NCLT Lawyer in Delhi: Company Petitions, IBC Cases and NCLAT Appeals

What cases does the NCLT in Delhi hear?

The NCLT hears two kinds of cases. Under the IBC it is the adjudicating authority for the insolvency of companies, LLPs and personal guarantors of companies. Under the Companies Act 2013 it hears disputes and approvals that were earlier spread across the company courts of the High Courts, the Company Law Board and the BIFR. The New Delhi benches take cases of companies whose registered office is in Delhi; Noida and Ghaziabad companies go to the Allahabad bench and Gurugram companies to Chandigarh.

On the company law side, the cases that come to us most are oppression and mismanagement petitions in closely held companies, schemes of amalgamation and demerger, restoration of companies struck off by the Registrar of Companies, rectification of the register of members after a disputed share transfer, and reduction of share capital. The tribunal also hears class actions under section 245, winding up petitions under section 271, appeals against refusal to register a share transfer, and applications for investigation into a company's affairs.

What the NCLT does not hear is just as useful to know. A recovery suit for money, a breach of contract claim against a company, a tenancy dispute or a criminal complaint against directors goes to the ordinary courts, and a default below ₹1 crore cannot start a corporate insolvency process at all.

Common NCLT matters at a glance

These limits are stated in general terms. The tribunal applies the Limitation Act where the Companies Act is silent, and the facts of each case decide whether a petition is late.

What is oppression and mismanagement under the Companies Act?

Oppression means the company's affairs are being run in a way that is prejudicial or oppressive to some members, or to the company, or against the public interest. Mismanagement covers a material change in the management or control of the company, for example through a change in the board or the shareholding, that is likely to harm the company or its members. Section 241 lets members bring either complaint to the NCLT, and section 242 gives the tribunal wide powers to put things right.

In closely held Delhi companies, these petitions usually grow out of a family or partnership split. Typical facts are a brother removed from the board without proper notice, a fresh allotment of shares that reduces a 50 per cent holder to 20 per cent, accounts not shared for years, the company's business diverted to a firm owned by one side, or a director who signs everything while the others learn of decisions from the bank. A single wrong decision, or a commercial choice you disagree with, is usually not enough; the tribunal looks for a course of conduct that lacks fairness toward the complaining members.

Advocate B.K. Singh's first step in these cases is to build a dated chronology from the company's own records: board minutes, annual returns, the register of members, ROC filings and bank statements. Most oppression petitions are won or lost on whether the documents tell a coherent story, not on the force of the affidavits.

Who can file an oppression petition? The 10 per cent rule

For a company with share capital, section 244 allows a petition by at least 100 members or one tenth of the total number of members, whichever is less, or by members holding at least one tenth of the issued share capital, provided calls on their shares have been paid. For a company without share capital, one fifth of the members may apply. Members can club their holdings to meet the test, and one of them can sign for the others with their written consent.

The NCLT can waive these requirements on an application, and in a family company where the complaining member holds 5 or 8 per cent, the waiver application is often the first battle. The tribunal looks at whether the case raises a real grievance of the kind section 241 deals with. A waiver is not automatic, so the waiver application and the main petition should be drafted together, with the facts that justify the waiver set out plainly.

A director who is not a shareholder cannot bring an oppression petition in that capacity. A director removed from office may have other remedies, including a challenge to the removal process, but should not assume the NCLT route is open without a shareholding.

What the NCLT can order in an oppression case

Section 242 lists the orders the tribunal may pass, and the list is not closed. The orders most often sought are these.

• Purchase of shares. One group buys out the other at a value fixed by the tribunal or a valuer it appoints. This is the usual end of a family company dispute where the parties can no longer work together.
• Regulating the company's affairs. Directions on how the board meets, how decisions are taken and how accounts are shared, sometimes with an observer or administrator.
• Setting aside allotments and transfers. Cancelling a share allotment, transfer or agreement made to oust or dilute a member.
• Removing or appointing directors. Including restraining a director from acting and, in serious cases, appointing independent directors.
• Interim orders. Under section 242(4), status quo on shareholding, a restraint on selling assets or holding meetings, and similar protection while the petition is pending.
• Accounting for diverted money. Ordering those responsible for diverting funds or business to account for it to the company.

How an NCLT company petition is run

Company petitions are governed by the NCLT Rules 2016. The steps are broadly the same for an oppression petition, a restoration appeal or a rectification application.

