of not less than fifteen years in industrial finance, industrial management, industrial
reconstruction, investment and accountancy
5. NOTA

Ans: Option 5

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 Companies Act 2013 -> Section 410 – NCLT and NCLAT

Constitution of Appellate Tribunal also known as NCLAT

Central Government through notification Constitutes NCLAT

Notification came on 1st June, 2016

The number of members shall not be more

than 11

It shall consist of 2 types of members

1. Technical Members
2. Judicial Members

There should be a Chairperson appointed for

NCLAT

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 Companies Act 2013 -> Section 411 – NCLT and NCLAT

Qualification of Members of NCLAT

Chairperson

A person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court.

Judicial Member

Judge of a High Court or is a Judicial Member of the Tribunal for five years.

Technical Member

Professional experience of not less than twenty-five years in industrial finance, industrial management, industrial
reconstruction, investment and accountancy

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 Companies Act 2013 -> Section 411 – NCLT and NCLAT

Qualification of Members of NCLAT

Chairperson (Judicial Member)

Judicial Members Technical Members

If we use the term member, even a chairperson is included in that

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 Companies Act 2013 -> Section 412 – NCLT and NCLAT

Selection of Members of Tribunal and Appellate Tribunal.

Category 1 for Selection Process

President of NCLT Chairperson of NCLAT
Judicial Members of NCLAT
(Judicial Member) (Judicial Member)

Category 2 for Selection Process

Technical Member of NCLT Technical Member of NCLAT Judicial Member of NCLT

Different Selection Process is followed for Category 1 and Category 2

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 Companies Act 2013 -> Section 412 – NCLT and NCLAT

Selection of Members of Tribunal and Appellate Tribunal.

Category 1 for Selection Process

President of NCLT Chairperson of NCLAT
Judicial Members of NCLAT
(Judicial Member) (Judicial Member)

They shall be appointed by Govt. of India after consultation with the Chief Justice of India.

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 Companies Act 2013 -> Section 412 – NCLT and NCLAT

Selection of Members of Tribunal and Appellate Tribunal.

Category 2 for Selection Process

Technical Member of NCLT Technical Member of NCLAT Judicial Member of NCLT

These shall be appointed on the recommendation of a Selection Committee consisting of—

1. Chief Justice of India or his nominee who shall also be the Chairperson of the committee
2. Senior Judge of the Supreme Court or Chief Justice of High Court— Member;
3. Secretary in the Ministry of Corporate Affairs—Member and Convener
4. Secretary in the Ministry of Law and Justice—Member

No appointment of the Members of the Tribunal or the Appellate Tribunal shall be invalid merely by reason of any vacancy
or any defect in the constitution of the Selection Committee

Note: In case of tie during voting, the chairperson shall have casting vote
Casting vote is an extra vote given by a chairperson to decide an issue when the votes on each side are equal.

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 Concept Check

The maximum number of members in NCLAT can be

1. 9
2. 10
3. 11
4. 12
Ans: Option 3

The chairperson of NCLAT shall be

1. Judge of the Supreme Court or the Chief Justice of a High Court
2. Judge of High Court
3. Judge of Supreme Court
4. Chief Justice of Supreme Court
Ans: Option 1

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 Concept Check

Judicial Members of NCLAT are appointed by

1. Government of India
2. Government of India in consultation with CJI
3. Selection Committee consisting of members of Judiciary and Industry
4. Chief Justice of India
Ans: Option 2

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 Companies Act 2013 -> Section 413 – NCLT and NCLAT

Term of Office of President, Chairperson and Other Members of NCLT and NCLAT

Members (Both Judicial and Technical)of NCLT

Members including President – Term is of 5 years and can be re-appointed for another term of 5 years

President can hold office till age of 67 years

Other Members can hold office till Age of 65 Years
For president and Member the min age to be appointed is 50 years

Member may retain his lien with his parent cadre or Ministry or Department while holding office as such for a period not
exceeding one year

Lien: A privilege granted by some employers to employees assuring them that they will have their jobs held while absent.

