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How NCLT has Improved Corporate Jurisdiction

How NCLT has Improved Corporate Jurisdiction


Corporate jurisdiction of a few specific authorities has been consolidated with the launch of the national company law tribunal India. These authorities include the Company Law Board or CLB, the Board for Industrial and Financial Reconstruction or BIFR, and the Appellate Authority for Industrial and Financial Reconstruction or AAIFR. It has also impacted a few functions, powers and jurisdictions of the High Court that involves restructuring or winding up as well as a few other provisions. The impact of such creation is expected to improve matters related to company law and therefore is a welcome move for the stakeholders as well as other experts.

The single forum

The most significant impact of the creation of NCLAT and NCLT in India is the formation of a single forum that will now deal with matters related to company law. Before the launch, all company matters were dealt singlehandedly by the Company Law Board, BIFR and its appellate authority and the High Courts. This lead to an array of events and forums to arbitrate matters related to different companies. Now, the constitution of NCLT and NCLAT will replace CLB, BIFR, and the appellate authority into a single forum and at the same time will subsume the jurisdiction of High Court.

Facilitate holistic solution

The launching of NCLT was done with intent to provide more holistic solution to company matters through a single forum. All issues faced by the companies will be eliminated or resolved by the tribunals with no scope for any conflicts or overlapping of judgments. Acting as a single forum will also reduce delays in adjudicating disputes and provide more effective solutions. The whole idea of creation of NCLT is to consolidate the jurisdiction and powers vested in Central Government by assigning a single authority to all the parties involved, for a faster and more simplified adjudication of disputes.

Class action suits

Previously, class action claims were a very difficult and often an unproductive process to protect the common interest of a large number of people. This class action claims was allowed in 2013 through an amendment made in the Section 245 of Indian Companies Act 2013. However, this provision was in suspension till a notification was issued on 1st June 2016. Now, shareholders can approach the NCLT when they feel that a company is not managing affairs in their best interests and file a class action lawsuit for alleged misconduct against the directors and auditors of a company. This will restrict the arbitrary decision of the company and protect the interest of all shareholders.

The accessibility factor

According to the notification, there are eleven benches of National Company Law Tribunal formed and spread all over India so that the entire region can be covered. This has provided the shareholders with an increased accessibility and reduced the wait time. Previously, there were on five benches of the Central Law Board that managed such litigations which was insufficient and unable to cater to the demands of the shareholders and handle the increasing number of such litigations related to company law matters. Now everything will be taken care of by the NCLT while NCLAT will handle those appeals that have risen out of an order passed by the NCLT.

Make long story short

The whole intent of launching NCLT is to make the lengthy procedure that was previously followed by the Company Law Board and High Courts shorter. This is because the NCLT and NCLAT are given the power to regulate their procedures on their own to conduct speedier disposal of cases. Usually the time taken is 3 months. For exceptional cases it is extended by 90 days but it must be recorded by President or Chairman of NCLT or NCLAT respectively.

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