NCLT-Constitution and its power

NCLT-Constitution and its power and opportunities for professionals

1. “NCLT – Constitution and its Powers and Role of Professionals” (Under Companies Act, 2013)

2. NCLT- Constitution 2 The Ministry of Corporate Affairs vide notification dated on  1st June, 2016  Constituted the National Company Law Tribunal (NCLT) and its Appellate Authority (NCLAT ). The Ministry of Corporate Affairs vide notification dated on  21st   July, 2016  notified the National Company Law Tribunal Rules, 2016 (NCLT Rules) and National Company Law Appellate Tribunal Rules, 2016 (NCLAT Rules ). It is the quasi-judicial body which adjudicates issues relating to Companies and Corporate entities. The National Company Law Tribunal has replaced with Existing Company Law Board (CLB). The Companies Second Amendment Act, 2002 provides for the setting up of the NCLT and NCLAT to replace then existing CLB and BIFR. The setting up NCLT and NCLAT are single regimes to resolve the corporate dispute and pending any litigation under the Companies Act. The NCLT and NCLAT play faster role Implementation of the Insolvency and Bankruptcy code. and their setting up is expected to reduce the burden on courts

3. NCLT- Constitution … Contd 3 NCLT replaces: Company Law Board (CLB); Board of Industrial and financial Reconstruction (BIFR); Consolidate jurisdiction of Judicial and quasi judicial tribunals; NCLT replaces

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5. NCLT – A New Era to Corporate Adjudication 5 Upon constitution of NCLT, the powers and jurisdiction of following agencies/departments in respect of corresponding aspects shall vest with NCLT: State High Court(s): Cases relating to arrangement or compromise, winding up, reduction of capital, restoration of name of the company, appeals from CLB orders u/s 10F of the Companies Act, 1956. BIFR/ AAIFR: Cases pertaining to revival and rehabilitation of sick companies. CLB: Cases pertaining to rectification of register of members, complaints relating to refusal to transfer/ of transmission of shares, matters relating to oppression and mismanagement and other matters relating to investigations & compounding of offences. Appeals against the order(s) of NCLT to be heard by NCLAT and appeals against the order of NCLAT to be heard by the Hon’ble Supreme Court.

6. NCLT- Powers vested 6 Powers relating provision of: Company law, Compromise arrangement and Amalgamation, Winding up, Oppression and mismanagement, Revival & Rehabilitation of sick companies, Compounding of offence.

7. ABOUT THE ACT 7 In relation to NCLT and NCLAT ( Section 407 to 414 ): Definitions ( Section 407 ); Constitution of NCLT ( Section 408 ); Qualification of President and Members of NCLT ( Section 409 ); Constitution of NCLAT ( Section 410 ); Qualification of Chairperson and Members of NCLAT ( Section 411 ); Selection of Members of NCLT and NCLAT ( Section 412 ); Terms of office of President, Chairperson and other Members ( Section 413 ) Salary, allowances and other terms and conditions of service of Members ( Section 414 );

8. A PICTURE IS WORTH A THOUSAND WORDS The Central Government has constituted National Company Law Tribunal (NCLT) under section 408 of the Companies Act, 2013 (18 of 2013) w.e.f. 01st June 2016. In the first phase the Ministry of Corporate Affairs have set up eleven Benches, one Principal Bench at New Delhi and one each Regional Benches at New Delhi, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guahati, Hyderabad, Kolkata and Mumbai. 8

9. National Company Law Tribunal – Essential Provisions 9 Expeditious disposal by Tribunal and Appellate Tribunal ( Section 422 ): Every application, petition or appeal, as the case may be, presented before NCLT & NCLAT shall be dealt with and disposed off in a speedy manner & efforts shall be made to dispose the matter within 3 months from the date of its presentation. Otherwise NCLT or NCLAT shall record the reasons for not disposing off the application/petition/appeal with the said period of 3 months. The said period may be extended by the President of NCLT or the Chairperson of NCLAT by such period not exceeding 90 days.

10. National Company Law Tribunal – Essential Provisions … Contd 10 Procedure before Tribunal and Appellate Tribunal ( Section 424 ): NCLT and NCLAT while dealing with any matter before it are not bound by the procedure laid down by the Code of Civil Procedure, 1908 (“CPC”). However, subject to the provisions of the New Act and rules made there under, they shall be guided by the principles of natural justice and shall have the power to regulate their own procedure. NCLT and NCLAT shall have the same powers vested in a civil court under CPC, for discharging its functions for specified matters. All proceedings before NCLT or the NCLAT shall be deemed to be judicial proceedings within the meaning of Sections 193 and 228, and for the purposes of Section 196 of the Indian Penal Code, and NCLT and NCLAT shall be deemed to be civil court for the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.

11. National Company Law Tribunal – Essential Provisions … Contd 11 Power to punish for contempt (Section 425): NCLT and NCLAT shall have the same jurisdiction, powers and authority in respect of contempt of themselves as the High Court has under the provisions of the Contempt of Courts Act, 1971, but subject to certain modifications as provided in this Section. Civil court not to have jurisdiction (Section 430): No Civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which NCLT or NCLAT is empowered to determine either in terms of the New Act or by any other law in force. No court or authority shall have the power to grant injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the New Act or any other law for the time being in force, by NCLT or NCLAT.

