Section 466 provides that the Company Law Board constituted under the Companies Act, 1956 shall stand dissolved on the constitution of the Tribunal and the Appellate Tribunal. Section 466 has been notified by the MCA vide Notification No. S.O. 1936(E) dated 1st June, 2016 effective from 01st June, 2016. Section 434 provides that all matters or proceedings or cases pending before the Company Law Board on or before the constitution of the Tribunal shall, on such constitution, stand transferred to the National Company Law Tribunal and the Tribunal shall dispose of such matters, proceedings or cases in accordance with the provisions of this Act.
The Supreme Court vide its order dated 14.05.2015 in Madras Bar Association v Union of India has upheld the constitutional validity of the NCLT/NCLAT provisions.
The MCA vide its Notification No. S.O. 1936(E) dated 1st June, 2016 has appointed 1st June, 2016 on which all matters or proceedings or cases pending before the CLB shall stand transferred to the National Company Law Tribunal.
Applicant can appear before the Tribunal or the Appellate Tribunal in person or can authorise a chartered accountant, company secretary, cost and works accountant or a lawyer to appear before NCLT, NCLAT.
Salient Features of the National Company Law Tribunal
(a) The National Company Law Tribunal (NCLT) working in benches all over the country and having its Principal Bench at New Delhi.
(b) It shall abolish the existence of Company Law Board and replace its wider powers and jurisdiction by NCLT.
(c) In majority of the sections of the principal Act, for the words ‘Company Law Board/Court’, wherever they occur, the word ‘Tribunal’ has been substituted.
(d) Appeal against the orders of the Tribunal shall be heard by the Appellate Tribunal (NCLAT) at New Delhi.
(e) The orders of the NCLT and the NCLAT are binding on parties to the issue and appeal against them in Court of Law is not maintainable.
(f) The Supreme Court can be reckoned to hear an appeal against an order only on a moot question of law.
(g) The employees of the NCLT and the NCLAT are to be treated as public servants. Therefore, no suit against order of the NCLAT or its staff for any action in good faith is maintainable.
(h) The NCLT and the NCLAT are not to be bound by Code of Civil Procedure, 1908 but guided by principles of natural justice.
(i) Applicant can appear before the Tribunal or the Appellate Tribunal in person or can authorise a chartered accountant, company secretary, cost and works accountant or a lawyer to appear before NCLT, NCLAT.
(j) Any appeal against the order of Company Law Board before the commencement of the Companies Act, 2013 to be made to the High Court of competent jurisdiction.
(k) All matters pending before the CLB on or before constitution of the NCLT shall be transferred to the NCLT.
(l) The cases which remain pending before District Court or High Court, for any compromise, arrangement or winding up of company (not being winding up under supervision of Court) under the Companies Act, 1956, or any other law for the time being in force other than Banking Regulation Act, 1949, if already started, shall be transferred to the NCLT, from such date as notified by Central Government. Provided that where winding up of companies subject to supervision of Court has commenced before the Court it shall continue in the same manner as was before the commencement of the Companies Act, 2013.
(m) The Tribunal may either de novo proceed with such cases transferred, or may continue it from the stage it was so transferred.
Significant applications/petitions that can be filed before the Tribunal – The “why” factor:
1. Application for change in financial year: Section 2(41) provides that on an application made by a company or body corporate, which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunalmay, if it is satisfied, allow any period as its financial year, whether or not that period is a year;
2. Conversion of public company into a private company: Section 14(1) provides that any alteration having the effect of conversion of a public company into a private company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit.
3. Appeal against refusal of registration of shares or Appeal for rectification of register of member: Section 58(3) provides that the transferee may appeal to the Tribunal against the refusal within a period of thirty days from the date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, was delivered to the company. Section 59 further provides that if the name of any person is, without sufficient cause, entered in the register of members of a company, or after having been entered in the register, is, without sufficient cause, omitted therefrom, or if a default is made, or unnecessary delay takes place in entering in the register, the fact of any person having become or ceased to be a member, the person aggrieved, or any member of the company, or the company may appeal in such form as may be prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture holders residing outside India, for rectification of the register.
4. Application by deposition for repayment of deposit or interest: Where a company fails to repay the deposit or part thereof or any interest thereon under sub-section (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other orders as the Tribunal may deem fit [Section 73(4)].
5. Application to allow further time as considered reasonable to the company to repay deposits: The Tribunal may on an application made by the company, after considering the financial condition of the company, the amount of deposit or part thereof and the interest payable thereon and such other matters, allow further time as considered reasonable to the company to repay the deposit [Section 74(2)].
6. Application for calling of Annual General meeting: Section 97(1) provides that if any default is made in holding the annual general meeting of a company undersection 96, the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient.
7. Application for calling of general meeting of company other than annual general meeting: Section 98(1) provides that if for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles of the company, the Tribunal may, either suo motuor on the application of any director or member of the company who would be entitled to vote at the meeting,—
(a) order a meeting of the company to be called, held and conducted in such manner as the Tribunal thinks fit; and
(b) give such ancillary or consequential directions as the Tribunal thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act or articles of the company:
8. Petition to pass an order directing immediate inspection of minutes books or directing a copy thereof be sent forthwith to person requiring it: Section 119(4) provides that in the case of any such refusal or default, the Tribunal may, without prejudice to any action being taken under sub-section (3), by order, direct an immediate inspection of the minute-books or direct that the copy required shall forthwith be sent to the person requiring it.
