Is Company Law Board A Civil Court?

A significant institution in the field of corporation, regulation and oversight in India is the Company Law Board (CLB). The CLB, which was established in compliance with the Companies Act in the year  2013, was important in resolving disagreements concerning company law disputes.

Company Law Board: About

Equitable jurisdiction, which was formerly vested in the Central Government or the High Court, is currently carried out by the Company Law Board (CLB), a sort of quasi-judicial body rather than a civil court. The Board has authority over its own procedures.

Company Law Board: Its Emergence

• In May 1991, the Company Law Board was founded in accordance with Section 10E of the Companies Act 1956.
• The Central Government oversaw the functions, powers, and protocols. 
• The central government was given permission to form a board known as the Board of the Company legislation, which was governed in accordance with Section 10E of the Companies Act of 1956, by the Companies Amendment Act, 1998.
• It was there to carry out all of the duties assigned to it by the Companies Act of 1956, the federal government, and any other law.
• However, in 2002, the National Company Law Tribunal was established, eliminating all of the authority previously held by the Company Law Board.

Company Law Board: Its Powers

• According to Section 10E (4) of the Companies Act, 1956, the members were granted exclusive authority, and any decisions made by the board cannot be questioned due to a constitutional flaw or the occurrence of a vacancy among the members.
• When making decisions in any process, the Company Law Board will have the same authority as the Civil Procedure Code, 1908, including:

1. finding and examining records or other tangible items that can be used as proof;
2. compelling witnesses to appear in person and to deposit the costs they incurred;
3. requiring the submission of documentation;
4. calling the witnesses to testify;
5. granting postponements;
6. taking evidence based on affidavits.

• Under the Companies Act of 1956, board members were empowered to protect shareholders against oppression and poor management.
• The board’s members were granted the authority to carry out directives, and the board’s orders will be enforceable in the same manner as those issued by courts.
• Although board members are free to govern their own processes, natural justice principles have always served as their compass.

Replacement of Company Law Board (CLB) with National Company Law Tribunal (NCLT) 2016: Reasons Behind It

As a result of the Companies (Second Amendment) 2002, the Board for Industrial and Financial Reconstruction and the Company Law Board were replaced by the National Company Law Tribunal 2016 as well as the National Company Law Appellate Tribunal (NCLAT) 2016.

Some of the rationales behind the substitution of NCLT for CLB include the following:

• Reducing the workload of higher courts is the main justification.
• The creation of NCLT and NCLAT facilitates quicker conflict resolution, which benefits business owners by allowing them to conduct operations more comfortably.
• Parties who have been wronged by the business law board’s rulings and directives may file an appeal with NCLAT.
• Individuals and business owners believed that a standard jurisdiction was necessary to settle disputes quickly and cheaply.
• The opinion of the shareholders along with other individuals was that replacing NCLT not only expedites the dispute resolution process but also facilitates an effective free flow of management.

Company Law Board in Comparison with Civil Courts

According to Section 430 of the Companies Act of 2013, a tribunal has the authority to consider cases in which a civil court lacks jurisdiction to make a decision. The Civil Procedure Code created civil courts, which have been primarily accountable for resolving non-criminal matters. To hear disputes and arrive at decisions, they conform to specific procedural laws.

• Whereas the Civil Procedure Code provides civil courts the power to act, specific acts, in this case, the Companies Act, provide the CLB and NCLT the power to act.
• Comparable to civil courts, the CLB as well as the NCLT has the power to summon witnesses, examine evidence, and make orders which have legal authority underlying them.

It has been demonstrated over time that the National Company Law Tribunal has been crucial in resolving business disputes rather than the Company Law Board. Its scope has significantly expanded by giving parties faster remedies and giving specialists more work options.

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