1. Read the company record

   We pull the master data, annual returns, financial statements, charges and director filings from the MCA portal and match them with your own papers. This shows what the other side has filed and when, and it often reveals filings you never knew about.

2. Draft the petition

   The petition is prepared in the prescribed form with a synopsis, list of dates, facts, grounds under the relevant sections, reliefs and documents, supported by an affidavit. Advocate Sadhna Singh prepares the paper book, index and pagination, which is what the bench actually reads.

3. File and seek urgent listing

   The petition is e-filed with the fee. Where interim relief is needed, such as a stay of a meeting or an allotment, we mention the matter for early listing and serve advance notice on the other side.

4. Reply, rejoinder and interim hearings

   The respondents reply and the petitioner files a rejoinder. Interim applications for status quo, inspection of records or an observer are heard alongside, and these interim orders often shape the case more than the final order.

5. Mediation or final hearing

   The tribunal can refer the parties to mediation through its panel under section 442. If that fails, the petition is heard finally on the pleadings and documents, with written submissions, and the order is pronounced.

Restoration appeals under section 252 follow a simpler path, with the Registrar of Companies as respondent. Where the company was in fact operating, the usual outcome is restoration on filing the pending returns and paying the costs ordered.

Mergers, amalgamations and demergers before the NCLT

A scheme of merger or demerger under sections 230 to 232 needs the sanction of the NCLT, and the process has two stages. In the first, the companies file an application for directions, and the tribunal orders meetings of shareholders and creditors or dispenses with them where consents are filed; a creditors' meeting can be dispensed with where creditors holding 90 per cent in value consent by affidavit. Notice goes to the Central Government through the Regional Director, the Registrar of Companies, the income tax authorities, the Official Liquidator and, where relevant, the RBI, SEBI, the stock exchanges and the Competition Commission, who have 30 days to respond.

In the second stage, after the meetings approve the scheme, the companies file a petition for sanction. The tribunal considers the regulators' observations and any objections, and sanctions the scheme if it is fair and not against the law or public interest. Only shareholders holding at least 10 per cent, or creditors holding at least 5 per cent of the total outstanding debt, can object. A certified copy of the sanction order must be filed with the ROC within 30 days, and stamp duty on the order is payable under the law of the state concerned.

The documents that delay schemes are usually the valuation report from a registered valuer, the auditor's certificate that the accounting treatment complies with the accounting standards, and replies to the Regional Director's observations, which often raise tax or compliance points. A scheme that leaves these to the end can lose months.

Do all mergers need the NCLT? Fast-track mergers under section 233

No. Section 233 allows a fast-track merger, approved by the Regional Director instead of the NCLT, between two or more small companies, between a holding company and its wholly owned subsidiary, between start-up companies, and in other classes prescribed by the rules. The scheme needs approval from members holding 90 per cent of the total shares and from creditors holding nine tenths in value, and objections are invited from the ROC and the Official Liquidator.

If the Regional Director thinks the scheme is not in the public interest or the interest of creditors, he can refer it to the NCLT, which may then deal with it as an ordinary scheme. For family groups consolidating small private companies, the fast-track route is usually quicker and cheaper, and we suggest it first where the companies qualify.

How do I restore a company struck off by the ROC?

Apply to the NCLT under section 252. A company struck off by the Registrar of Companies for not filing returns, or for not carrying on business, can be restored by the tribunal. The company, a member, a creditor or a workman aggrieved by the strike-off can appeal within three years of the ROC's order. A company, member, creditor or workman can also apply before 20 years have passed from the publication of the strike-off notice in the Official Gazette, where the company was carrying on business or it is otherwise just to restore it.

The tribunal looks for evidence that the company was alive: bank statements with real transactions, GST and income tax returns, contracts, and property in its name. If it is restored, the company must file all pending financial statements and annual returns with the additional fees and pay any costs ordered. Restoration matters because a struck-off company cannot operate its bank account, enforce contracts or deal with its property, and its directors may face disqualification for the missed filings.

Reduction of capital, rectification and winding up

A company that wants to reduce its share capital, to write off accumulated losses or return surplus capital to shareholders, passes a special resolution and applies to the NCLT under section 66. Notice goes to the Central Government, the ROC, the creditors and, for listed companies, SEBI, who may respond within three months. The tribunal confirms the reduction once it is satisfied that creditors have been paid, secured or have consented.

Where a name has been entered in or removed from the register of members without sufficient cause, or a transfer has not been registered without good reason, the aggrieved person can apply under section 59 for rectification. This often comes up after the death of a shareholder, or where shares were transferred on forged transfer deeds. The NCLT can decide questions of title to shares that arise in the rectification, though a tangled title dispute may be left to the civil court.