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 Companies Act 2013 -> Section 413 – NCLT and NCLAT

Term of Office of President, Chairperson and Other Members of NCLT and NCLAT

Members (Both Judicial and Technical)of NCLAT

Members including Chairperson – Term is of 5 years and can be re-appointed for another term of 5 years

Chairperson can hold office till age of 70 years

Other Members can hold office till Age of 67 Years
For Chairperson and Member the min age to be appointed is 50 years

Member may retain his lien with his parent cadre or Ministry or Department while holding office as such for a period not
exceeding one year

Lien: A privilege granted by some employers to employees assuring them that they will have their jobs held while absent.

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 Companies Act 2013 -> Section 414 – NCLT and NCLAT

Salaries and Allowances of Members

The salary, allowances and other terms and conditions of service of the Members of the Tribunal and the Appellate
Tribunal shall be such prescribed

In case of NCLAT

1. Chairperson – 90000 + other Allowances

2. Judicial and Technical Member – 80000 + other allowances

In case of NCLT

There is no mention of salary and allowances

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 Companies Act 2013 -> Section 415 – NCLT and NCLAT

Acting President of NCLT and Chairperson of NCLAT

If the office of President or Chairperson falls Vacant due to death or resignation, then the senior most member shall act as
the President or the Chairperson until the date on which a new President or Chairperson appointers as per procedure
joins the office

If the President or the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, then
the senior-most Member shall discharge the functions of the President or the Chairperson until the date on which the
President or the Chairperson resumes his duties.

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 Companies Act 2013 -> Section 416 – NCLT and NCLAT

Resignation of Members

All the members including President and Chairperson can resign by giving a notice to Central government

The member shall continue to hold office after the resignation till the any of the following occurs

1. 3 months from receipt of notice by central government

2. A successor is appointed by the government
3. His term expires

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 Companies Act 2013 -> Section 417 – NCLT and NCLAT

Removal of Members

The Central Government may, after consultation with the Chief Justice of India, remove any member including president
and chairperson who

1. has been adjudged an insolvent; or

2. has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude or
3. has become physically or mentally incapable of acting as such President, the Chairperson, or Member; or
4. has acquired such financial or other interest as is likely to affect prejudicially his functions as such President, the
Chairperson or Member; or
5. has so abused his position as to render his continuance in office prejudicial to the public interest

There is a procedure to be followed by removing the members

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 Companies Act 2013 -> Section 417 – NCLT and NCLAT

Procedure for Removal of Members

Nominates a Judge of supreme

Central Government Consults Chief Justice of India court to conduct Inquiry

The government passes final Member including chairperson

order on the basis of the The judge submits his report to and President are informed of the
report central government charges against them and are
given a reasonable opportunity of
being heard.

The Central Government in consultation with CJI can suspend the concerned member from office till the report of Judge is
given to central government and Orders are passed by central govt. based on that report

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 Companies Act 2013 -> Section 418 – NCLT and NCLAT

Staff of NCLT and NCLAT

The Central Government in consultation with the Tribunal and the Appellate Tribunal must provide them with such officers
and other employees as may be necessary for the exercise of the powers and discharge of the functions of the Tribunal and
the Appellate Tribunal.

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 Concept Check

The single term of members of NCLT and NCLAT is _____years and they can reappointed for another ____term(s) of 5 years
1. 5,0
2. 5,1
3. 5,2
4. 5,5
Ans: Option 2

Member of NCLT who is not a President and Member of NCLAT who is not a chairperson can serve uptil ___ and ____age
respectively
1. 65,67
2. 67,70
3. 60,65
4. 58,60
Ans: Option 1

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 Concept Check

If the office of President or Chairperson falls Vacant due to death or resignation, then the ____member shall act as the
President or the Chairperson until the date on which a new President or Chairperson appointers as per procedure joins the
office
1. Senior Most
2. Newly Elected
3. Recently Retired
4. Newly Appointed
Ans: Option 1

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 Thanks

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