The Ministry of Corporate Affairs, vide Notification dated July 21, 2016, has notified the National Company Law Tribunal Rules, 2016 (NCLT Rules, 2016), which has replaced the Company Law Board. Further, the rules for the National Company Law Appellate Tribunal have also been notified by the Corporate Affairs Ministry. The Tribunal and its Appellate Authority are part of the Companies Act, 2013.
All the matters or proceedings pending before the Company law board has been shifted to NCLT and its Appellate Tribunal with effect from the 1st day of June, 2016.
CRITERIA FOR MATTERS BEFORE NCLT/NCLAT BENCH:
(Order No. 25/1/2016-NCLT dated June 29, 2016)
| Bench | Matters pertaining to |
| National Company Law Tribunal, Principal Bench | 1) Company having paid up share capital more than Rs. 50 lakhs and
2)As per special order of the Hon’ble President, NCLT |
| National Company Law Tribunal, New Delhi Branch | 1)Company having paid up capital upto Rs. 50 lakhs |
BRIEF OVERVIEW OF THE RULES:
Shift of cases from existing judiciary to NCLT:
- All the pending cases filed with CLB has been shifted to NCLT with effect from 01st June, 2016 as they are originally filed with NCLT only.
- All the previous decisions and interim orders passed by CLB will hold good except in case where order was reserved with CLB. In such a case, NCLT will reopen the matter and rehear the case.
- NCLT is entitled to dispose of any case transferred to it whenever it feels that further continuance is a redundant exercise
- A fresh application can also be filed before NCLT for the pending case if both the parties unanimously agreed to withdraw the application and notice of same shall also be served to Registrar of Companies, Regional Director and Ministry of Corporate Affairs.
Use of electronic media:
- Tribunal may allow filing of documents, appeal, proceedings through electronic mode like online filing and rectification of defects by email.
- Tribunal authorised to make electronic orders by affixing the digital signature of the president or bench officer.
- These Rules shall be adopted as nearly as possible on and from a date to be notified separately and the central government may issue instructions in this behalf from time to time.
View of Professionals:
- The Tribunal may, at its discretion, permit any person including the professionals to render or to communicate views to the Tribunal as Amicus Curiae on any point or points or legal issues as the case may be.
- The Tribunal shall be at liberty to direct either of the parties or both the parties to the proceedings involving a point on which the opinion of the Amicus Curiae has been sought and both parties will bear the cost of such amicus curiae.
Voluntary Revision of Financial Statement:
- Company may file the application for the re-opening of accounts with Tribunal if they feel that the accounts are prepared fraudulently or affairs of the company has been mismanaged during the relevant period.
- Application for such revision shall be filed within 14 days from the date of board decision along with requisite documents.
- Where no objection has been received from any of the parties, who have been duly served, the Registrar of Tribunal or Bench as the case may be may put up the petition for orders without hearing or else after hearing the petition or any adjourned hearing thereof, the Tribunal may pass such an order, subject to such terms and conditions, as it thinks fit.
Calling of Annual General Meeting:
- If a default has been made to hold an Annual General Meeting, then an application may be filed by any member of the company for calling or obtaining a direction to call the annual general meeting of the company in the manner prescribed in the NCLT Rules.
Removal of Auditors before expiry of their term:
- The statutory auditor appointed in the company under Section 139 may be removed from his office before expiry of his term only by a special resolution of the company and after obtaining prior approval of NCLT.
- An application can be filed by a director on behalf of the company or the aggrieved auditor to the Tribunal in the manner prescribed in the Rules
- Where Tribunal is satisfied on an application of the company or the aggrieved person that the rights conferred by the provisions of Section 140 are being abused by the auditor, then the copy of the representation of the auditor need not to be sent to every member of the company and the representation need not be read out at the meeting
- If the application is made by the central government and the Tribunal is satisfied that any change of the auditor is required, it shall within 15 days of receipt of such an application make an order that the auditor shall not function as an auditor and the central government may appoint another auditor in his place.
Recusal:
- For the purpose of maintaining the high standards and integrity of the Tribunal, the President or a Member of the Tribunal shall recuse himself:
- In cases involving persons with whom the President or the Member has a personal, familial or professional relationship.
- In cases concerning which President or the Member has previously been called upon in another capacity, including as advisor, representative, expert or witness.
- If there exist other circumstances such as to make the President or the Member’s participation seem inappropriate.
- Any member recusing himself shall immediately inform the President of the Tribunal or in the case of the President, the next senior member thereto
Conclusion:
However all the pending cases filed with CLB has already been transferred to NCLT and Tribunal started hearing the cases from 01st June, 2016 but still there is lot of ambiguity which needs to be addressed due to non applicability of certain sections of the Act. Accordingly, certain issues still be dealt with High Court till the time all sections will be notified.
