National Company Law Tribunal - Study of Legal Institutions - Complete Lawyer Module

 



Chapter II

Study of Legal Institutions

National Company Law Tribunal

Prepared by 

Academic Team of Complete Lawyer

        National Company Law Tribunal or NCLT as it is popularly known, is constituted by the Union Government, with effect from 1st June 2016[i]. In the first phase, eleven benches, one Principal Bench at New Delhi and one each Regional Benches at New Delhi, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Jaipur, Hyderabad, Kolkata and Mumbai.  Subsequently, five more benches were set up at Cuttack, Jaipur, Kochi, Amravati and Indore. 

        A study of Chapter XXVII of the Companies Act, with reference to the Tribunal, would be helpful for a better understanding about qualification and method of appointment of members of the Tribunal and other relevant matters.  NCLT, assumed the jurisdiction of the Company Law Board and the High Court, which were provided in the repealed Act[ii].  Therefore, the matters pending before the Company Law Board were transferred to the different benches of the NCLT, after its constitution.

Jurisdiction of the NCLT

    Broadly speaking, the jurisdiction of the NCLT can be divided into four (a) Matters under the Companies Act, 2013 (b) Matters earlier dealt with by the Company Law Board (c) Proceedings under the Insolvency and Bankruptcy Code, 2016 (c) Petitions or application under Sub Section (2) of Section 45QA of the Reserve Bank of India Act 1934.

(a)  Matters under the Companies Act 2013

The tribunal has jurisdiction[iii] to entertain 

(i) any suit or proceedings against the company, 

(ii) any claims made by or against the company, including any claims by or against any of its branches in India, 

(iii) any application made under Section 233[iv], 

(iv) any scheme submitted under Section 262[v], and 

(v) any question of priorities or any other question whatsoever, whether of law or facts, including those relating to assets, business, actions, rights, entitlements, privileges, benefits, duties, responsibilities, obligations or in any matter arising out of, or in relation to winding up of the company. 

    The jurisdiction provided is quite confusing, at least for a few. Let us therefore attempt to identify and enumerate the jurisdiction in which this tribunal operates.  The fact that a tribunal is governed by rules[vi], and that fees[vii], forms and required documents to be produced are prescribed, would make life easier to identify the contours of its  jurisdiction.

Study of the Rules

    Fees are prescribed for 31 items/types of applications.  The item in serial number 29 is not applicable to the Tribunal, as it prescribes the fees for preferring appeals to the National Company Law Appellate Tribunal (NCLAT). Similarly, item in serial number 31 relates to fees for obtaining a certified true copy of the final order, and not relevant to the study of jurisdiction.  Therefore, it can be concluded that the NCLT has jurisdiction relating to 29 types of applications, appeals and petitions.  Sl No. 30, gives room for filing applications under any other provisions of the Companies Act, as it appears to be residuary in  nature, and the fees prescribed is Rs. 1000/-.  However, it would be encouraging to realize that there are only 29 types of proceedings that will be entertained by the Tribunal.[viii]

    The procedure discussed here may not be exhaustive, however it covers most contingencies.  The application of the rules in this manner, would be helpful to avoid defects in the applications, petitions and appeals relating to companies[ix] before the NCLT.  

Consolidated table[x]

Sl No.

Section of the Companies Act 

Nature of Application/Petition

Fees

Relevant Rule

Documents to be produced 

1.

Sec 2(41)

Application for change of Financial Year (Form NCLT 1)

5000/-

Rule 67

·        Copy of the memorandum and articles of association.

·        Copy of balance sheet of companies.

·        Affidavit verifying the petition. 

·        Bank draft evidencing payment of application fee. 

·        Memorandum of appearance with a copy of the Board Resolution or the executed Vakalatnama, as the case may be.

2.

Sec 7(7)

Application to tribunal where company has been incorporated by furnishing false or incorrect info or by any fraudulent action (Form NCLT 1)

5000/-

Rule 66

·        Copy of the memorandum and articles of association.

·        Document in proof of false or incorrect information or fraudulent action.

·        Affidavit verifying the petition.

