Section 424 of the Companies Act, 2013 confers on the Tribunal and the Appellate Tribunal the power to regulate their own procedure and the powers vested in a civil court under the Code of Civil Procedure, 1908, in respect of matters such as the summoning and enforcement of witnesses, the discovery and production of documents, and the reception of evidence on affidavits. The provision is the source of the Tribunal’s procedural flexibility, but it is not a source of substantive jurisdiction.
The Procedural Powers
The Tribunal’s powers under Section 424 are procedural. They enable the Tribunal to conduct the proceedings effectively, to ensure that the parties produce the relevant material, and to prevent the abuse of the process. The power to grant an interim injunction, which is drawn from Order XXXIX of the CPC, is a procedural power, and it is exercised in accordance with the well-known tests of a prima facie case, the balance of convenience, and irreparable injury.
The NCLT has the power to summon witnesses, to compel the production of documents, and to issue commissions for the examination of witnesses. The power is exercised where the Tribunal is satisfied that the evidence is necessary for the just disposal of the matter.
The Limits of the Power
The NCLT’s procedural powers cannot be used to expand its substantive jurisdiction. The NCLT Ahmedabad has held that Section 424(3) cannot be invoked to enforce an alleged breach of a private settlement, because the provision enables the Tribunal to enforce its orders, not to adjudicate a contractual dispute that is outside its jurisdiction.
The NCLT Kochi has held that the power under Section 424 cannot be used to reopen the commercial evaluation undertaken by the Committee of Creditors in an IBC proceeding. The power is procedural, and it cannot be used to expand the scope of judicial review under the IBC.
The Recall Jurisdiction
The NCLT’s inherent power to recall its own orders is a distinct power. The Supreme Court has recognised that a court has the inherent jurisdiction to correct its own errors to prevent a miscarriage of justice. The power is exercised sparingly, and it is subject to the limitations discussed in the context of Rule 11 of the NCLT Rules.
The inherent power is not a substitute for an appeal. A party that is aggrieved by an order must use the appellate remedy where it is available, and it cannot invoke the inherent power to circumvent the appellate process.
A technically sound NCLT practice recognises the distinction between the procedural powers and the substantive jurisdiction. The procedural powers are the tools; the substantive jurisdiction is the source of the authority. A party that confuses the two will find that the Tribunal declines to exercise a power that it does not have.
Call to Action
Anuj Desai & Associates advises companies and petitioners on the NCLT’s inherent and procedural powers—from the interim injunction and the production of documents to the limits of the power in IBC and contractual matters. If you are seeking a procedural remedy or opposing one, we can help you assess the scope of the Tribunal’s power.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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