Companies Act Section 420

Companies Act, Section 420: Orders of the National Company Law Tribunal (NCLT)

Section 420 of the Companies Act, 2013 lays down important rules regarding how the National Company Law Tribunal (NCLT) issues its orders, ensures fairness in proceedings, and corrects errors in its decisions. 

This provision ensures that the Tribunal follows principles of natural justice, maintains accuracy in its records, and communicates its decisions properly to all parties involved.

1. Power to Pass Orders After Proper Hearing

Give all parties involved a reasonable opportunity to be heard. Consider the arguments, submissions, and evidence presented

Only after ensuring fair hearing can the Tribunal pass such orders as it thinks fit, meaning it has full authority to decide the case in a manner it believes is just and appropriate under the law.

This reflects the fundamental legal principle of natural justice no person should be condemned without being heard.

2. Power to Amend Orders to Correct Mistakes

The law recognizes that minor errors may sometimes occur in judicial orders. Therefore, the Tribunal is permitted to:

Correct any mistake apparent on the record, at any time within two years from the date of the original order. This may include:

Clerical mistakes, Typographical errors, Mathematical miscalculations, Errors arising from accidental slips or omissions. Corrections may be made:

On the Tribunal’s own initiative, or when the mistake is brought to its notice by a party involved in the case.

This ensures that records remain accurate and reliable. However, the law includes a very important restriction:

No amendment can be made if an appeal has already been filed against that order under the Act. This prevents conflicting judicial processes and respects the appellate hierarchy.

3. Duty to Provide Orders to Parties

Send a copy of the order to all concerned parties involved in the case. This ensures:

Proper communication of the decision, Transparency, and fairness, enabling parties to take further legal action if required (such as appeal, rectification request, or compliance).

It also acts as a formal notification, which may be significant for legal timelines and enforcement.

Significance of Section 420

Fair adjudication with proper hearing.

Accuracy in orders, with a limited window for correcting visible mistakes.

Clear communication of decisions to all concerned.

Accountability and transparency in the judicial process.

It balances efficient decision-making with safeguards to protect the rights of litigants and preserve confidence in the Tribunal system.