NCLT & NCLAT UNDER COMPANIES ACT, 2013
NCLT & NCLAT UNDER COMPANIES ACT, 2013
CONTENT OF ARTICLES
Introduction
NCLT & NCLAT
A. Background of NCLT.
B. Mega Tribunal.
C. Effect of Notification dated 1st
June, 2016.
D. Dissolution of CLB
E. Benches of NCLT
F. Section and Provisions of CA-2013
relating to Tribunal in effectiveness.
G. Powers of NCLT
H. Administration of NCLT &
NCLAT.
I. Advantage of NCLT & NCLAT
J. Scope for Practicing Company
Secretaries.
K. Constitution of NCLT & NCLAT
-
NCLT & NCLAT Consists
- Qualification
-Selection of Member
- Terms
It has been more than
14 years that we first heard about National Company Law Tribunal [NCLT] &
National Company Law Appellate Tribunal [NCLAT]. But now by MCA Notification
dated 1st June, 2016 in exercise of the powers conferred by section
408 of the Companies Act, 2013 (18 of 2013), the Central Government hereby constitutes
the National Company Law Tribunal to exercise and discharge
the powers and functions as are, or may be, conferred on it by or under the
said Act with effect from the 1st day of June, 2016.
The Companies (Second Amendment) Act, 2002 provides for the
setting up of a National Company Law Tribunal and Appellate Tribunal to replace
the existing Company Law Board and Board for Industrial and Financial
Reconstruction. The setting up of NCLT as a specialized institution for
corporate justice is
based on the recommendations of the Justice Eradi Committee on
Law Relating to Insolvency and Winding up of Companies.
Need of Specialized
Courts or Tribunals: The genesis of setting up of
specialized tribunals can be traced to the Supreme Court judgment
in Sampath
Kumar case. In that case, while adopting the theory of alternative
institutional mechanism for Supreme Court referred to the fact that since
independence, the population explosion and the increase in litigation had
greatly increased the burden of pendency in high courts. The supreme court also
referred to studies conducted towards relieving the high courts of their
increase load; the recommendations of the Shah committee for setting up
independent tribunals as also the suggestion of the administrative
reforms commission for setting up of Civil Service tribunals.
MEGA TRIBUNAL:-
NCLT
can be called as Mega Tribunal. Because NCLT will CONSOLIDATE the corporate jurisdiction of the followings:
·
Company Law Board.
·
The Board for Industrial and Financial
Reconstruction
·
The Appellate authority for Industrial and
Financial Reconstruction
·
Jurisdiction and powers relating to winding up
restructuring and other such provisions, vested in the High courts
Present Scenario: 1st
June, 2016
The Ministry of Corporate Affairs has issued notification for
constitution of the National Company Law Tribunal (NCLT) and National Company
Law Appellate Tribunal (NCLAT) with effect from today i.e. 1st June,
2016. http://www.mca.gov.in/Ministry/pdf/Notification_02062016_II.pdf
Chairperson
|
Hon’ble Justice S.J. Mukhopadhaya, Judge (Retd.), Supreme
Court of India
|
President
|
Hon’ble Justice M.M.Kumar, Judge (Retd.)
|
Dissolution of CLB: According to this notification Company Law Board (CLB) stand
dissolved w.e.f. 1st June, 2016. Notification of this section 466 makes last
Chairman of CLB as Provisional and first Chairman of NCLT.
Benches of NCLT: Initially NCLT will have eleven Benches, as per list given
below.
