Companies Act Section 422

Companies Act, Section 422: Expeditious Disposal by the Tribunal and Appellate Tribunal

Section 422 of the Companies Act, 2013 emphasizes speedy justice in matters brought before the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). 

Corporate disputes often involve crucial financial implications and may affect the viability of businesses, creditor recoveries, employment, and investment confidence. 

Therefore, the law mandates that matters should not remain pending unnecessarily and must be resolved in a time-bound manner.

This provision supports the overall objective of the Tribunal system to provide faster, efficient and specialized adjudication in company law matters without the delays commonly associated with traditional court processes.

1. Expeditious Disposal of Proceedings

The law requires that every application or petition submitted to the NCLT, every appeal filed before the NCLAT shall be dealt with as expeditiously as possible. Additionally, the section specifically directs that:

Every effort must be made to dispose of such cases within a period of three months from the date of filing before the NCLT, or from the date of filing the appeal before the NCLAT.

This creates a time-bound adjudication framework, ensuring that justice is not delayed and corporate issues are resolved promptly.

2. Extension and Reasons for Delay

Despite best efforts, certain cases especially those of complex legal or financial nature may require more than three months. In such situations:

The Tribunal or Appellate Tribunal must record written reasons explaining why the case could not be disposed of within the prescribed period.

These recorded reasons must be justified and form part of the official record. After reviewing the reasons for delay:

The President of NCLT or the Chairperson of NCLAT, as applicable, may grant an extension of time. The extension period must not exceed 90 days.

This ensures flexibility where needed, but while still maintaining a strict upper limit to avoid undue delays in justice.

Significance of Section 422

Encourages swift resolution of corporate disputes and insolvency matters. Prevents unnecessary litigation backlog.

Ensures creditors and investors have timely clarity on recovery and rights. Protects companies from prolonged uncertainty and operational disruption.

Reinforces confidence in the Tribunal system among domestic and international businesses. 

Aligns judicial outcomes with economic and commercial realities where time is often critical.