Role of Company Secretary In NCLT & NCLAT

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Deepti Grover Khanna

Role of Company Secretary In National Company Law Tribunal (NCLT) & National Company Law Appellate Tribunal (NCLAT)

Who is Company Secretary?

As per Companies Act, 2013, a company secretary or secretary means a company secretary as defined in clause (c) of subsection (1) of section 2 of the Company Secretaries Act, 1980.

What is National Company Law Tribunal (NCLT) ?

NCLT consolidate the corporate jurisdiction of the following: –

Company Law Board
Board for Industrial and Financial Reconstruction (BIFR)
The Appellate Authority for Industrial and Financial Reconstruction
Jurisdiction and powers relating to winding up restructuring and other such provisions, vested in the High Courts.

Structure of National Company Law Tribunal (NCLT)

NCLT

Principal Bench

(New Delhi)

Other Benches as may be notified by Central Government

–

PRESIDENT
JUDICIAL MEMBER		TECHNICAL MEMBER

Members of Tribunal

> President – Judge of High Court for 5 years

> Judicial Member– Judicial Member of NCLT or held a judicial Office for 5 years or Advocate of the High Court for 5 years

> Technical Member – CA/CS/ICWA for at least 15 years and Other applicable criteria

NCLT BENCHES

In exercise of the powers conferred by section 410 of the Companies Act, 2013, the Central Government hereby constitutes the National Company Law Appellate Tribunal for hearing appeals against the orders of the National Company Law Tribunal with effect from the 1st day of June, 2016.

The NCLT is functioning with it’s eleven Benches – two at New Delhi and one each at Ahmadabad, Allahabad, Bangalore, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. The Principal Bench of the NCLT will be at New Delhi.

NATIONAL COMPANY LAW TRIBUNAL POWERS

> Powers in terms of the LLP Act, 2008

> Revival and Rehabilitation of Sick Companies

> Rectification of Register(s)

> Complaints relating to refusal to transfer/ of transmission of shares

> Investigation and compounding

> Class Action suits

> Oppression and Mismanagement

> Winding Up

Major Sections of Companies Act, 2013 Deals in NCLT & NCLAT

*S.No*	*Sections*	*Particulars*
1.	Section 7(7) [except clause (c) and (d)]	Incorporation of Companies (furnishing false or incorrect information).
2.	Section 14 (1) and (2)	Alteration of Articles(conversion of public Company to private Company).
3.	Section 55 (3)	Issue and redemption of preference shares.
4.	Section 61(1)(b)	Changes in voting rights by Consolidation or sub-division of share Capital.
5.	Section 66	Reduction of Share capital.
6.	Section 75	Damages for fraud (fail to repay and interest thereon in terms of Section 74(2).)
7.	Section 97,98 and 99	Power of the tribunal to call annual general meetings and meetings of member.
8.	Section 131	Voluntary revision of financial statements or Board’s Report
9.	Section 140 second proviso to sub-section (4) and sub-section(5)	Removal, resignation of auditor and giving of special notice.
10.	Section 169(4)	Removal of Directors.
11.	Section 218	Protection of employees during investigation
12.	Section 221	Freezing of assets of company on inquiry and investigation.
13.	Section 241, 242, (except clause (b) of sub section (1), clause (c) & (g) of sub-section (2), 243, 244 and 245.	Prevention of Oppression and Mismanagement
14.	Section 441	Compounding of certain offences

Right to legal representation

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:-

Chartered accountants; or
Company secretaries; or,
Cost accountants; or,
Legal practitioners; or,
Any other person like officer of the company.

What is National Company Law Appellate Tribunal (NCLAT)?

National Company Law Appellate Tribunal is new Forum of Quasi Judicial and Have Following Powers:-

Issue of Direction(s), orders, Summons, Warrants, or other mandatory Process;
Power to extend time;
Power to exempt.

STRUCTURE OF NCLAT

NCLAT

PRESIDENT
JUDICIAL MEMBER		TECHNICAL MEMBER

Definition of Certain Terms

Chairperson means Chairperson of Appellate Tribunal.
Judicial Member means a member of Tribunal or Appellate Tribunal as the Case may be.
Member means a member whether judicial or Technical of the Tribunal as the Case may be.
President means the President of the Tribunal.
Technical Member means a member of the Tribunal or Appellate as the case may be.

