Corporate Matters Before NCLT: Supreme Court Perspective
Corporate Matters Handled by the
National Company Law Tribunal (NCLT)
Blog by:
Jayprakash B. Somani
Advocate, Supreme Court of India & IP
Cell: PA 9322188701
www.jayprakashsomani.com
www.supremecourtlawfirm.com
1. Introduction to NCLT
The National Company Law Tribunal (NCLT) is a quasi-judicial body constituted under the Companies Act, 2013 to adjudicate corporate disputes and insolvency matters in India.
It consolidates and replaces the jurisdiction earlier exercised by:
Company Law Board (CLB)
High Courts (company jurisdiction)
Board for Industrial and Financial Reconstruction (BIFR)
Appellate Authority for Industrial and Financial Reconstruction (AAIFR)
NCLT plays a central role in corporate governance, restructuring, shareholder protection, and insolvency resolution.
2. Statutory Framework Governing NCLT
Companies Act, 2013
Insolvency and Bankruptcy Code, 2016 (IBC)
National Company Law Tribunal Rules, 2016
NCLAT Rules, 2016
Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
3. Jurisdiction of NCLT in Corporate Matters
NCLT exercises jurisdiction over:
Company law matters under the Companies Act
Insolvency and liquidation proceedings under IBC
Corporate restructuring and M&A approvals
Oppression and mismanagement disputes
Shareholder and investor protection matters
Winding up of companies
Class actions and corporate fraud cases
4. Major Corporate Matters Handled by NCLT
4.1 Oppression and Mismanagement
(Sections 241–242, Companies Act, 2013)
Nature of Disputes
Oppression of minority shareholders
Mismanagement of company affairs
Diversion of funds
Abuse of majority powers
Powers of NCLT
Regulate conduct of company affairs
Removal of directors
Imposition of restrictions on share transfer
Ordering buy-out of minority shares
Leading Case Laws
Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd.
(2021) 9 SCC 449
Landmark judgment on corporate governance
Removal of Chairman not per se oppression
Business decisions protected under the business judgment rule
Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holdings Ltd.
(1981) 3 SCC 333
Oppression must be burdensome, harsh, and wrongful
4.2 Corporate Insolvency Resolution Process (CIRP)
(Sections 7, 9, 10 – IBC)
Corporate Issues Covered
Initiation of insolvency by financial and operational creditors
Moratorium under Section 14
Approval of resolution plans
Claims adjudication
Leading Case Laws
Innoventive Industries Ltd. v. ICICI Bank
(2018) 1 SCC 407
Financial creditor’s right to trigger CIRP
Primacy of IBC over state laws
Swiss Ribbons Pvt. Ltd. v. Union of India
(2019) 4 SCC 17
Constitutional validity of IBC upheld
Commercial wisdom of the Committee of Creditors is paramount
4.3 Liquidation of Companies
(Sections 33–54, IBC)
Matters Handled
Liquidation orders
Appointment of liquidator
Asset distribution
Dissolution of company
Case Law
K. Sashidhar v. Indian Overseas Bank
(2019) 12 SCC 150
NCLT cannot interfere with the commercial decisions of the CoC
4.4 Compromises, Arrangements and Amalgamations
(Sections 230–232, Companies Act, 2013)
Corporate Transactions Covered
Mergers and amalgamations
Demergers
Capital restructuring
Role of NCLT
Calling meetings of shareholders and creditors
Sanctioning schemes
Ensuring legal compliance and fairness
Case Law
Miheer H. Mafatlal v. Mafatlal Industries Ltd.
(1997) 1 SCC 579
Court’s role is supervisory, not appellate
Commercial viability decided by shareholders
4.5 Class Action Suits
(Section 245, Companies Act, 2013)
Issues Covered
Misleading statements in prospectus
Fraudulent acts of directors and auditors
Investor protection
Reliefs
Damages
Restraining wrongful acts
Claims against auditors and advisors
This provision introduced the class action mechanism in Indian company law for the first time.
4.6 Winding Up of Companies
(Sections 271–272, Companies Act, 2013)
Grounds
Inability to pay debts
Fraudulent conduct
Just and equitable grounds
Most winding-up cases are now subsumed under the IBC framework.
4.7 Corporate Fraud and Investigation Matters
(Section 213, Companies Act, 2013)
Issues
Investigation by the Serious Fraud Investigation Office (SFIO)
Serious corporate fraud
Misfeasance by directors
Case Law
Union of India v. Delhi Gymkhana Club Ltd.
(2022) 7 SCC 661
Scope of SFIO investigations clarified
Balance between autonomy and accountability
5. Powers of NCLT
NCLT is empowered to:
Summon witnesses
Call for documents
Pass interim orders
Approve or reject resolution plans
Remove directors or managerial personnel
Impose penalties under the Companies Act and IBC
6. Appellate Mechanism
Appeal from NCLT to NCLAT
Appeal from NCLAT to the Supreme Court of India
Appeals to the Supreme Court are limited to questions of law.
7. Important Supreme Court Judgments on NCLT Jurisdiction
Madras Bar Association v. Union of India
(2021) 7 SCC 369
Constitutional validity of NCLT and NCLAT upheld
Emphasis on independence of tribunals
Embassy Property Developments Pvt. Ltd. v. State of Karnataka
(2020) 13 SCC 308
NCLT has limited jurisdiction over public law issues
High Courts retain jurisdiction under Article 226
8. Penalties and Compliance Issues for Corporates
| Matter | Consequence |
|---|---|
| Non-compliance with NCLT orders | Contempt and penalties |
| Fraudulent transactions | Criminal prosecution |
| Insolvency defaults | Loss of management control |
| False statements | Director disqualification |
9. Corporate Governance Impact
NCLT decisions significantly affect:
Boardroom governance
Shareholder rights
M&A structuring
Insolvency outcomes
Director liability
10. Conclusion
The National Company Law Tribunal is the backbone of India’s corporate adjudicatory framework. From shareholder disputes to large-scale insolvency resolutions, and from corporate restructuring to fraud investigations, NCLT has become indispensable to corporate law practice.
Supreme Court jurisprudence has consistently reinforced speed, commercial certainty, and judicial restraint, making NCLT a central forum for corporate dispute resolution in India.
