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  • Divyanshita Singh

Section 416 : Resignation of Members

Updated: Oct 18, 2022

Section 416 : Resignation of Members

Introduction- Since 1600, India has had a variety of Company Laws, including the East India Company under Royal Charter, the Joint Stock Company Act of 1857, the Companies Act of 1866, and the Indian Companies Act of 1913. The Indian Companies Act of 1913 was replaced by the Indian Companies Act of 1956, which was amended several times over the years. In 2015, the Supreme Court upheld the validity of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT). On June 1st, 2016, the Central Government issued a decree that established the constitutionalized NCLT and NCLAT. The National Company Law Tribunal (NCLT) is a quasi-judicial body that regulates and resolves civil corporate disputes. The Appellate Tribunal, on the other hand, is the higher forum where appeals from the Tribunal are heard. Article 245 of the Indian Constitution grants the authority to establish the NCLT and NCLAT. The Tribunal, the result of the Eradi Committee, is institutionalised by the Constitution and exercises authority and power similar to that of a court of law. The Tribunal is required to be objective and pass orders based on natural justice by closely scrutinising the facts presented in the cases heard. The NCLT, also known as the "Tribunal," is a quasi-judicial authority established by the Companies Act, 2013 to resolve corporate civil disputes arising under the Act. It is a legal entity with the same powers and procedures as a court of law or a judge. The NCLT is required to determine facts objectively, decide cases in accordance with natural justice principles, and draw conclusions in the form of orders. Such orders can be used to remedy a situation, correct a mistake, or impose legal penalties/costs, and they may have an impact on the legal rights, duties, or privileges of the specific parties. The Tribunal is not bound by strict judicial evidence and procedure rules. It can make decisions based on natural justice principles. The NCLAT, also known as the "Appellate Tribunal," is a body established to hear appeals from the Tribunal's decisions. It was established to correct the Tribunal's mistakes. It is an intermediate appellate forum where appeals are heard following the Tribunal's decision. The decisions of the Appellate Tribunal can be appealed to the Supreme Court. Any party who is dissatisfied with a Tribunal decision may file an appeal. The Appellate Tribunal reviews the Tribunal's decisions and has the authority to overturn, modify, or confirm them.

Main provisions relating NCLAT and NCLT

Section 407 of the Companies Act defines the terms chairperson, judicial members, technical members, and president. They are important members of the NCLT and NCLAT. The National Company Law Tribunal is composed of a president and a number of members, including judicial and technical members. The tribunal's president will be someone who has served as a judge on a high court for at least five years. Section 409 of the Companies Act specifies the qualifications for technical and judicial members. Section 411 of the Companies Act specifies the qualifications for the chairman and members of the appellate tribunal. The chairperson should be or have been a Supreme Court judge or the chief justice of a high court. It also specifies the qualifications of judicial and technical members. Section 413 specifies the tenure of the president, chairperson, and other members. The acting president and chairperson of the tribunal or appellate tribunal are specified in Section 415. The provisions relating to the National Company Law Tribunal (NCLT) and the Appellate Tribunal are addressed in Chapter XXVII (Sections 407-434) of the Companies Act, 2013. (NCLAT). Section 416 of the Companies Act of 2013 allows members to resign. The section 416 provision went into effect on June 1, 2016.


The President, the Chairperson, or any Member may resign from his office by giving written notice to the Central Government. The President, Chairperson, or Member shall continue to hold office until three months from the date of receipt of such notice by the Central Government, or until a person duly appointed as his successor enters upon his office, or until the expiry of his term of office, whichever comes first.

A Chairperson, a judicial member, and a technical member comprise the NCLAT. It is made up of no more than eleven members. Any member may resign his or her position by providing written notice. He can hold the office after giving notice for three months from the date of notice.


The NCLT has primary jurisdiction, while the NCLAT has appellate authority. NCLAT is a more prestigious forum than NCLT. Evidence and witnesses are generally presented before NCLT for decision-making, and NCLAT generally reviews NCLT decisions and checks them on a point of law or fact. NCLAT is the Appellate Tribunal for hearing appeals against National Company Law Tribunal orders ( NCLT ). With effect from December 1, 2016, it is also responsible for hearing appeals against NCLT(s) orders under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC). Each NCLT is made up of a Principal Bench and other benches. Rs. 50 lakhs, or for any other reason specified by the Hon'ble President of the NCLT. The constitutional validity of Chapters 1B and 1C of the Companies Act, 1956 ('Act' for short) inserted by the Companies (Second Amendment) Act 2002 ('Amendment Act' for short) establishing the National Company Law Tribunal ('NCLT' or 'Tribunal') and National Company Law Appellate Tribunal ('NCLAT' or 'Appellate Tribunal') was challenged in the Supreme Court of India. After referring to the provisions inserted by the Companies (Second Amendment) Act 2002 and considering whether there is a conflict between the powers of High Courts of India and such amended provisions, the Supreme Court of India finally validated the creation of NCLT and NCLAT. There are some flaws in the administration of NCLT and NCLAT.

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