Two New Delhi
|
Ahmedabad
|
Allahabad
|
Bengluru
|
Chandigarh
|
Chennai
|
Guwhati
|
Hyderabad
|
Kolkata
|
Mumbai
|
SECTIONS AND PROVISIONS OF THE COMPANIES
ACT, 2013 RELATING TO
TRIBUNAL NOTIFIED W.E.F. 1/6/2016
TRIBUNAL NOTIFIED W.E.F. 1/6/2016
SI. No.
|
Section
|
Purpose
|
1
|
Sub-section (7) of section 7 [except clause (c) and (d)]
|
Legal action for false or incorrect
information at the
time of Incorporation
|
2
|
Second proviso to sub-section (1) f
section 14
|
Conversion of Public to Private Limited
|
3
|
Sub-section (2) of section 14
|
Conversion of Public to Private Limited
|
4
|
Sub-section (3) of section 55
|
Rollover of existing redeemable preference shares
|
5
|
Proviso to Clause (b) of sub-section (1) of
section 61
|
Changes in voting rights by Consolidation
or sub-division of share
Capital
|
6
|
Sub-sections (4) to (6) of section 62
|
Changes in terms of issue of Debentures to facilitate Conversion into equity shares
|
7
|
Sub-sections (9) to (11) of section 71
|
Action by Debenture trustee once the
secured Assets becomes insufficient
|
8
|
Section 75
|
Action against Company by defrauding
Depositors by non-payment
|
9
|
Section 97
|
Power to call for AGM in case of failure by the Company
|
10
|
Section 98
|
Power to call for meetings other than AGM
|
11
|
Section 99
|
Punishment for failure to comply with
Tribunal Direction regarding Meetings
|
12
|
Sub-section (4) of section 119
|
Order for inspection in case of failure by
the Company
|
13
|
Section 130
|
Re-opening of Accounts by Authorities
|
14
|
Section 131
|
Voluntary revision of financial statements
|
15
|
Second proviso to sub-section (4) and sub- section (5) of section 140
|
Removal or change of Auditor before due
Date and Suo Moto action by Tribunal for removal
|
16
|
Sub-section (4) of section 169
|
Removal of Directors - representation and relaxation of provisions in certain cases
|
17
|
Section 213
|
Investigation into the affairs of the
Company
|
18
|
Sub-section (2) of Section 216
|
Appointment of Inspectors
|
19
|
Section 218
|
Protection of employees during
investigation
|
20
|
Section 221
|
Freezing of assets of Company on inquiry and investigation
|
21
|
Section 222
|
Imposition of restrictions upon securities
|
22
|
Sub-sections (5) of section 224
|
Action against Company or Directors
on
inspector's report
|
23
|
Sections
241, 242 [except clause (b) of sub- section (1), clause (c) & (g) of sub-section (2)], 243, 244, and 245
|
Action against Prevention and Oppression and Mismanagement
|
24
|
Reference of word 'Tribunal' in sub-
section (2) of section 399
|
Order for production of documents by
Registrar
|
25
|
Sections 415
to 433 (both inclusive)
|
Tribunal and its Chairman, Members
etc and provisions
relating thereto.
|
26
|
Sub-section (1)(a) and (b) of section 434
|
Transfer of pending proceedings
|
27
|
Sub-section (2) of section 434
|
Appeal against Company Law Board Order
|
28
|
Section 441
|
Compounding of offences
|
29
|
Section 466
|
Dissolution of CLB and consequential
provisions
|
I am not going to discuss much debated thing, whether National
Company Law Tribunal ever be constituted. I am going to discuss provisions in
this Act; whether they are applicable or going to be applicable or not.
v POWERS OF NCLT:
The proposed NCLT will have judicial and technical experts who
will handle all matters presently being handled by CLB, Company Court and BIFR
with much wider jurisdiction in terms of scope of the subjects.
Compounding of Certain Offences
Section 441. Compounding application for certain offences shall be made
before the Tribunal under
Transfer of certain pending proceedings
[Section 434(1)(a)]All matters, proceedings or cases pending before the Board of
Company Law Administration immediately before such date shall stand transferred
to the Tribunal and the Tribunal shall dispose of such matters, proceedings or
cases in accordance with the provisions of this Act.
v
ADMINISTRATION OF NCLT AND NCLAT
Section 415 to Section 433 (both inclusive) has also came into
force. These sections deal with administration of NCLT and NCLAT.
