Modalities Of Execution Powers Of The NCLT

Sweeping powers are conferred upon the NCLT to enforce the execution of its order…

In June 2016, the Central Government in exercise of its powers under the Companies Act, 2013 (“the Act”) constituted the National Company Law Tribunal (“NCLT”) replacing the Company Law Board (“CLB”). One of the key objects for constitution of the NCLT was to enhance the powers for effective execution of orders, a problem which was often faced by the CLB. Post commencement of operations, the NCLT passed orders in company petitions instituted before it. At that juncture and similar to the situations that arise before civil courts, two kinds of judgment debtors emerged. Those that belong to the first category comply with the orders passed by the NCLT without the courts’ intervention. The second category comprises companies which do not comply with orders passed by NCLT. In such cases, the decree holder is compelled to institute execution proceedings. While dealing with the cases falling under the second category, the NCLT discovered its infrastructural inability to effectively enforce execution of its orders. The present article makes an attempt to address the said issue. Another issue that has been addressed in this article relates to execution of an order by the NCLT without sending for its execution to the court of local jurisdiction.

Section 424(3) of the Act empowers the NCLT to enforce its own order in the same manner as if it were a decree made by a civil court. Implying that in order to enforce its order, the NCLT would be guided by the principles laid down under Order 21 of the Code of Civil Procedure, 1908 (“CPC”) which comprehensively lays down the procedure for execution of decrees and orders.