Trupti Upadhyay

Introduction

The Central Government vide notification dated 1st June, 2016, constituted the National Company Law Tribunal and National Company Law Appellate Tribunal..

MCA vide its notification dated 20th December, 2016 issued National Company Law Tribunal (Amendment) Rules, 2016 (herein after referred to as “amendment rules”) to amend the National Company Law Tribunal Rules, 2016 (hereinafter referred to as the “principal rules”). The amendment rules shall come into force from the date of its publication in the Official Gazette.

The principal rules were issued by MCA vide notification dated 21stJuly, 2016, that came into force from date of publication in Official Gazette viz., 21st July, 2016.

This write up covers the comparative analysis of the amendments made in the principal rules.

Particulars Text of Principal Rules Text of Amendment Rules Our Analysis
Part-I Heading “Definitions, forms and etc” “Definitions and forms etc”
Rule 2(5) Definition of “application” “application” means any application, interlocutory application or proceedings filed under the provisions of the Act, including any transferred application or transferred petition as defined under sub-rule (29) “application” means any application, or proceedings filed under the provisions of the Act, including any transferred application or transferred petition as defined under sub-rule (29)  “Interlocutory application” is incidental to the original application and is anyways separately defined and provided for.
Rule 2(9)(d) Definition of “certified” [substitution] copy of document as may be a downloaded from any online portal prescribed under section 398 of the Act or a photo copy of the original pertaining to any company registered with the Office of the Registrar of Companies of the concerned State duly certified by a legal practitioner or a chartered accountant or a cost accountant or a company secretary; copy of document as may be a downloaded from any online portal prescribed under section 398 of the Act or a photo copy of the original pertaining to any company registered with the Office of the Registrar of Companies of the concerned State duly certified by a legal practitioner or a chartered accountant in practice or a cost accountant in practice or a company secretary in practice; This implies that members in practice are only eligible for the certification of documents.
Rule 23A – Presentation of Joint Petition [Insertion of new rule] No such provision (1) The Bench may permit more than one person to join together and present a single petition if it is satisfied, having regard to the cause of action and the nature of relief prayed for, that they have a common interest in the matter.

(2) Such permission shall be granted where the joining of the petitioners by a single petition is specifically permitted by the Act.

The amendment proposes the insertion of new rule which permits Joint petition by the persons having common interest in the matter in relation to the cause of action and the nature of relief prayed for.

In order to make joint petition the conditions specified under sub-section 3 of Section 245 of the Companies Act, 2013 need to be satisfied.

Rule 25 – Lodging of Caveat [substitution] (1) Any person may lodge a caveat in triplicate in any appeal or petition or application that may be instituted before this Tribunal by paying the prescribed fee after forwarding a copy by registered post or serving the same on the expected petitioner or appellant and the caveat shall be in the form prescribed and contain such details and particulars or orders or directions, details of authority against whose orders or directions the appeal or petition or application is being instituted by the expected appellant or petitioner or applicant which full address for service on other side, so that the appeal or petition or application could be served before the appeal or petition or interim application is taken up:

Provided, that the Tribunal may pass interim orders in case of urgency.

(1) Any person may lodge a caveat in triplicate in any appeal or petition or application that may be instituted before this Tribunal by paying the prescribed fee after forwarding a copy by registered post or serving the same on the expected petitioner or appellant and the caveat shall be in the Form No. NCLT 3C and contain such details and particulars or orders or directions, details of authority against whose orders or directions the appeal or petition or application is being instituted by the expected appellant or petitioner or applicant which full address for service on other side, so that the appeal or petition or application could be served before the appeal or petition or interim application is taken up:

Provided, that the Tribunal may pass interim orders in case of urgency.

