6 June, 2016

Constitution of NCLT | Notification of allied Sections of Companies Act 2013

The Ministry of Corporate Affairs (MCA) has notified the constitution of the National Company Law Tribunal (NCLT) and National Company Appellate Law Tribunal (NCALT) with effect from 1 June 2016. NLCT shall have eleven benches across India which includes benches in Ahmedabad, Allahabad, Bengaluru, Chennai, Chandigarh, New Delhi Guwahati, Hydererabad, Kolkata and Mumbai. The principal bench of the tribunal is also to be situated at New Delhi. NOTIFICATION OF ALLIED SECTIONS OF COMPANIES ACT 2013: MCA has also notified several sections of the Companies Act, 2013 (Act) in relation to the NCLT. Following are some of the important sections that have been notified: Powers of the Tribunal in cases of oppression and mismanagement.

SECTION	APPLICABILITY AND EFFECT
Sub-section (7) of section 7 [except clause (c) and (d)] of Act.	Authorizes the Tribunal to pass appropriate orders if a Company has been incorporated by furnishing false or misleading information.
Second proviso to sub-section (1) of section 14 of Act	A public company can only be converted into a private company upon an appropriate order to that effect passed by the Tribunal.
Sections 97, 98 and 99 of Act	Power of the Tribunal to call for meetings of the Company and punish officers for a default thereof.
Section 221 of Act	Power of the Tribunal to freeze the assets of a Company pending inquiry and investigation.
Sections 241 and 244 of Act	Confers right upon members to apply to the Tribunal in cases of oppression and mismanagement.
242 [except clause (b) of sub-section (1), clause (c) & (g) of sub-section (2)] of Act
Section 243 of Act	Consequence of modification or termination of existing agreements as a result of orders passed under Section 242.
Section 245 of Act	Power to file class action suits with the Tribunal.

DISSOLUTION OF CLB: With the constitution of the NCLT, the Company Law Board (CLB) stands dissolved. All cases pending before the CLB are now transferred to the NCLT who shall dispose off such cases in accordance with the provisions of the Companies Act, 1956 or the Companies Act, 2013 as the case may be.

MHCO COMMENT

The intention of the Government seems to be the introduction of the NCLT in a phased manner. Provisions of the Companies Act, 2013 in relation to winding up of companies, mergers and amalgamations have not yet been notified. Presently, jurisdictions in these matters rest with the High Court and are governed by the provisions of the Companies Act, 1956. The government shall notify these provisions once the NCLT is fully operational. The eventual aim is to confer the NCLT with exclusive jurisdiction on all matters of Company Law.

This article was released on 6 June 2016. 

(The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or contact@mhcolaw.com for any assistance.)