GS 3 – ECONOMY
Establishment
- Constituted under Section 410 of the Companies Act, 2013.
- Came into effect from June 1, 2016.
Nature
- It is a quasi-judicial body.
- Functions as an appellate authority over orders passed by the National Company Law Tribunal (NCLT) and other specific regulators.
Composition
- Consists of a Chairperson and Judicial & Technical Members.
- Appointment: By the Central Government (based on recommendations of a Selection Committee).
- Eligibility:
- Chairperson: Must be a Supreme Court Judge (current or former) or Chief Justice of a High Court.
Jurisdiction / Powers
NCLAT hears appeals against:
- NCLT orders (under the Companies Act, 2013).
- Insolvency and Bankruptcy Code, 2016 (IBC) – appeals against NCLT’s orders.
- Competition Commission of India (CCI) – appeals against CCI’s orders.
- National Financial Reporting Authority (NFRA) – appeals against its orders.
- Insolvency and Bankruptcy Board of India (IBBI) decisions (in certain cases).
Appeals from NCLAT can be filed to the Supreme Court of India on questions of law.
Functions
- Ensures fair corporate governance and resolves corporate disputes.
- Strengthens the insolvency resolution framework under IBC.
- Acts as an appellate mechanism for competition and financial reporting regulation.
Significance
- Provides a specialised forum for corporate and insolvency matters (reducing burden on regular courts).
- Ensures speedy resolution of disputes (important for business confidence, Ease of Doing Business, and FDI).
- Integrates multiple regulatory appeals into one body (CCI, IBBI, NFRA), reducing fragmentation.
Limitations / Challenges
- Case pendency due to shortage of members.
- Questions on independence (since appointments are made by government).
- Heavy workload after IBC came into effect (2016).