Prior to the amendment, the form for lodging a caveat in any appeal or petition was not prescribed. However, post issuance of notification, the same shall be filed in Form No. NCLT 3C.
Rule 27 – Translation of Document [substitution] (1) A document other than English language intended to be used in any proceeding before the Tribunal shall be received by the Registry accompanied by a copy in English, which is agreed to by both the parties or certified to be a true translated copy by authorised representative engaged on behalf of parties in the case or by any other advocate or authorised representative whether engaged in the case or not or if the advocate or authorised representative engaged in the case authenticates such certificate or prepared by a translator approved for the purpose by the Registrar on payment of such charges as he may order. (1) A document other than English language intended to be used in any proceeding before the Tribunal shall be received by the Registry accompanied by a copy in English, which is  agreed to by both the parties or certified to be a true translated copy by authorised representative engaged on behalf of parties in the case or if the authorised representative engaged in the case authenticates such certificate or prepared by a translator approved for the purpose by the Registrar on payment of such charges as he may order. Only the authorised representative engaged on behalf of the parties or authorised representative engaged in the case can authenticate the translation of document and not by advocates.
Rule 38 – Service of Notices and processes [Insertion of Explanation] (1) Any notice or process to be issued by the Tribunal may be served by post or at the e-mail address as provided in the petition or application or in the reply;

(2) The notice or process if to be served physically may be served in any one of the following modes as may be directed by the Tribunal; –

(a) by hand delivery through a process server or respective authorised representative;

(b) by registered post or speed post with acknowledgment due; or

(c) service by the party himself.

(1) Any notice or process to be issued by the Tribunal may be served by post or by courier or at the e-mail address as provided in the petition or application or in the reply;

(2) The notice or process if to be served physically may be served in any one of the following modes as may be directed by the Tribunal;-

(a) by hand delivery through a process server or respective authorised representative;

(b) by registered post or speed post with acknowledgment due or by courier; or

(c)service by the party himself.

Explanation. For the purposes of sub-rules (1) and (2), the term “courier” means a person or agency which delivers the document and provides proof of its delivery.

Amendment of Rule 38 implies that the service of notices and processes by the Tribunal can now also be done through courier apart from post or electronic means.

This amendment will ease the process of service of Notices and processes to the Tribunal.

Rule 38A – Multiple Remedies [Insertion of new rule] No such provision A petition shall be based upon a single cause of action and may seek one or more reliefs provided that the reliefs are consequential to one another. Amendment has increased the scope of reliefs provided by the Tribunal by inserting a new rule regarding the multiple remedies that a petitioner may seek provided that the reliefs are consequential to one another.
Rule 68A – Application to cancel variation of rights under sub-section (2) of section 48 [Insertion of new rule] No such provision (1) Where an application to cancel a variation of the rights attached to the shares of any class is made on behalf of the shareholders or that class entitled to apply for cancellation under sub section (2) of section 48 by the letter of authority signed by the shareholders so entitled, authorizing the applicant or applicants to present the application on their behalf, such letter of authority shall be annexed to the application, and the names and addresses of all the shareholders, the number of shares held by each of them, aggregate number of such shares held and percentage of the issued shares of that class shall be set out in the schedule to the application.

(2) The application in Form No. NCLT. 1 shall be accompanied by documents required for the purposes of the case and shall set out-

(a) the particulars of registration;

(b) the capital structure, the different classes of shares into which the share capital of the company is divided and the rights attached to each class of shares;

(c) the provisions of the memorandum or articles authorizing the variation of the rights attached to the various classes of shares;

(d) the total number of shares of the class whose rights have been varied;

(e) the nature of the variation made, and so far as may have been ascertained by the applicants, the number of shareholders of the class who gave their consent to the variation or voted in favour of the resolution for variation and the number of shares held by them;

(f) the number of shareholders who did not consent to the variation or who voted against the resolution, and the number of shares held by them;

(g) the date on which the consent was given or the resolution was passed; and

(h) the reasons for opposing the variation.

(3) The applicant shall at least fourteen days before the date of filing of the petition advertise the application in accordance with rule 35.

(4) Where any objection of any person whose interest is likely to be affected by the proposed application is received by the applicant, a copy thereof shall be served to the Registrar of Companies and Regional Director on or before the date of hearing.