·        Bank draft evidencing payment of application fee.

·        Memorandum of appearance with a copy of the Board Resolution or the executed Vakalatnama, as the case may be. 

3.

Sec 14(1)

Conversion of a Public Company into a private Company (Form No. NCLT 1)

5000/-

Rule 68

·        Copy of the memorandum and articles of association.

·        Copy of the documents showing that the company ceased to become a public company.

·        Affidavit verifying the petition. 

·        Bank draft evidencing payment of application fee.

·        Memorandum of appearance with a copy of the Board Resolution or the executed Vakalatnama, as the case may be.

4.

Sec 55(3)

Application for issue further redeemable preference shares (Form No. NCLT 1)

5000/-

Rule 69

·        Copy of the memorandum and articles of association. 

·        Documents showing the terms of issue of the existing preference shares. 

·        Copy of the Board Resolution and resolution of general meeting for issue of further redeemable preference shares. 

·        Copy of the latest audited balance sheet with the profit and loss account of the company with the auditor's report and director’s report. 

·        Affidavit verifying the petition. 

·        Bank draft evidencing payment of application fee. 

·        Memorandum of appearance with a copy of the Board Resolution or the executed Vakalatnama, as the case may be.

5.

Sec 58(3)

Appeal against refusal of registration of shares (Form NCLT 1)

1000/-

Rule 70
  • Copy of the memorandum and articles of association
  • Latest audited balance-sheet and profit and loss account, auditor’s report and director’s report.
  • Authenticated copy of the extract of the Register of Members.
  • Copy of the resolution of the Board or Committee of Directors (where applicable)
  • Any other relevant documents.
  • Affidavit verifying the petition.
  • Bank draft evidencing payment of application fee. 
  • Memorandum of appearance with a copy of the Board Resolution or the executed Vakalatnama, as the case may be. 
  • Two extra copies of the petition.

6.

Sec 59

Appeal for rectification of register of member (Form NCLT 1)

1000/-

Rule 70
  • Documentary evidence in support of the statements made in the petition including the copy of the letter written by the petitioner to the company for purpose of registering the transfer of, or the transmission of the right to, any share, or interest in, or debentures as also a copy of the letter of refusal of the company.
  • Copies of the documents returned by the company.
  • Any other relevant document.
  • Affidavit verifying the petition.
  • Bank draft evidencing payment of application fee. 
  • Memorandum of appearance with a copy of the Board’s Resolution or the executed Vakalatnama, as the case may be. 
  • Two extra copies of the petition.

7.

Sec 62(4)

Appeal against order of Government fixing terms and conditions for conversion of debentures and shares (Form NCLT-9)

5000/-

Rule 72
  • Copies of memorandum and articles of association; 
  • Copies of audited balance sheets for past 3 years; 
  • Resolution for allowing such consolidation or division and providing justification for the same; 
  • Documents in proof of new capital structure and class of shares being consolidated or divided; 
  • Affidavit verifying the petition. 
  • Bank draft evidencing payment of application fee.
  • Memorandum of appearance with a copy of the Board’s Resolution or the executed Vakalatnama, as the case may be. 
  • Two extra copies of the application 
  • Any other relevant documents. 

8.

Sec 71(9)

Petition by Debenture-trustees (Form NCLT 11)

5000/-

Rule 73

9.

Sec 71(10)

Application is the event of failure of redeeming of debentures (Form NCLT 11)

1000/-

Rule 73

10.

Sec 73(4)

Application by deposition for repayment of deposit or interest (Form NCLT 11)

500/-

Rule 73

11.

Sec 74(2)

Application to allow further time as considered reasonable to the company to repay deposits. (Form NCLT 11)

5000/-

Rule 73

12.

Sec 97(1)

Application for calling of annual general meeting (Form No. NCLT. 1)

1000/-

Rule 74
  • Affidavit verifying the petition. 
  • Bank draft evidencing payment of application fee. 
  • Any other relevant document

13.