415. Acting President and Chairperson of Tribunal or Appellate
Tribunal.
|
416. Resignation of Members.
|
417. Removal of Members.
|
418. Staff of Tribunal and Appellate Tribunal.
|
419. Benches of Tribunal.
|
420. Orders of Tribunal.
|
421. Appeal from Orders of Tribunal.
|
422. Expeditious disposal by Tribunal and Appellate Tribunal.
|
423. Appeal to Supreme Court.
|
424. Procedure before Tribunal and Appellate Tribunal.
|
425. Power to punish for contempt.
|
426. Delegation of powers.
|
427. President, Members, officers, etc., to be public servants.
|
428. Protection of action taken in good faith.
|
429. Power to seek assistance of Chief Metropolitan Magistrate, etc.
|
430. Civil court not to have jurisdiction.
|
431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts
or proceedings.
|
432. Right to legal representation.
|
433. Limitation.
|
v
CONSTITUTION OF NCLT AND NCLAT:
I.
NCLT & NCLAT
Consist:
§
There are two classes
of members to the National Company Law Tribunal; Judicial Members and Technical
Members.
§
The Tribunal shall be
headed by the President while the Appellate Tribunal by Chairperson.
§
NCLAT not exceeding
eleven members for hearing appeals against the orders of the Tribunal
II. Qualification: (President/Member of NCLT)
S. No.
|
President
|
Judicial Member
|
Technical Member
|
i.
|
Is/has been Judge of
High Court ≥ 5 years
|
Is/has been Judge of
High Court (any period)
|
Has Member of Indian
Corporate Law Service /Indian Legal Service ≥ 15 years
(out of 15 years at
least 3 years to be in the pay scale of Joint Secretary to GOI or equivalent
post)
|
ii.
|
|
Is/has been District
Judge atleast 5 years
|
Is/has been Practicing
Chartered Accountant at least15 years
|
iii.
|
|
Has been Advocate of
court held a judicial office or as member of a tribunal atleast 10 years
|
Is/has been Practicing
Cost Accountant at least 15 years
|
iv.
|
|
|
Is/has been Practicing
COMPANY SECRETARY at
least 15 years
|
v.
|
|
|
Person with proven
ability, integrity and standing having special knowledge and experience ≥ 15
years [1](in below mentioned specified
areas)
|
vi.
|
|
|
Presiding Officer of
Labour Court/ Tribunal/ National Tribunal (under Industrial Disputes Act,
1947) at least 5 years
|
III. Qualification: (Chairman/Member of NCLAT)
§
National Company Law
Appellate Tribunal, constituting of a Chairperson and not exceeding eleven
members for hearing appeals against the orders of the Tribunal.
S. No.
|
Chairman
|
Judicial Member
|
Technical Member
|
i.
|
Is/has been Judge of
Supreme Court
|
Is/has been Judge of
High Court
|
Person with proven
ability, integrity and standing having special knowledge and experience ≥ 25
years [2](in below given specified
areas)
|
ii.
|
Is/has been Chief
Justice of High Court
|
Is a Judicial Member
of Tribunal for at least 5 years
|
IV. Selection of Members
S. No.
|
President/ Chairman
|
Judicial Members of
the Appellate Tribunal
|
Members of the
Tribunal and the Technical Members of the Appellate Tribunal
|
i.
|
Shall be Appointed
after consultation with the Chief Justice of India.
|
Shall be Appointed
after consultation with the Chief Justice of India.
|
shall be appointed
on the recommendation of a Selection Committee consisting of
|
V. Selection Committee Consisting:
The Secretary, Ministry of Corporate Affairs shall be the
Convener of the Selection Committee.
S.No.
|
Position
|
Selection
Committee Consisting
|
i.
|
Chairperson
|
§ Chief Justice of India or his nominee
|
ii.
|
Member
|
§ A senior Judge of the Supreme Court or a
Chief Justice of High Court
|
iii.
|
Member
|
§ Secretary in the Ministry of Corporate
Affairs
|
iv.
|
Member
|
§ Secretary in the Ministry of Law and
Justice
|
v.
|
Member
|
§ Secretary in the Department of Financial
Services in the Ministry of Finance
|
VI. Terms:
Advantages of NCLT & NCLAT:
§
It shall avoid multiplicity of litigation before various Forums
(High Courts, CLB, BIFR. AAIFT). Thus there will be a consolidation of
Corporate Jurisdiction.