TRANSITIONAL PROVISIONS

Section 434 has provided following, transfer of pending cases :-

All matters, proceedings before CLB before such date shall stand transferred to NCLT immediately.
An person aggrieved from the order of the CLB (before the Notified date), may file the appeal to high court within 60 days.
All cases pending before High Court or District Court( in Respect of matters related to “Companies Act’) will be transferred to the Tribunal.
Any enquiry or scheme pending before BIFR or any appeal pending before AAIFR to shall stand abated

REMEDIES FOR PERSON AGGRIEVED BY ORDER

NCLT: Any person aggrieved by the order of NCLT then appeal any order on Question of Law and Fact within 45 Days to NCLAT.

NCLAT: Any person aggrieved by the order of NCLAT then appeal on Question of Law within 60 Days to Supreme Court.

SCOPE FOR COMPANY SECRETARIES

Establishment of NCLT/NCLAT shall offer various following opportunities to Practicing Company Secretaries as they have been authorized to appear before the Tribunal/ Appellate tribunal:-

Compromise and arrangement,
Sick companies,
Winding up, (only Notified sections)
Reduction of capital,
PCS as a member of NCLT,
Act as Company representative in all other related Matters.

Role of Company Secretary

Compromise and arrangement
Preparation of scheme of Compromise and arrangement.
Petition to the NCLT and NCLAT for Confirmation of the scheme.
Obtaining Tribunal order sanctioning scheme.
Appearing on behalf of the Company, before Tribunal

Revival & Rehabilitation of Sick Companies

Making Application to the Tribunal for Getting the Status of Sick, on behalf of Board of Directors.
Appearing before the Tribunal on Various Matters in Respect Sick Company.

Winding up

Preparation and Submission of Petition of Winding Up before Tribunal.
Submission to the Liquidator, an Affidavit as to the affairs of the company.
Assisting the Liquidator in the Proceeding of winding up.
Act as an Official Liquidator, under Winding up
MCA has notified sections of winding up 270 to 288, (Winding up by the Tribunal)
290 to 303, (Winding up by the Tribunal)
324, (Debts of all descriptions to be admitted to proof)
.326 to 365. (Provisions applicable to every mode of winding up)
Section in respect of Voluntary Winding up is yet to be notified (i.e. Section 304-323)

Reduction of capital

Make an Application to the Tribunal.
Appear before the Tribunal, on the behalf of the Company.

Member of NCLT

A Practicing Company Secretary can be Appointed as a Technical Member of NCLT, provided he has 15 years working experiences as Secretary in Whole-Time Practice.

Other related Matters

Analysis and Prepare Drafts in Respect of Matters which are required to be dealt with NCLT or NCLAT.
Appear before the Tribunal on behalf of the Company
Appeal to Supreme Court
Help the Company to execute the order of the Tribunal.
Private liquidator and many others

CHALLENGES FOR COMPANY SECRETARIES

With every opportunity there comes challenges for the professionals in the manner of dealing with the cases with NCLT and NCLAT like court craft and art of advocacy etc, since the cases that are being dealt with Company Law Board, High Court and BIFR will be now dealt by NCLT and NCLAT.

ART OF ADVOCACY

Must File Memorandum of Appearance with Tribunal along with Pleadings
Dress Code as Prescribed by Institute/ NCLT Rules
Service of documents to opposite party, if any
SWITCH OFF Mobile Phone (NOT VIBRATION MODE)
Standing position of councils- Petitioner at Left Hand Side of Judge & Defendant at Right Hand Side of Judge
Case Summery/Fact Sheet of the Case

Preparation and Rehearsal

Use notes – as prompts not to read
Find Merits – Focus on it
Body Language – Positive and Respectful
Make clear brief on law and evidence. Keep focus on main issues & result to be achieved
Avoid frequent interruptions or objections. Wait for your chance
Knowledge of development of law and background will be helpful
DO NOT ARGUE with the Judge, explain with reason. Focus on winning war not battles
Co-operate with opposite counsel or representative….. “The Learned Friend”
Make clear brief on law and evidence. Keep focus on main issues & result to be achieved
Look previous similar cases and their determination – For Precedents

CONCLUSION

In the view of vast opportunities emerging with establishment of National Company Law Tribunal, the Practicing Company Secretaries should standardize their competencies with the global benchmarks to provide value added services in assisting the Tribunal in:

Dispensation of justice
And speedier disposal of matters like merger, amalgamation, restructuring, revival and rehabilitation Of sick companies and winding up of companies.