The Ministry of Corporate Affairs (MCA), has vide Notification no. S.O. 1932(E) dated 01.06.2016 notified constitution of National Company Law Tribunal by Central Government, to exercise and discharge the powers and functions as are, or may be, conferred on it by or under the Companies Act, 2013 with effect from the 1st day of June, 2016. This would effectively dissolve the Company Law Board (CLB) as constituted under the Companies Act, 1956 from the same day.
In continuation of the same vide Notification no. S.O. 1933(E) dated 01.06.2016, it has notified constitution of 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.
To ensure smooth functioning and operation of NCLT, vide Notification no. S.O. 1934(E) dated 01.06.2016, in exercise of the powers conferred by sub-section (3) of section 1 of the Companies
Act, 2013, the Central Government notified and appointed the 1st day of June, 2016 as the date on which the following provisions of the Companies Act, 2013 shall come into force:
|1||Sub-section (7) of section 7 [except clause (c) and (d)]||Power of NCLT to take action against company if incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made or by any fraudulent action.|
|2||Second proviso to sub-section (1) of section 14||Approval of Tribunal for alteration of articles having the effect of conversion of public company into private company.|
|3||Sub-section (2) of section 14||Filing of altered articles and copy of the order of Tribunal on conversion of company with Registrar of companies.|
|4||Sub-section (3) of section 55||Approval of Tribunal and preference shareholders for issuing fresh redeemable preference shares if company is not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of issue.|
|5||Proviso to Clause (b) of sub-section (1) of section 61||Approval of Tribunal for consolidation and division of shares which results in changes in the voting percentage of shareholders.|
|6||Sub-sections (4) to (6) of section 62||Sec. 62(4): Conversion of debentures issued to or loan taken from government by the company into shares on receiving of order from government- Company can appeal to Tribunal if terms of order are not acceptable to it.
Sec. 62(5): Government shall consider financial position of the company, the terms of issue of debentures or loans, interest payable and such other matters as it may consider necessary for determining terms and conditions of conversion.
Sec. 62(6): With effect of order for conversion issued by Government, if required, memorandum and the authorised share capital of such company shall stand altered and increased by an amount equal to the amount of the value of shares which such debentures or loans or part thereof has been converted into.
|7||Sub-sections (9) to (11) of section 71||Sec. 71(9): Filing of petition before Tribunal by Debenture trustee if assets of the company are insufficient or are likely to become insufficient to discharge the principal amount as and when it becomes due, and Tribunal may, by order, impose such restrictions on the incurring of any further liabilities by the company as consider necessary in the interests of the debenture-holders.
Sec. 71(10): If company fails to redeem debentures or any interest thereon, application can be filed by debenture-holders or debenture trustee with Tribunal to direct, by order, the company to redeem the debentures forthwith by payment of principal and interest due thereon.
Sec. 71(11): If default is made in complying with the order of the Tribunal under this section, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than two lakh rupees but which may extend to five lakh rupees, or with both.
|8||Section 75||If default is made in repayment of deposits accepted by a company before the commencement of this Act within one year from such commencement or from the date on which such payments are due, whichever is earlier or such further time as may be allowed by the Tribunal under sub-section (2) of that section, every officer of the company who was responsible for the acceptance of such deposit shall be personally responsible, without any limitation of liability, for all or any of the losses or damages.|
|9||Section 97||Power of Tribunal to call AGM of the company, if any default is made in holding the annual general meeting under section 96, on filing of application by any member of the company.|
|10||Section 98||Power of Tribunal to call meetings of members of the company, other than an annual general meeting, either suo motu or on the application of any director or member of the company who would be entitled to vote at the meeting, if for any reason it’s impracticable to call a meeting of a company, 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.|
|11||Section 99||The company and every officer of the company who is in default shall be punishable for default in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in complying with any directions of the Tribunal.|
|12||Sub-section (4) of section 119||Power of Tribunal to direct inspection of minutes book of general meeting if company refuses to forward copy to members on receipt of request.|
|13||Section 130||Power of Tribunal or Court to issue order for re-opening of accounts of company on receiving application from Central Government, the Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned.|
|14||Section 131||Voluntary revision of financial statements or Board’s report by company with approval of Tribunal.|
|15||Second proviso to sub-section (4) and sub-section (5) of section 140||Power of Tribunal to allow company, not to send or read out at the general meeting representation made by the retiring auditor or to remove auditor on application from Central Government, if auditor has acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers.|
|16||Sub-section (4) of section 169||If representation is received from director being removed from the company, Company shall send that representation to members or read out at the meeting.
Approval of Tribunal, if satisfied, that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter by the director, representation need not be sent out or read out at the meeting.
|17||Section 213||Power of Tribunal to order investigation into the affairs of the company on receipt of application from its members or other persons with reasonable cause for it.|
|18||Sub-section (2) of Section 216||Power of Central Government to appoint inspector during investigation into the affairs of the company ordered by the Tribunal.|
|19||Section 218||Approval of Tribunal for any change in employment agreement during the course of investigation into the affairs of the company ordered by the Tribunal.|
|20||Section 221||Power of Tribunal to freeze assets of company on receipt of application or during the course of investigation.|
|21||Section 222||Power of Tribunal to impose restrictions upon securities of the company during the course of investigation or on receipt of complaint.|
|22||Sub-sections (5) of section 224||Power of tribunal to take action in pursuance of inspector’s report on investigation carried out of the affairs of the company.|
|23||Sections 241, 242 [except clause (b) of sub-section (1), clause (c) & (g) of sub-section (2)], 243, 244, and 245
|Power of tribunal for prevention of oppression and mismanagement by the company on application filed by members.|
|24||Reference of word ‘Tribunal’ in sub-section (2) of section 399||Power of tribunal or court for the production of any document kept by the Registrar.|
|25||Sections 415 to 433 (both inclusive)||Composition, Functions and Powers of NCLT & NCLAT.|
|26||Sub-section (1)(a) and (b) of section 434||Power of Central Government to notify date for transfer of cases pending before CLB to NCLT.|
|27||Sub-section (2) of section 434||Power of Central Government to make rules for ensuring timely transfer of matters pending before CLB to NCLT.|
|28||Section 441||Power of Tribunal and Regional Director regarding compounding of offences under the Act.|
|29||Section 466||Dissolution of CLB on constitution of Tribunal and holding of offices of Tribunal during transition period by eligible personnel of CLB.|
With effect of above mentioned sections from 01.06.2016, powers regarding approvals, appeals, orders, and investigations under various provisions of the Act are entrusted to NCLT now.
Vide Notification No. G.S.R. 716(E) dated 21st July, 2016 and Notification No. G.S.R. 717(E) dated 21st July, 2016 MCA has notified National Company Law Tribunal Rules, 2016 and National Company Law Appellate Tribunal Rules, 2016 describing powers, functions, procedures of proceedings, petition, appeals etc. and issuance of orders and disposal of cases by NCLT & NCLAT.
Central Government has vide Notification No. S.O. 1935(E) dated 01.06.2016 constituted 11 benches – two at New Delhi and one each at Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. The Principal Bench of the NCLT will be at New Delhi.