§
There shall be at least 11 benches of the NCLT, thereby
providing justice almost at one’s doorstep.
§
This tribunal shall comprise of technical experts who will
provide more concrete and precise decision.
§
There will be mixture of judicial and equitable jurisdiction
while deciding matters.
§
There shall be reduction in period of winding up from 20-25
years to 2 years.
§
Reduction in pendency of cases, expeditious disposal of cases.
SCOPE of
Services for PRACTICING COMPANY SECRETARIES under NCLT:
The
establishment of NCLT/NCLAT shall offer various opportunities to Practicing
Company Secretaries as they have been authorized to appear before the Tribunal/
Appellate Tribunal. Therefore, Practicing Company Secretaries would for the
first time be eligible to appear for matters which were hitherto dealt with by
the High Court viz. mergers, amalgamations under Section 391-394 and winding up
proceedings under the Companies Act, 1956. Areas opened up for company secretaries
in practice under NCLT are briefly stated hereunder:
PCS as Member of NCLT: A Practicing Company Secretary can be
appointed as a Technical Member of NCLT, provided he has 15 years working
experience as secretary in whole-time practice.
Appearance before National Company Law Appellate: Tribunal As stated earlier a Practicing
Company Secretary has been authorized to appear before National Company Law
Appellate Tribunal.
Insolvency Process: Currently, the law does not support effective participation
of professionals and experts in the Insolvency process. There is no shortage of
quality professionals in India. Disciplines of chartered accountancy, company secretaryship,
cost and works accountancy, law etc can act as feeder streams, providing high
quality professionals for this new activity. In fact, private professionals can
play a meaningful role in all aspects of process.
Insolvency practice can also
open up a new field of activity for service professionals while improving the
quality of intervention at all levels during rehabilitation/winding
up/liquidation proceedings. Law should encourage and recognize the concept of
Insolvency Practitioners (Administrators, Liquidators, Turnaround Specialists,
Valuers etc). Greater responsibility and authority should be given to
Insolvency Practitioners under the supervision of the Tribunal to maximize
resource use and application of skills.”
A.
Winding up: The National Company Law Tribunal has
also been empowered to pass an order for winding up of a company. Therefore
Practicing Company Secretaries may represent the winding up case before the
Tribunal.
B.
Compromise and
Arrangement: With
the establishment of NCLT, a whole new area of practice will open up for
Company Secretary in Practice with respect to advising and assisting corporate
sector on merger, amalgamation, demerger, reverse merger, compromise and other
arrangements right from the conceptual to implementation level. Company
Secretaries in practice will be able to render services in preparing schemes,
appearing before NCLT/NCLAT for approval of schemes and post merger formalities
C. Sick Companies
§
Since
all powers of BIFR have been entrusted to NCLT ,detecting the Sick companies
and providing resolution of the queries and for making reference to the
Tribunal for revival and rehabilitation of the Company
§
The
provisions also mandated preparation of scheme and seeking approval from the
Tribunal as may be required. Thus the practicing professionals could play a
pivot role in the same area.
CONCLUSION:
In
view of vast opportunities emerging with the establishment of National Company
Law Tribunal, the Practicing Company Secretaries should standardize their
competencies with the global benchmarks to provide value added services in
assisting the Tribunal in dispensation of justice and speedier disposal of
matters like merger, amalgamation, restructuring, revival and rehabilitation of
sick companies and winding up of companies.
[1]
in law, industrial finance, industrial
management or administration, industrial reconstruction, investment,
accountancy, labour matters, or such other disciplines related to management,
conduct of affairs, revival, rehabilitation and winding up of companies
[2]
in law, industrial finance, industrial management or
administration, industrial reconstruction, investment, accountancy, labour
matters, or such other disciplines related to management, conduct of affairs,
revival, rehabilitation and winding up of companies.
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