Jurisdiction of NCLT in India

Author - Mansi Patel

National Company Law Tribunal is a quasi -judicial body in India that adjudicates company law matters and Indian companies which are compliant under it. The tribunal was established under the Companies Act, 2013 and constituted on June 1, 2016. Under the Companies Act, all proceedings such as arbitration, compromise, arrangements etc. 

Jurisdiction of civil courts under companies act 2013

Civil courts do not have any jurisdiction to entertain any suit or proceeding in respect to any matter where the Tribunal has the power to determine what the outcome shall be. The National Company Tribunal is the primary adjudicating authority for the insolvency resolution process for companies under the Insolvency and Bankruptcy Code, 2016.

NCLT Jurisdiction

In a recent move, the National Company Law Appellate held that the National Company Law Tribunal has exclusive jurisdiction  of NCLT to try all matters under Companies Act 2013. This will include those matters that involve contentious and complex issues. This is a result of Section 430 of the Companies Act which bars jurisdiction of civil courts in respect of matters under the Act. 

The National Company Law Tribunal or NCLAT was hearing a challenge brought against the course which was adopted by the Hyderabad bench in declining to entertain a petition under Section 59 of the Companies Act 2013 for rectification of registry. The petition was filed seeking cancellation of entry of the name of petitioner in the Register of Members of respondent-company showing an equity of 906599 Compulsory Convertible Debentures in the name of the petitioner. It was held by the Hyderabad NCLAT bench that the issues which were raised in this matter were of complex or contentious issues which would require an in-depth examination of the Insolvency and Bankruptcy Code, 2016 as well as that of the Arbitration Act, 1996. 

The 1998 Supreme Court judgement in the case of Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Ltd which held that if the rectification petition raises serious disputes relating to the title, then the matter must be examined by civil courts. It was argued by the appellant in the NCLAT that the above mentioned judgement was no longer valid and “good law” after the Companies Act, 2013 in the light of the express bar on civil courts which is mentioned under Section 430. 

It was noted by the NCLAT that in the case of Shashi Prakash Khemka v. NEPC Micon and others, the Supreme Court had observed that if a dispute had emerged after the 2013 Act, “the civil suit remedy would be completely barred and the power would be vested with the National Company Law Tribunal under Section 59 of the said Act. “

The bench headed by Justice A I S Cheema held that based on these precedents, “ we are of the view that with change of law now under Section 59 of the Act, NCLT can deal with rectification and all questions including incidental and peripheral questions raised with regard to rectification for the purpose of deciding the legality of the rectification.” “NCLT which exercises widest possible powers in a matter where Section 241, 242 of the Act, which even otherwise is expected to always keep the interest of the Company in the forefront, cannot be treated as unequipped only because the Petition is under Section 59 of the Act.” Thus, this brings about a new change to the functions of the NCLT and further widens its scope.