We represent before the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), established under the Companies Act, 2013.
The Central Government constituted an independent NCLT, vide Notification No. S.O.1932(E) dated the 01 June, 2016 in terms of Section 408 of the Companies Act, 2013. Similarly, NCLAT has been constituted vide Notification No. S.O.1933(E) dated the 01 June, 2016 in terms of Section 410 of the Companies Act, 2013. NCLT has replaced Company Law Board (see sections 434 and 466) and this CLB is dissolved from 01 June 2016.
Under the Companies Act, 1956, High Courts were vested with original jurisdiction as a ‘Company Court’ to adjudicate certain matters. The jurisdiction which was divided between the erstwhile Company Law Board (CLB) and High Court was clubbed and transferred to the NCLT under the 2013 Act.
NCLT and NCLAT is a quasi-judicial body, which exercises some of the judicial and quasi-judicial powers, which were earlier being exercised by the Company Law Board, High Court, BIFR, AAIFR or the Central Government.
NCLT derives jurisdiction from the Companies Act, 2013, the Reserve Bank of India Act, 1934 and the Insolvency and Bankruptcy Code 2016.
NCLT has its Benches at New Delhi, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kolkata, Kochi and Mumbai.
A recent ruling (in SAS Hospitality Pvt ltd and Anr. vs. Surya Constructions Pvt Ltd – decided on 16 Oct 2018) by Justice Prathiba Singh of the Delhi High Court has held that Civil Courts do not have jurisdiction to adjudicate on matters vested with the NCLT under Companies Act, 2013 – per section 430 thereof. Section 430 of the Companies Act, 2013 does not permit the Civil Courts “to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act”.
NCLT is not subject to the control of the Central Government and has powers to regulate its own procedures and act in its own discretion, though members of NCLT are appointed by Central Government.
Provisions of the Companies act 2013 has been notified in a staggered manner:
- From 12th September 2013, 98 provisions of the new Companies Act, 2013 were brought to force.
- 184 provisions of the Companies Act, 2013 were brought to force from 01 April 2014.
- A partial provision from 06 June 2014 [Sec. 74(2)7(3)]
- A partial provision from 13 January 2016 [Sec. 125(5),(6), (7)]
- 5 provisions related to special court from 18 May 2016
- 51 provisions related to NCLT from 01 June 2016, and so on.
From date(s) to be notified by the Government, NCLT and NCLAT will replace BIFR and AAIFR, respectively. Also from date to be notified, all matters relating to compromise or arrangements (merger, demerger, amalgamation), reduction of share capital, winding-up of companies would lie before NCLT and High Courts would cease to have jurisdiction in those matters (see section 434). Insolvency and winding-up of Companies would be adjudicated by NCLT as per provisions of Insolvency and Bankruptcy Code, 2015.
An illustrative list of matters before National Company Law Tribunal (‘NCLT’) are given below.
- To deregister or dissolve companies that are found to have attained ‘registered’ status through illegal and wrongful manner ((Section 7(7) of the Companies Act 2013 ))
- To direct the company to make repayment of matured deposits. ((Section 74(2) of the Companies Act 2013 or Section 45QA of RBI Act ))
- For rectification of Register of Members
- on a refusal of registration of transfer/transmission of securities or interest of a member in the company (for a company not having share capital). ((Sections 58(3) of the Companies Act 2013 ))
- on any ground including refusal of registration of transfer/transmission of securities or interest of a member in the company (for a company not having share capital). ((Sections 59(1) of the Companies Act 2013 ))
- Where at any time the debenture trustee comes to the conclusion that the assets of the company are insufficient or are likely to become insufficient to discharge the principal amount as and when it becomes due, the debenture trustee may file a petition before the NCLT ((Section 71(9) of the Companies Act 2013 ))
- debenture trustee or debenture holder may approach NCLT upon failure of a company to redeem debentures on a due date. ((Section 71(10) of the Companies Act 2013.))