(5) On any application, the Tribunal, after hearing the applicant and any other person, as appears to it, to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case that the variation would unfairly prejudice to the shareholders of the class represented by the applicant, cancel the variation and shall, if not so satisfied, confirm the variation for the reasons to be recorded:

Provided that the Tribunal may, at its discretion, make such orders as to cost as it thinks fit.

New insertion states that the   application made for cancellation of variation of rights under section 48(2) of the Companies Act, 2013 on behalf of the shareholders of that particular class shall be made by an applicant or applicants to present the application on their behalf provided letter of authority is annexed to the application and the following details shall set out in the Schedule to such application:

  • the names and addresses of all the shareholders;
  • the number of shares held by each of them;
  • aggregate number of such shares held; and
  • percentage of the issued shares of that class.

This rule also covers the set of documents to be accompanied with the application made in Form No NCLT-1.

Rule 69(3) – Petition under sub-section (3) of section 55 [Omission] (3) The decision of the Tribunal on the petition shall be final. Omitted Rule 69 states that Petition under Section 55(3) of Companies Act, 2013 which contains provisions for a company which is not in a position to redeem any preference shares or to pay dividend.

The principle rules stated that in such a petition, decision of the Tribunal shall be final.

However, the same has now been omitted vide amendment rules.

Rule 70(6) – Appeal under sections 58 and 59 [Omission] (6) The decision of the Tribunal on the petition shall be final. Omitted Rule 70 contains provisions relating to appeals to the Tribunal against the refusal for registration of transfer or transmission of securities under section 58 or for rectification of register of members under section 59.

The principle rules stated that in such a petition, decision of the Tribunal shall be final.

However, the same has now been omitted vide amendment rules.

Rule 76A – Application under section 130 [Insertion of new rule] No such provision The Central Government, the Income-tax authorities, the Securities Exchange Board of India, any other statutory regulatory or authority or any person concerned may file an application in Form No. NCLT. 9 for re-opening of books of accounts and for re-casting of financial statement of a company under section 130 of the Act and such application shall be accompanied by such documents as mentioned in Annexure B. Rule 76 contains the provision regarding application to Tribunal by the member in case the company has denied the inspection of minute-book of general meeting.

Therefore, the amendment extends the scope of the same by inserting a new rule 76A stating that the Central Government and other authorities like Income-tax authorities, SEBI or any other statutory regulatory or authority or any person concerned may file an application in Form No. NCLT 9 and be allowed to inspect the books of books of accounts of the company.

Rule 83A – Application under sub-section (1) of section 244 [Insertion of new rule] No such provision An application in Form No. NCLT. 9 may be filed before the Tribunal for waiver of requirement of clause (a) and (b) of section 244 of the Act which shall be accompanied by such documents as mentioned in Annexure B. Section 244 of the Companies Act, 2013 provides the class of members who have the right to apply before NCLT for relief in cases of oppression and mismanagement under Section 241 of Companies Act, 2013.

However, proviso of section 244 states that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) and (b) so as to enable members to apply under section 241.

Such application shall be made in Form No. NCLT 9.

Rule 112(3) – Fees [Insertion] (3) In respect of a petition or appeal or application filed or references made before the Principal Bench or the Bench of the Tribunal, fees referred to in this Part shall be paid by means of a bank draft drawn in favour of the Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi/Kolkata/Chennai /Mumbai, as the case may be or as decided by the President. (3) In respect of a petition or appeal or application filed or references made before the Principal Bench or the Bench of the Tribunal, fees referred to in this Part shall be paid by means of an Indian Postal Order or by a bank draft drawn in favour of the Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi/Kolkata/Chennai /Mumbai, as the case may be or as decided by the President. Amendment of Rule 112(3) implies that fees in respect of a petition or appeal or application filed or references made before the Principal Bench or the Bench of Tribunal, can now be paid by means of an Indian Postal Order apart from bank draft.

(Author is associated as an Executive with Vinod Kothari & Company)

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