Sec 98(1)

Application of calling of general meeting of the company other than annual general meeting (Form NCLT 1)

1000/-

Rule 75
  • Documentary evidence in proof of status of the applicant. 
  • Affidavit verifying the petition. 
  • Bank draft evidencing payment of application fee. 
  • Memorandum of appearance with a copy of the Board’s Resolution or the executed Vakalatnama, as the case may be. 
  • Any other relevant document

14.

Sec 119(4)

Petition to pass and order directing immediate inspection of minute’s books or directing or directing the copy thereof be sent forthwith to the person requiring it. n (Form No NCLT-9) 

500/-

Rule 76
  • Documentary evidence, if any, showing the refusal of the company to give inspection to the petitioner. 
  • Affidavit verifying the petition. 
  • Bank draft evidencing payment of application fee. 
  • Memorandum of appearance with a copy of the Board’s Resolution or the executed Vakalatnama, as the case may be. 
  • Any other relevant document. 

15.

Sec 131

Application for re-opening of the books of accounts, if made by any person other than Union Government, Income tax authorities, SEBI or any other statutory regulatory body or authority (Form NCLT 1)

5000/-

Rule 77

 

 


 

 

 

16.

Sec 131 (1)

Application by company of voluntary revision of financial statement or Board's report (Form NCLT I)

5000/-

Rule 77
  • Audited Financial statements of relevant period; 
  • Copies of memorandum and articles of association. 
  • The details of the Managing Director, Chief Financial Officer, directors, Company Secretary and officer of the company responsible for making and maintaining such books of accounts and financial statements. 
  •  Where such accounts are audited, documents in proof of the name and contact details of the auditor or any former auditor who audited such accounts. 
  • Copy of the Board resolution passed by the Board of Directors.
  • Affidavit verifying the petition. 
  • Bank draft evidencing payment of application fee. 
  • Memorandum of appearance with a copy of the Board’s Resolution or the executed Vakalatnama, as the case may be. 
  •  Any other relevant document.

17.

Sec 140(4)

Application for not sending the copy of representation of auditor to the member. (Form NCLT 1)

1000/-

Rule 78

18.

Sec 140(5)

Application by any other person concerned for change of auditors (Form NCLT 1)

2000/-

Rule 78

19.

Sec 169(4)

Application for not sending copies of representation (Form NCLT-1)

1000/-

Rule 79

20.

Sec 213

Application to Tribunal for investigation into company affairs (Form NCLT 1)

5000/-

Rule 80

21.

Sec 218(1)

Application for approval of action proposed against employee

1000/-

22.

Sec 222 (1)

Application to impose restriction on securities

2500/-

23.

Sec 241(1)

Application in cases of oppression and mismanagement (Form NCLT 1)

10,000/-

Rule 81 and Rule 82

24.

Sec 242(4)

Application for regulating the conduct of the Company 

2500/-

25.

Sec 243(1)(b)

Application for appointment of managing Director of the company. (Form NCLT-1)

5000/-

Rule 83

26.

Sec 244(1)

Application for waiver of requirement specified in clause (a) or (b) of Sec 244(1)

2500/-

27.

Sec 245

Class Action Suit.  (Form NCLT-9)

5000/-

Rules 84, 85, 86 and 87

28.

Sec 441

Application for compounding of certain offences (Form NCLT-9)

1000/-

Rule 88

29.

Application under any other provision not specifically mentioned

1000/-

30.

Fee for obtaining copies of final order to parties other than the concerned parties under Rule 50

5/- per page

. 

A consolidated reading of the list of fees[xi] and the documents[xii] to be produced along with the application in prescribed form[xiii] with reference to the corresponding rule would make the filing of applications, petitions and appeals relating to companies, easy.  

Let us now try a few examples. 

Example II

An Application for 'change of financial year of the company' under Section 2(41) of the Companies Act 2013.  

Refer to Part VIII of the Rules – Special Provisions, Rule 67 deals with the 'application for change of financial year.'  

The rule requires the use of NCLT Form 1, suitably customized, payment of the fees prescribed in Annexure A and production of the documents in Annexure B. 

Example II

A 'petition for the conversion of a public company into a private company' can be filed before the Tribunal, under Section 14 of the Companies Act 2013.  

