Appearance Before NCLT/NCLAT – Corporate Restructuring, Insolvency, Liquidation & Winding-Up Important Questions
Question 1.
Discuss the provision relating to appeal by a person aggrieved by the orders of National Company Law Tribunal.
OR
Question 2.
EST Ltd. is aggrieved by the order of National Company Law Tribunal (NCLT) and seeks your advice for further steps in the matter.
Answer:
The provisions relating to appeal from orders of National Company Law Tribunal (NCLT)are given in Section 421 of the Companies Act, 2013. Following are the provisions
(a) Any person aggrieved by an order of the Tribunal (NCLT) may prefer an appeal to the Appellate Tribunal (NCLAT).
(b) No appeal shall lie to the NCLAT from an order made by the NCLT, with the consent of parties.
(c) Every appeal u/s 421(1) shall be filed within a period of 45 days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved. The appeal shall be in the prescribed form, and accompanied by such prescribed fees.
(d) However, the Appellate Tribunal may entertain an appeal after the expiry of 45 days from the date, but within a further period not exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.
(e) On receiving the appeal u/s 421(1), the Appellate Tribunal shall pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. The NCLAT shall provide a reasonable opportunity of being heard to the parties to the appeal.
(f) The Appellate Tribunal shall send a copy of every order made by it to the Tribunal and the parties to appeal.
Question 3.
Constitution of National Company Law Tribunal (NCLT) will usher a new era as far as insolvency issues are concerned and will also open up new professional opportunities for Company Secretaries. Comment.
Answer:
- The Companies Act, 2013 presents radical shift in process of reconstruction/ reorganization.
- The Establishment of a single forum, which is dedicated to corporate matters, removes the problem of multiple regulators. Besides, Companies Act confers new powers on NCLT. NCLT is an adjudicating authority under IBC 2016 for insolvency resolution process of corporate and LLPs. NCLT and NCLAT is constituted with effect from June 1, 2016.
- The establishment of NCLT/NCLAT shall offer various opportunities to Practicing Company Secretaries as they have been authorized to appear before the Tribunal/Appellate Tribunal.
- Practicing Company Secretaries would be eligible to appear for matters which were hitherto dealt with by the High Court viz mergers, amalgamations and winding-up proceedings under the Companies Act.
- A Practicing Company Secretary can be appointed as a Technical Member of NCLT, provided he has 15 years working experience as secretary in whole-time practice.
- The National Company Law Tribunal has also been empowered to pass an order for winding up of a company.
- Therefore, Practicing Company Secretaries may represent the winding up case before the Tribunal. With the establishment of NCLT, a whole new area of practice will open up for Company Secretary in Practice with respect to advising and assisting corporate sector on merger, amalgamation, demerger, reverse merger, compromise and other arrangements right from the conceptual to implementation level. Company Secretaries in Practice will be able to render services in preparing schemes, appearing before NCLT
- NCLAT for approval of schemes and post-merger formalities –
- Since all powers of BIFR have been entrusted to NCLT, detecting the Sick companies and providing resolution of the queries and for making reference to the Tribunal for revival and rehabilitation of the Company.
- The provisions also mandated preparation of scheme and seeking approval from the Tribunal as may be required. Thus the practicing professionals could play a pivot role in the same area.
Question 4.
Every party who wants to file a petition in the NTCLT shall follow certain rules. Comment.
Answer:
- The Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down in the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice. The Tribunal and the Appellate Tribunal shall have power to regulate their own procedures.
- The cause title shall state “Before the National Company Law Tribunal” and shall specify the Bench to which it is presented
- Every appeal or petition or application or objection or counter presented to NCLT shall be in English. If it is in any other Indian language, it shall be accompanied translation in English.
- Full name, age, description of each party and address and in case a party sues or being sued in a representative character, shall also be set out at the beginning of the appeal.
- Every correction or deletion in any appeal or petition or application or document shall be initialed by the party or his authorized representative presenting it.
- Presentation of Petition – Every petition, application, documents, appeal shall be presented in triplicate by the appellant or applicant or petitioner or respondent, as the case may be. Such petition shall be filed in person or by his duly authorized representative or by an advocate.
- Every petition or application or appeal may be accompanied by documents duly certified. All the documents filed in the Tribunal shall be accompanied by an index in triplicate containing their details and the amount of fee paid thereon.
- Joint Petition: The Bench may permit more than one person to join together and present a single petition if it is satisfied that they have a common interest in the matter.
- Endorsement and Verification: Every petition or appeal shall be signed and verified by the party concerned. At the foot of every petition or appeal or pleading there shall appear the name and signature of the party or their authorized representative.
- Interlocutory applications: Every interlocutory (interim) application : for stay, direction, condonation of delay, exemption from production; of copy of order appealed against or extension of time etc. shall be in prescribed form along with compliance of requirements.
- Forms: Every petition or application or reference shall be filed in Form No. NCLT-1 with reqd. attachments thereto in Form No. NCLT- 2. Interlocutory application shall in Form No. NCLT-1 accompanied by such attachments thereto in Form No. NCLT-3. Every petition or application including interlocutory application shall be verified by an affidavit in Form No. NCLT-6. Notice to be issued by the Tribunal to the opposite party shall be in Form NCLT-5.
Question 5.
NCLT and NCLAT have opened a plethora of opportunities for Company Secretary in practice. Comment.
Answer:
Establishment of NCLT and NCLAT have created plenty of opportunities for Practicing Company Secretaries. Company Secretaries are authorized to appear before the NCLT/NCLAT.
Following are the areas of activities for Company Secretary:
1. Merger/Amalgamation/Compromise – A whole new area of practice opened up for Company Secretary in Practice with respect to advising and assisting corporate sector on merger, amalgamation, demerger, reverse merger, compromise and arrangements. The role of CS starts from the conceptual to implementation level. Company Secretaries in Practice will be able to render services in preparing schemes, appearing before NCLT/NCLAT for approval of schemes and post-merger formalities.
2. Revival of Companies – Where a Registrar of Companies (ROC) have struck off the name of a company u/s 248, a practicing company secretary may assist in revival of such company
3. Winding up – National Company Law Tribunal has also been empowered to pass an order for winding- up of a company. Therefore, Practicing Company Secretaries may represent the winding-up case before the Tribunal. Now Practicing Company Secretaries have been permitted to act as Liquidator in case of winding-up by the Tribunal.
4. Reduction of Capital – As per Section 66 of the Companies Act, subject to confirmation by the Tribunal, a company limited by shares or a company limited by guarantee and having a share capital can reduce its share capital. Practicing Company Secretaries will be able to represent cases of reduction of capital before the Tribunal.
5. Oppression and mismanagement – Sections 241 and 244 of the Companies Act, 2013 deals with the cases of Oppression and Mismanagement. Section 241 deals with making an application to Tribunal for relief in cases of Oppression, etc. and section 244 describes the Right to apply under section 241.
6. Insolvency and Bankruptcy cases – Insolvency practice is a new field of activity for professionals while improving the quality of intervention at all levels during rehabilitation/winding-up/ liquidation proceedings. Law has recognized the Insolvency Practitioners as Administrators, Liquidators, Turn around Specialists, Valuers, etc. Greater responsibility and authority have been given to Insolvency Practitioners under the supervision of the Tribunal to maximize resource use and application of skills.
7. PCS as Member of NCLT – A Practicing Company Secretary can be appointed as a Technical Member of NCLT, provided he has 15 years working experience as secretary in whole-time practice.