- Member of the company or debenture holder may approach NCLT upon a refusal of a company to furnish a copy of trust deed. ((Section 118(3) of the Companies Act, 1956. There is no similar provision under Companies Act 2013, however, Rule 18(8) of the Companies (Share Capital and Debenture)Rules, 2014 provides for the right of debenture holders to inspect and demand a copy of debenture trust deed. ))
- For directing to call an annual general meeting. ((Section 97 of the Companies Act 2013 ))
- For ordering for calling of general meeting (other than an annual general meeting). ((Section 98 of the Companies Act 2013 ))
- To pass an order directing an immediate inspection of minute books or directing a copy thereof be sent forthwith to a person requiring it. ((Section 119(4) of the Companies Act 2013 ))
- To decide as to whether a right of auditors to get their representation circulated and read out at the meeting, is being abused to secure needless publicity for defamatory matter and to order company’s costs on an application to be paid in whole or in part by retiring auditors. ((Second proviso to Section 140(4) of the Companies Act 2013 ))
- The Central Government to pass an order for investigating the affairs of a company by an inspector. ((Section 210(2) and Section 216 (2) of the Companies Act 2013 ))
- CLB may in the course of any proceedings before it, declare by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purpose of determining the true persons (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or (b) who are or have been able to control or materially to influence the policy of the company. Then the Central Government shall appoint one or more inspectors. ((Section 216 (2) of the Companies Act 2013 ))
- Complaint by any person for finding out facts about shares / securities issued / to be issued / transferred. ((Section 222 of the Companies Act 2013. ))
- To decide as to whether the rights of a director to get his representation circulated and read out in meeting is being abused to secure needless publicity for defamatory matter and to order company’s costs on application to be paid in whole or in part by such director. ((Proviso to Section 169(4) of the Companies Act 2013 ))
- Scheme of Compromise and arrangement (merger, demerger and amalgamation) ((Sections 230 to 240 of Companies Act 2013 ))
- To exercise powers in connection with the prevention of oppression and/or mismanagement. ((Sections 241 to 246 of the Companies Act 2013 ))
- To grant leave for an appointment of managing director or manager whose agreement has been terminated or set aside provided notice has been served on Central Government. ((Section 243(1)(b) of the Companies Act 2013 ))
- Class action by members or depositors ((Section 245 of Companies Act 2013 ))
- Revival / restroation of companies whose name is striked off by the Registrar of Companies ((Section 252 of the Companies Act 2013 ))
- Winding-up by Tribunal ((Sections 270 to 365 of Companies Act 2013 ))
- Compounding of offence ((Section 441 of Companies Act 2013 ))
Besides under the Insolvency and Bankruptcy Code 2016, NCLT is the Adjudicating Authority and NCLAT is the Appellate Authority. The provisions of IBC are brought to force from 01st December 2016 and members’ Voluntary winding-up from 01 April 2017.
Member of a company and debentures holders may complain to MCA, to direct the company to allow an immediate inspection of Register of Investments, if inspection is refused.
Complaint may also be filed with ROC in view of adjudication power under section 454 of the Companies Act, 2013.
In case of listed company, a complaint may also be filed with the SEBI.
Under section 187 of the Companies Act 2013 there is no provision similar to Section 49(10) of the Companies Act 1956 whereby aggrieved member or debenture holder could approach Company Law Board / NCLT. Under section 439(2) of the Companies Act 2013 civil court may also be approached by a shareholder.
Under section 56 of Companies Act 2013 there is no provision similar to Section 113(1) and proviso thereto of the Companies Act 1956 whereby Company may approach the Company Law Board / NCLT seeking more time for the issue of a certificate of securities holders (including debentures holders).
Further, there is no provision under Companies Act 2013 similar to section 113(3) of the Companies Act 1956, hence, on non-receipt of a certificate within a prescribed time, a complaint may be filed with ROC in view of adjudication power under section 454 of the Companies Act, 2013.
In case of listed company, a complaint may also be filed with the SEBI.