Winding up by the tribunal under section 271 still exists, on grounds such as a special resolution of the company, acts against the sovereignty and security of India, fraud in the conduct of the company's affairs, or where it is just and equitable. Inability to pay debts is no longer a ground under the Companies Act; that now belongs to the IBC.

IBC cases at NCLT New Delhi

Insolvency petitions under sections 7, 9 and 10 of the IBC, applications in running insolvency processes, and personal guarantor cases make up most of the cause list at the New Delhi benches. They have their own procedure, thresholds and time limits, which we explain separately: the strategy before filing on our bankruptcy and insolvency advice page, and the conduct of cases at the Delhi benches, including homebuyer and guarantor petitions, on the insolvency lawyer in Delhi page.

Company law and insolvency often meet. A shareholder dispute can turn into a section 9 or section 7 petition by a director who lent money to the company, and a creditor's petition can be met with allegations that one faction filed it collusively to oust the other. In such cases the two proceedings have to be planned together, because positions taken in one will be quoted in the other.

How do I appeal an NCLT order to the NCLAT?

Appeals from the NCLT lie to the National Company Law Appellate Tribunal (NCLAT), whose Principal Bench sits in New Delhi; a bench at Chennai takes appeals from the southern states. An appeal under the Companies Act must be filed within 45 days of receiving a copy of the order, extendable by another 45 days for sufficient cause, under section 421. An appeal under the IBC has a tighter limit of 30 days plus up to 15, under section 61.

The NCLAT hears appeals on facts and law, but it is slow to interfere with interim orders such as status quo, and it gives weight to the NCLT's reading of the documents. Appeals from the NCLAT go to the Supreme Court only on a question of law: within 60 days, extendable by 60, under section 423 of the Companies Act, and within 45 days, extendable by 15, under section 62 of the IBC. The NCLAT also hears appeals against orders of the Competition Commission of India.

Count the days from the right date. Under the Companies Act the period runs from receipt of a copy of the order, while under the IBC it is generally counted from the date of the order where you were present, so do not wait for the certified copy before drafting. More on appeals to the Supreme Court is on our Supreme Court practice page.

Appeal time limits from the NCLT and the NCLAT

Papers to bring for an NCLT company matter

How long does an NCLT case take, and what does it cost?

A restoration appeal with clear evidence of business often finishes in a few hearings. A merger scheme without objections usually takes several months across both stages, depending on how quickly the regulators respond. A contested oppression petition can run for a year or more to final hearing, though interim orders in the first few months often decide how the dispute ends.

Our fees are discussed at the first meeting and agreed in writing, stage by stage: petition, interim relief, final hearing and any appeal. Tribunal fees, valuers' and auditors' fees, and the costs of advertisements and meetings in schemes are separate. In shareholder disputes the cost of a long fight often exceeds the value in dispute, which is one reason we raise mediation early.

When not to go to the NCLT

Do not file an oppression petition to win one argument about a single board decision, or as a pressure tactic in what is really a recovery dispute. The tribunal sees many such petitions and is quick to spot them, and the respondents will ask for costs. If your real claim is for money the company owes you, a recovery suit or, where the debt is large and undisputed, an insolvency petition is the honest route.

Where a shareholders' agreement has an arbitration clause, the other side may argue that the dispute belongs in arbitration. Whether it does depends on whether the claim is really about oppression and the company's affairs, which the tribunal decides, or about contractual rights between shareholders, which an arbitrator can decide. Think this through before filing so the case is framed for the right forum; our arbitration lawyer in Delhi page covers the other side.

What to do this week if you have an NCLT problem

• Download the company's MCA master data, annual returns and recent filings
• Write down the date of each act you object to: meetings, allotments, removals
• Collect your share certificates or demat statements
• Do not sign any resolution, consent or transfer form under pressure
• If a meeting or allotment is coming up, act before it, not after
• Send the documents through our online enquiry and fix a meeting

How we handle NCLT matters

Advocate B.K. Singh advises on strategy and argues before the NCLT and the NCLAT. Advocate Sadhna Singh is usually your day-to-day contact: she reads the company records, prepares the petition and paper books, and reports after every hearing. In schemes we work alongside the company's chartered accountant, company secretary and registered valuer, each appointed by the company. For matters in other states or in the Supreme Court we work with associate counsel and Advocates-on-Record. You can read more about Advocate B.K. Singh.