9. Application by company for voluntary revision of financial statement on Board’s report: If it appears to the directors of a company that—
(a) the financial statement of the company; or
(b) the report of the Board,
do not comply with the provisions of section 129 or section 134 they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made by the company in such form and manner as may be prescribed and a copy of the order passed by the Tribunal shall be filed with the Registrar [Section 131(1)].
10. Application to Tribunal for investigation into company affairs: Section 213 provides that the Tribunal may order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the company ought to be investigated by an inspector or inspectors appointed by the Central Government.
11. Application for approval for action proposed against employee: Section 218 provides that if during the course of any investigation of the affairs and other matters of or relating to a company, it proposes—
(i) to discharge or suspend any employee; or
(ii) to punish him, whether by dismissal, removal, reduction in rank or otherwise; or
(iii) to change the terms of employment to his disadvantage,
the company, other body corporate or person, as the case may be, shall obtain approval of the Tribunal of the action proposed against the employee and if the Tribunal has any objection to the action proposed, it shall send by post notice thereof in writing to the company, other body corporate or person concerned.
12. Application for imposition of restrictions on securities: Where it appears to the Tribunal, in connection with any investigation under section 216or on a complaint made by any person in this behalf, that there is good reason to find out the relevant facts about any securities issued or to be issued by a company and the Tribunal is of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that the securities shall be subject to such restrictions as it may deem fit for such period not exceeding three years as may be specified in the order [Section 222(1)].
13. Application in cases of oppression and mismanagement: Under Section 241(1) application can be filed to Tribunal for relief in cases of oppression, etc in accordance with section 244 of the Act.
14. Application for compounding of certain offences: Section 441 of the Act provides that any offence punishable under this Act (whether committed by a company or any officer thereof) with fine only, may, either before or after the institution of any prosecution, be compounded by—
(a) the Tribunal; or
(b) where the maximum amount of fine which may be imposed for such offence does not exceed five lakh rupees, by the Regional Director or any officer authorised by the Central Government,
on payment or credit, by the company or, as the case may be, the officer, to the Central Government of such sum as that Tribunal or the Regional Director or any officer authorised by the Central Government, as the case may be, may specify.
List of significant compoundable offences under the Companies Act, 2013
|124(7) – Default in transfer of amount of accumulated profits to unpaid dividend account and violating other provisions of section 124.|
|143(15) – Failure of auditor to intimate to Central Government regarding fraud against the company by officers or employees.|
|185(2) – Contravention of the provisions of sub-section (1) relating to loans, guarantee or security.|
|128(6) – Failure to keep proper books of account.|
|129(7) – Failure to keep proper financial statement.|
|134(8) – Default in complying with the provisions regarding financial statement and Board’s report.|
|137(3) – Failure to file financial statements with the Registrar.|
|147(1) – Failure of company to comply with the provisions of sections 139 to 146 with regard to auditors.|
|167(2) – Functioning as a director after vacation of office.|
|178(8) – Default in complying with the provisions u/s 177 & of this section relating to Committees like Nomination, Remuneration and Stakeholders Relationship committee.|
|124(7) – Failure to transfer the amount of accumulated profits to unpaid dividend account and violating other provisions of section 124.
184(4) – Failure to disclose of director’s interest and Participation in Board meeting by interested director.
|137(3) – Failure to file financial statements with the Registrar.
185(2) – Contravention of the provisions of sub-section (1) relating to loans, guarantee or security.
|140(3) – Non-Compliance by auditor of subsection (2) relating to filing of resignation information.
187(4) – Contravention of the provisions of this section relating to investment of company held in its name.
|147(1) – Failure of company to comply with provisions of sections 139 to 146 with regard to auditors.
188(5)(i) – Contravention of this section relating to Related party transaction in case of listed Company.
|157(2) – Failure to furnish DIN to Registrar.
194(2) – Forward dealing in Securities of the company by Key Managerial personnel or director.
|165(6) – Acting as a director of more than 20 companies.
195(2) – Contravention of this section (195) relating to Insider trading of securities by KMP or director.
|166(7) – Default in complying with the provisions of this section relating to directors duties.|
|172 – Contravention of the provisions of Chapter XI relating to appointment and qualifications of directors.|
|178(8) – Default in complying with the provisions of section 177 & of this section relating to Committees like Nomination, Remuneration and Stakeholders Relationship Committee.|
|188(5)(ii) – Related party transaction in case of other company.|
|186(13) – Contravention of the provisions of this section relating to loans and investment.|
|187(4) – Contravention of the provisions of this section relating to investment of company held in its name.|
|191(5) – Contravention of the provisions of this section relating to payment to director for loss of office in connection with transfer of property.|
|197(15) – Contravention of the provisions of this section relating to managerial remuneration in case of absence or inadequacy of profits.|
|203(5) – Contravention of the provisions of this section relating to appointment of Key Managerial personnel.|
|204(4) – Contravention of the provisions of this section relating to Secretarial Audit for bigger companies.|
|206(7) – Failure to furnish any information during inspection or inquiry.|
List of significant non compoundable offences under the Companies Act, 2013
|186(13) – Default in complying with the provisions of section 186 (1) to (12).|
|447 – Punishment for fraud|
|182(4) – Political Contributions made in contravention of section 182|
|127 – Director’s failure to distribute dividends|
(Author can be reached at firstname.lastname@example.org)
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018