National Company Law Tribunal
Also written NCLT
The quasi-judicial authority constituted under section 408 of the Companies Act, 2013 from 1 June 2016 to decide civil corporate disputes under the Companies Act and the Insolvency and Bankruptcy Code.
In plain language
Some company moves need legal approval. A company may want to merge with another. It may want to cut its capital. Or its majority and minority shareholders may be in a fight. Someone with legal power has to approve or settle these. For Indian companies, that is the National Company Law Tribunal, or NCLT.
It is a tribunal, not an ordinary civil court. It is quasi-judicial. That means it decides disputes and passes orders that must be obeyed. But it is a special body, set up by the Central Government for one area of law.
The workbook calls it a single judicial forum dealing with all disputes concerning the affairs of Indian companies. It covers disputes under the Companies Act. It also covers those under the Insolvency and Bankruptcy Code.
Think of a compliance officer in a fund house. For them, the NCLT is less a courtroom and more a gate. Some company events change who controls a sponsor or a manager. Several of these must pass through the NCLT. And SEBI wants to know before they do.
How it works
Constitution (Chapter 2). The Central Government constituted the NCLT under section 408 of the Companies Act, 2013, with effect from 1st June 2016.
Benches. In the first phase the Ministry of Corporate Affairs set up eleven Benches — one Principal Bench at New Delhi and ten Benches at New Delhi, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. They were headed by the President, with 16 Judicial Members and 09 Technical Members at different locations. Subsequently more members joined and Benches were set up at Cuttack, Jaipur, Kochi, Amravati and Indore.
What it deals with. Corporate disputes of a civil nature arising under the Companies Act and the Insolvency and Bankruptcy Code.
Where it sits in the Companies Act (Chapter 2's chapter-by-chapter summary).
| Companies Act chapter | The Tribunal's role |
|---|---|
| XV — Compromises, Arrangements and Amalgamations | Power of the Tribunal to enforce a compromise or arrangement |
| XVI — Prevention of Oppression and Mismanagement | Application to the Tribunal for relief; powers of the Tribunal; class action |
| XXVII — National Company Law Tribunal and Appellate Tribunal | Constitution, qualifications of President and members, benches, orders, appeals from its orders, appeal to the Supreme Court, power to punish for contempt, and civil courts not to have jurisdiction |
The fund connection (Chapter 15). A change in control of the sponsor and/or manager of an AIF involving a scheme of arrangement under the Companies Act, 2013 needs prior approval of SEBI before filing the petition with the NCLT. That prior approval is valid for 3 months from issuance. After the NCLT sanctions the scheme, final approval of SEBI is mandatory.
A worked example
Illustrative dates. Godavari Asset Managers Pvt Ltd is the manager of a Category II AIF with ₹450 crore of commitments. Its parent is merging Godavari into a group company, which will change who controls the manager. The merger is a scheme of arrangement under the Companies Act, 2013.
| Step | Date | What happens |
|---|---|---|
| 1 | 10 March | Application to SEBI for prior approval |
| 2 | 2 April | SEBI grants prior approval |
| 3 | by 2 July | Petition must be filed with the NCLT — the approval is valid for 3 months from issuance |
| 4 | 25 June | Petition filed with the NCLT bench at Mumbai |
| 5 | November | NCLT sanctions the scheme |
| 6 | after sanction | Final approval of SEBI obtained before the change is treated as complete |
What goes wrong if the order is reversed. Suppose the lawyers file with the NCLT on 25 June and only then apply to SEBI. The workbook's rule is prior approval before filing the petition — so the filing itself is the breach, whatever SEBI later decides.
What goes wrong if the calendar slips. Suppose SEBI approves on 2 April but board meetings delay the petition to 15 July. More than three months have passed; the prior approval has lapsed, and SEBI must be approached again before the petition is filed.
In both cases the NCLT is not the problem. The tribunal decides the scheme; the compliance officer's job is to get the SEBI steps on either side of it right.
Why NISM asks about it
Chapter 2 (Regulatory Framework – General View) covers the NCLT as one of the regulatory bodies alongside the ROC and SFIO (section 2.3.2), and again in its summary of the Companies Act's chapters. Chapter 15 (SEBI (AIF) Regulations, 2012) uses it in the change-in-control approvals.
The short NCLT section is dense with memorisable facts: section 408, 1 June 2016, eleven benches, the Principal Bench at New Delhi, 16 judicial and 9 technical members, the five later benches. Expect one of them as a direct question, and the SEBI-before-NCLT sequence as a scenario.
Common exam traps
- Section 408 of the Companies Act, 2013 — not the SEBI Act, and not the Insolvency and Bankruptcy Code, even though it hears IBC disputes.
- 1 June 2016, constituted by the Central Government.
- Eleven benches in the first phase, including the Principal Bench. New Delhi appears twice in the list — once as the Principal Bench, once as an ordinary bench.
- Civil disputes. The workbook describes corporate disputes "of a civil nature"; serious fraud investigation is the SFIO's field.
- Quasi-judicial, and civil courts do not have jurisdiction over matters under Chapter XXVII.
- The NCLT is not the SAT. Appeals against SEBI orders go to the Securities Appellate Tribunal; the NCLT is a Companies Act and IBC forum.
- For an AIF sponsor or manager: SEBI first, NCLT second, SEBI again. Prior approval valid for 3 months; final approval after sanction is mandatory.
- The workbook spells the Gujarat bench "Ahmadabad" — the same city as Ahmedabad.
Where this is taught
- Series III-A · Chapter 2: Regulatory Framework - General Viewintroduced here
- Series III-C · Chapter 2: Regulatory Framework - General Viewintroduced here
- Series X-A · Chapter 20: Grievance Redress Mechanismintroduced here
Related terms
- Scheme of arrangementA court-monitored settlement, under Section 230 of the Companies Act 2013, between a company and its creditors or shareholders — covering everything from debt restructuring to mergers.
- Securities Appellate TribunalThe statutory tribunal established under the SEBI Act that hears appeals from orders of SEBI and of its adjudicating officers, which must be filed within 45 days of receipt of the order.
- SponsorThe person or firm that sets up the mutual fund — applies to SEBI for registration, executes the trust deed in favour of the trustees, and puts up the capital of the AMC.
- Registrar of CompaniesThe office, appointed by the Central Government under section 396 of the Companies Act, 2013, that registers companies, keeps their public records and charges, and polices their statutory filings.
- Serious Fraud Investigation OfficeThe multi-disciplinary investigation agency under the Ministry of Corporate Affairs that investigates complex corporate frauds assigned by the Central Government under section 212 of the Companies Act, 2013.