12. National Company Law Tribunal – Essential Provisions … Contd 12 Right to legal representation (Section 432): A party to any proceeding or appeal before NCLT or NCLAT may either appear in person or authorise 1 or more CAs/ CSs/ CWA s/ Advocates or any other person to present the case. Rule 25(3) of Draft Rules for NCLT (Chapter XVII): In case, CS/CA/CWA (in practice) are authorized to appear, they should have post qualification experience of minimum 5 years Appeal to NCLAT (Section 421): No Appeal shall lie from an order of NCLT passed by consent of parties. Appeal shall be filed within 45 days from the date on which copy of order of NCLT is made available. Another maximum 45 days for condonation of delay (earlier within 60 days; with another 60 days with condonation of delay. u/s 10F against order of CLB but only on question of law) Appeal to Supreme Court (Section 423): Appeal from order of NCLAT to the Supreme Court within 60 days from the date of communication of the order of NCLAT on any question of law arising out of such order. Another 60 days with condonation of delay.

13. Corporate Jurisdiction Hierarchy under the Companies Act, 2013 13 Company Law jurisdiction High Courts Special Courts NCLAT NCLT Supreme Court Specified proceedings under the Companies Act, 2013 Offences to be tried

14. Structure of NCLT 14 NCLT High Courts Other benches as notified by Central Government NCLAT Principal bench (New Delhi) President

15. Special Courts – Essential Provisions 15 Establishment of Special Courts ( Section 435 ): The Central Government may, for the purpose of providing speedy trial of offences under this Act, by notification, establish or designate as many Special Courts as may be necessary. A Special Court shall consist of a single judge who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working. A person shall not be qualified for appointment as a judge of a Special Court unless he is, immediately before such appointment, holding office of a Sessions Judge or an Additional Sessions Judge. Offences tribal by Special Courts (Section 436) : All offences under the New Act shall be tried by Special Court; Special Court may try an offence under CrPC at the same trial.

16. NCLT IN NEWS 16

17. Opportunities for Professionals 17

18. Opportunities for Professionals 18 As per Section 432 , A party to any proceeding or appeal before the Tribunal or the Appellate Tribunal, as the case may be, may either appear in person or authorize one or more:- Company Secretaries (CS’s); or, Chartered accountants (CA’s); or Cost accountants (CWA’s); or, Legal practitioners (Advocates); or, Any other person like officer of the company (Director/ Partner etc.).  

19. SCOPE FOR PROFESSIONALS 19 The NCLT provide various opportunities for professionals to appear before the Tribunal in case of sick companies, mergers/amalgamation/de-merger/restructuring, reduction share capital, winding up proceeding, oppression and mismanagement, Conversion Company from the public to private, which are dealt with by Company court. The role of professionals was not only present facts before the NCLT, but also provide complete considering the interest of all the stakeholder. Now, the professionals able to render services in preparing schemes, appearing before NCLT, NCLAT for approval of Schemes and Post merger formalities.  

20. SCOPE FOR PROFESSIONALS 20 A Practicing Company Secretary can be appointed as a Technical Member of NCLT, provided he has 15 years working experience as the secretary in whole-time practice. The ICSI has played a major role in enhancing the creditability of its member before the Appearing NCLT and also improving the skills of the members. In the view of various opportunities for the professionals should standardize their competencies with the global benchmarks to provide value-added services in assisting tribunal in the dispensation of justice and speedy disposal of various matters under Companies Act.  

21. NCLAT- Legal Updates 21 Cases under Insolvency and Bankruptcy Code, 2016 Chirag Gada V. Bank of Baroda & Anr . Company Appeal (AT) (Insolvency) No. 71 of 2018 Gist: In the present case ‘corporate insolvency resolution process’ period has been lapsed, liquidation proceedings shaving started and the appellant being ineligible ‘Resolution Applicant’ under Section 29A of IBC, no relief can be granted.  

22. NCLAT- Legal Updates … Contd 22 Mr. Satyaprakash Aggarwal & Ors. V. Vistar Metal Industries Pvt. Ltd. Company Appeal (AT) (Insolvency) No. 136 of 2018 Gist : In a petition under section 7 of the ‘I&B Code’, the Adjudicating Authority is required to decide whether the Form 1 along with documents is complete or not. The Adjudicating Authority is not required to decide as to what is the actual amount of claim and other details, which is required to be determined by the ‘Resolution Professional’ after initiation of ‘Corporate Insolvency Resolution Process’. Dhoom Singh V. Centenary Polytex Pvt. Ltd. Company Appeal (AT) (Insolvency) No. 204 of 2018 Gist: Though we find that the parties have settled the dispute but in view that the application under Section 9 has been admitted and Corporate Insolvency Resolution Process has started, no relief can be granted by this Appellate Tribunal on the basis of settlement. The prayer made in this appeal is accordingly rejected. However, this order will not come in the way of the parties to move before an appropriate forum for appropriate relief.  

23. 23 THANKS! For discussions: Contact to : SRNG Advisors LLP CS Harleen V. Bedi, Corporate Legal Advisor B.com , C.S, LL.B.  [phone]  [email protected] Address: C-94, Lal Kothi Scheme, Jaipur-302015 (Raj.)