What Is The Difference Between NCLT and NCLAT

This post was originally published in 2019 and has been updated on December 18, 2024, to provide you with the most current and accurate information.

Both NCLT and NCLAT were established on June 1, 2016, under the Companies Act, 2013, to deal with matters related to the company law. In this blog post, we will understand why the need for the establishment of NCLT and NCLAT was felt, and the difference between the two through a table of comparison.

Need for Establishment of NCLT & NCLAT

Historically, matters related to the company law, such as mergers, amalgamations and shareholder disputes and grievances were addressed by the Company Law Board (CLB). CLB was a quasi-judicial body constituted under the Companies Act of 1956. It dealt with cases related to mismanagement, oppression and other business-specific disputes. 

Simultaneously, the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) handled cases of sick industrial companies under the Sick Industrial Companies (Special Provisions) Act, 1985, while High Courts handled matters pertaining to company insolvency. This multiplicity of forums often resulted in jurisdictional overlaps, delays and inconsistencies in judgements. 

The V. Balakrishna Eradi Committee, constituted in 1999, recognized these issues and recommended the establishment of a unified tribunal to consolidate the functions of CLB, BIFR, and AAIFR, and to reduce the burden on High Courts. The committee’s recommendations led to the formation of NCLT and NCLAT to provide a single-window system for matters related to corporate law and insolvency. 

What is NCLT?

NCLT full form is National Company Law Tribunal. A tribunal is essentially an organization with the power to hear cases, render decisions, and support or rule on certain claims. 

NCLT is a quasi-judicial body that specifically adjudicates issues relating to the Indian companies. The Union Government established this tribunal under Section 408 of the Companies Act, 2013 on June 1, 2016. 

NCLT was based on the Justice Eradi Committee’ recommendations. The purpose of this committee was to regulate insolvency laws and winding up of companies. The NCLT is supposed to dispose of all the concerned proceedings under the Companies Act, such as arbitration, compromise, arrangements, reconstruction and winding up of Indian companies. NCLT’s powers include scrutinizing its own orders and facilitating the recovery of corporate loans.

For insolvency resolution process of companies and limited liability partnerships under Insolvency and Bankruptcy Code (IBC) of 2016, NCLT serves as the adjudicating authority. Appeals of NCLT’s decisions can be filed with the National Company Law Appellate Tribunal (NCLAT). The right to appeal an NCLT order to the NCLAT has been provided under Section 61 of the Companies Act, 2013. 

The NCLT has 16 benches in total, including benches in Prayagraj, Bengaluru, Chennai, Cuttack, Guwahati, Hyderabad, Kochi, and Kolkata. The Principal Bench of NCLT is located in New Delhi.

What is NCLAT?

NCLAT full form is National Company Law Appellate Tribunal. It was constituted under Section 410 of the Companies Act, 2013 on June 1, 2016. This tribunal hears appeals against NCLT’s orders. NCLAT has two benches throughout India i.e., one principal bench at New Delhi and other one in Chennai.

Under Sections 202 and 211 of the IBC, the NCLAT is the appellate court for appeals against decisions made by the Insolvency and Bankruptcy Board of India. According to the amendment made to Section 410 of the Companies Act, 2013 by Section 172 of the Finance Act, 2017, which came into effect on May 26, 2017, the national company law appellate tribunal is responsible for hearing and resolving appeals against any directive, decision, or order issued by the Competition Commission of India.

Appeals against the National Financial Reporting Authority's orders are also heard and decided by this appellate tribunal. The Supreme Court may hear a challenge to decisions made by the National Company Law Appellate Tribunal (NCLAT) on a legal matter. 

Table of Comparison: NCLT vs NCLAT

Given below is a simple comparison table between NCLT (National Company Law Tribunal) and NCLAT (National Company Law Appellate Tribunal) to help you understand difference between NCLT and NCLAT easily:

Conclusion

The National Company Law Tribunal and National Company Law Appellate Tribunal are important bodies that deal with company-related legal matters. NCLT and NCLAT were established under Companies Act, 2013, under Section 408 and Section 410 respectively. They play a key role in resolving disputes related to companies, insolvency and mergers. The major difference between NCLT and NCLAT lies in the fact that the National Company Law Tribunal (NCLT) is a tribunal in India for company matters, while the National Company Law Appellate Tribunal (NCLAT) is an appellate tribunal for people who don't agree with the NCLT's decision.

Frequently Asked Questions (FAQs)

Q1. What is NCLT vs NCLAT difference?

A. The NCLT is the adjudicating authority for company-related matters, while the NCLAT is the appellate body that hears appeals against NCLT’s orders.

Q2. Where can a party seek redressal if aggrieved by the decisions of the NCLT?

A. An aggrieved party can appeal NCLT decisions before the National Company Law Appellate Tribunal (NCLAT).

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.