Refer to Part VIII of the Rules – Special Provisions - Rule 68 which deals with 'conversion of a public company into a private company' 

The rule requires the use of NCLT Form 1, payment of fees prescribed in Annexure A and production of documents mentioned in Annexure B.

 

(b)  Matters earlier dealt with by the Company Law Board

            The new companies act has provided for the dissolution of the Board of Company Administration or the Company Law Board[xiv] on the constitution of the Tribunal and the Appellate Tribunal.  On 1st June 2016, NCLT was constituted and the inevitable statutory consequence occurred, and the Company Law Board was dissolved.

Rules[xv], made provision for the manner in which the matters earlier dealt with by the Company Law Board is to be handled by the Tribunal.  The obvious consequence of dissolution of the company law board is the transfer of all the pending cases to the respective benches of the Tribunal exercising corresponding territorial jurisdiction, as if it had been originally filed before the Tribunal.  The Rule has also prescribed for the manner in which such matters have to be dealt with and disposed of. 

(c)   Proceedings under the Insolvency and Bankruptcy Code 2016

Insolvency and Bankruptcy Code 2016 (popularly known as IBC Code) is an enactment to consolidate and amend the law relating to reorganization of insolvency resolution of corporate persons, among other things.  The Tribunal is the Adjudicatory Authority under the Code[xvi], in relation to the corporate insolvency resolution process. The Rules[xvii] may be referred before filing of the various applications under the Code.  The Financial Creditors, Operational Creditors and the Corporate Body itself may file for Corporate Insolvency Resolution Process.  The Rules[xviii] prescribed separate statutory forms for financial creditors, operational creditors and corporate bodies.  The form is of a comprehensive nature, and there are other prescribed forms to cover each of the other contingencies. 

(d)  Petitions or application Reserve Bank of India Act[xix] 

The Rules[xx] shall apply, ‘mutantis mutantis’[xxi] to the application under the Act[xxii].  It would mean that the procedure as contemplated under the Rules with reference to the Reserve Bank of India Act would apply for filing of such applications.

Inherent Powers of the Tribunal

The Tribunal is invested with inherent powers[xxiii], under.  It is more or less similar to the inherent powers of the High Court, in criminal matters[xxiv].  It empowers the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of process of the tribunal


[i]  NCLT is formed in accordance with Article 323 B of the Constitution of India and Section 408 of the Companies Act 2013.  

[ii] Companies Act 1956

[iii] Section 280 of the Companies Act 2013

[iv] Companies Act 2013

[v] Supra

[vi] National Company Law Tribunal Rules 2016

[vii] Annexure A of the National Company Law Tribunal Rules 2016 prescribes the fees payable for each application.

[viii] Annexure A of the National Company Law Tribunal Rules 2016

[ix] National Company Law Tribunal Rules 2016

[x] Consolidation of Annexure A, B and relevant Provision of National Company Law Tribunal Rules 2016

[xi] Annexure A of the National Company Law Tribunal Rules 2016

[xii] Annexure B of the National Company Law Tribunal Rules 2016

[xiii] Form for filing Application before NCLT Under the companies act 2013   ,

[xiv] Section 466 (1) of the Companies Act 2013

[xv] Rule 64 of the National Company Law Tribunal Rules 2016

[xvi] Section 5(1) of the Part II of the Code

[xvii] The Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules, 2016

[xviii] Form 1 is prescribed for filing application for filing of Application by the Financial Creditors, Form 5 for operational creditors and Form 6 for the Corporate Body

[xix] Sub Section (2) of Section 45QA of the Reserve Bank of India Act 1934

[xx] Rule 65 of the National Company Law Tribunal Rules 2016

[xxi] The term ‘mutantis mutantis’ is (used when comparing two or more cases or situations) making necessary alterations while not affecting the main point at issue

[xxii] Section 45QA of the Reserve Bank of India Act 1934

[xxiii]  Rule 11 of National Company Law Tribunal Rules 2016

[xxiv] under Section 482 of the Criminal Procedure Code


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