Importance Of NCLT- In Special Reference To Winding Up Processes

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Importance Of NCLT

Written By:- Sreshta Satpathy

What is NCLT?

The Supreme Court established the National Company Law Tribunal (NCLT) to resolve legislation pertaining to corporations. The National Company Law Tribunal, or NCLT, is a quasi-judicial organization in India that renders a formal ruling on a contested matter involving Indian firms. It was established to oversee the operations of firms incorporated in India. It takes the place of the Company Law Board.

The Central Government established the National Company Law Tribunal in 2016 under Section 408 of the Companies Act of 2013, and it was founded on June 1, 2016. The Eradi Committee recommended the establishment of a National Company Law Tribunal. NCLT was supposed to be incorporated into the Indian legal system in 2002 under the Companies Act, 1956, but due to a ten-year court battle over its constitutional validity, it was notified under the Companies Act, 2013.

Winding up By Tribunal

If any of the circumstances listed in section 271 are met, the Tribunal may undertake a winding-up. On the application of any of the people allowed under section 272, the Tribunal can order the company to be wound up. The process of a company’s life coming to an end and its assets being controlled for the benefit of its creditors and members is known as winding up. An administrator, known as a liquidator, is appointed, and he takes charge of the company’s assets, pays its debts, and then distributes any surplus among the members according to their entitlements. A few examples of when a corporation can be wound up by a tribunal’s order;

  • If the corporation has resolved to be wound up by the Tribunal by a special resolution;
  • If the company was created with the intention of defrauding and defrauding others,
  • If the corporation has violated India’s sovereignty and integrity, the state’s security, friendly ties with foreign countries, public order, decency, or morality.

Need for NCLT

When a business is losing money and needs to pay off all of its debts to creditors, it must liquidate. A company’s winding-up is a process in which the company’s assets must be sold in order to make the outstanding payment. The tribunal’s winding up of a company, which is governed by section 357 of the Act. When a business is losing money and needs to pay off all of its debts to creditors, it must liquidate. A company’s winding-up is a process in which the company’s assets must be sold in order to make the outstanding payment.

The tribunal’s winding up of a company, as defined by section 357 of the Act. Section 270 of the Act allows a business to be wound up either by a tribunal or voluntarily. In a decision written by Justice Ramasubramanian, it was held that winding-up proceedings are a continuous legal process and that under Company law, any creditor of a firm in liquidation can become a party to the proceedings and request that the case be transferred from a high court to the NCLT, where it will be dealt with under the Insolvency and Bankruptcy Code (IBC) 2016. Corporations (winding up) Rules, 2020, published by the Ministry of Corporate Affairs, presented an overview of procedures for winding up companies that met the stated threshold restrictions.

The National Company Law Tribunal will benefit significantly since it will be less burdened in winding up enterprises that fulfil the stipulated threshold restrictions. Before winding up their businesses, those corporations must request authorization from the Central Government rather than the NCLT.

The National Company Law Tribunal, on the other hand, has a number of distinct advantages, including relieving the Company Courts and other institutions of the load of legal labour that is necessary for the efficient and timely delivery of justice. To decide disputes before it, the National Company Law Tribunal would use its original jurisdiction.

The establishment of the NCLT was a step toward making doing business easier by combining all aspects of company law under one roof. Because there are too many pending cases at the High Court, the matters of compromise, arrangement, amalgamation, and winding-up have been transferred to the NCLT. Accordingly. The NCLT and NCLAT will relieve overcrowded High Courts of their work. The tribunals will serve as a single point of contact for the successful resolution of all Company law-related disputes, which is the most significant benefit. It will do away with the requirement for several hearings before various authorities or courts.


It can also be stated that NCLT plays a significant part in a company’s winding-up. It takes all means to protect the interests of creditors and debenture holders and provides a clear guideline so that the winding-up process can be followed easily and effectively, while also striving to be exceedingly transparent and simple. The Ministry of Corporate Affairs’ Corporations (Winding-up) Rules 2020, which went into effect on January 24, 2020, have made major changes to the process of winding up companies, decreasing the burden of the tribunal and offering exit alternatives to certain kinds of companies.

Tribunals should only order a company to be wound up if all other options have been exhausted; otherwise, they should encourage corporations to amend or restore their businesses. The National Company Law Tribunal has been shown to play an important role in settling company challenges over the years. It has a large scope because it provides parties with faster remedies and opens career chances for professionals.

Keywords: Importance Of NCLT, Importance Of NCLT in India, Importance Of NCLT in the corporate world.

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