NATIONAL COMPANY LAW APPELLATE TRIBUNAL

[Mr. M. GOVINDARAJAN]

Constitution

Section 410 of the Act provides that the Central Government shall, by notification, constitute, with effect from such date as may be prescribed therein, the Appellate Tribunal to be known as the National Company Law Appellate Tribunal consisting of a Chairperson and such number of Judicial and Technical Members, not exceeding eleven, as the Central Government may deem fit, to be appointed by it, by notification, for hearing appeals against the orders of the Tribunal.

Qualifications of Chairperson

Section 411 (1) of the Act provides that the Chairperson shall be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court.

Appointment of Chairperson

Section 412 (1) of the Act provides that the Chairperson shall be appointed after consultation with the Chief Justice of India.

Term of Chairperson

Section 413 (3) provides that the Chairperson of the Appellate Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office, but shall be eligible for re-appointment for another  term of five years.  Section 413 (4) provides that the Chairperson shall hold office as such until he attains the age of seventy years.

Resignation of Chairman

Section 416 provides that the Chairman of the Appellate Tribunal may, by notice in writing under his hand addressed to the Central Government resign from his office.  The Chairman shall continue to hold office until the expiry of three months from the date of receipt of notice by the Central government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office whichever is earlier.

Removal of Chairman

Section 417 provides that the Central Government may, after consultation with the Chief Justice of India, remove from office of the Chairman, who-

1. has been adjudged an insolvent; or
2. has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or
3. has become physically or mentally incapable of acting as such Chairman; or
4. has acquired such financial or other interests as is likely to affect prejudicially his functions as Chairman; or
5. has so abused his position as to render his continuance in office prejudice to the public interest.

The Chairman shall not be removed on any of the grounds specified in clauses (b) to (e) without giving him a reasonable opportunity of being heard.

Section 417 (2) provides that without prejudice to the provisions of Section 417(1), the Chairman shall not be removed from his office except by an order made by the Central Government on the ground of proved misbehavior or incapacity after an inquiry made by a Judge of the Supreme Court nominated by the Chief Justice of India on a reference made to him by the Central Government in which such Chairman had been informed of the charges against him and given a reasonable opportunity of being heard.  Section 417(4) provides that the Central Government shall, after consultation with the Supreme Court make rules to regulate the procedure for the inquiry on the ground of proved mis behavior or incapacity referred to in Section 417(2).

Suspension of Chairman

Section 417(3) provides that the Central Government may, with the concurrence of the Chief Justice of India, suspend from office the Chairman in respect of whom reference has been made to the Judge of the Supreme Court under Section 417 (2) until the Central Government has passed orders on receipt of the report of the Judge of the Supreme Court on such reference.

Member

Section 407 (c) defines the term ‘member’ as a member, whether judicial or technical of the Tribunal and include the Chairman of the Appellate Tribunal.

Judicial Member

Section 407(b) defines the term ‘judicial member’ as a member of the Appellate Tribunal appointed as such and includes the Chairman of the Appellate Tribunal.

Qualification of Judicial Member

Section 411 (2) of the Act provides that a Judicial member shall be a person who is or has been a Judge of a High Court or is a Judicial Member of the Tribunal for five years. is, or has been, a District Judge for at least five years; or

Technical Member

Section 407(e) defines the term ‘Technical member’ as a member of the Appellate Tribunal appointed as such.

Qualification of Technical Member

Section 411 (3) of the Act provides that a Technical Member shall be a person of proven ability, integrity and standing having special knowledge and experience, of not less than twenty five years, in law, industrial finance, industrial management or administration, industrial reconstruction, investment, accountancy, labor matters, or such other disciplines related to management, conduct of affairs, revival, rehabilitation and winding up of companies.

Selection of members

Section 412 (2) provides that the Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of-

• Chief Justice of India or his nominee - Chairperson;
• A Senior Judge of the Supreme Court or a Chief Justice of High Court - Member;
• Secretary in the Ministry of Corporate Affairs - Member;
• Secretary in the Ministry of Law and Justice - Member; and
• Secretary in the Department of Financial Services in the Ministry of Finance - Member.

The Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection Committee.  The Selection Committee shall determine its procedure for recommending persons for appointment as Members.

No appointment of the Members of the Appellate Tribunal shall be invalid merely by reason of any vacancy or any defect in the constitution of the Selection Committee.

The proviso to Section 412(2) provides that a person who has not completed fifty years of age shall not be eligible for appointment as Member.

Tenure of Members

Section 413(1) of the Act provides that every Member of the Appellate Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office but shall be eligible for re-appointment for another term of five years.

Section 413(4) provides that a member of the Appellate Tribunal shall hold office as such until he attains the age of sixty five years.

Lien

The second proviso to Section 413(2) provides that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be, while holding office as such for a period not exceeding one year.

Resignation of Member

Section 416 provides that any member may, by notice in writing under his hand addressed to the Central government, resign from his office.   The Member shall hold office until the expiry of three months from the date of receipt of such notice by the Central Government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office whichever is the earliest.

Acting Chairperson of the Appellate Tribunal

Section 415 provides that in the event of the occurrence of any vacancy in the office of the Chairperson of the Appellate Tribunal, by reason of his death, resignation or otherwise, the senior most member shall act as the Chairperson of the Appellate Tribunal until the date on which a new Chairperson appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

Removal of Members

Section 417 provides that the Central Government may, after consultation with the Chief Justice of India, remove from office any member, who-

1. has been adjudged an insolvent; or
2. has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or
3. has become physically or mentally incapable of acting as such Member; or
4. has acquired such financial or other interests as is likely to affect prejudicially his functions as member; or
5. has so abused his position as to render his continuance in office prejudice to the public interest.

The member shall not be removed on any of the grounds specified in clauses (b) to (e) without giving him a reasonable opportunity of being heard.

Section 417 (2) provides that without prejudice to the provisions of Section 417(1), the Member shall not be removed from his office except by an order made by the Central Government on the ground of proved misbehavior or incapacity after an inquiry made by a Judge of the Supreme Court nominated by the Chief Justice of India on a reference made to him by the Central Government in which such Member had been informed of the charges against him and given a reasonable opportunity of being heard.  Section 417(4) provides that the Central Government shall, after consultation with the Supreme Court make rules to regulate the procedure for the inquiry on the ground of proved mis behavior or incapacity referred to in Section 417(2).

Suspension of Member

Section 417(3) provides that the Central Government may, with the concurrence of the Chief Justice of India, suspend from office the Member in respect of whom reference has been made to the Judge of the Supreme Court under Section 417 (2) until the Central Government has passed orders on receipt of the report of the Judge of the Supreme Court on such reference.

Filing appeal before the Appellate Tribunal

Section 421 provides the procedure for filing appeal before the Appellate Tribunal as detailed below:

• No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties;
• Every appeal shall be filed within a period of forty five days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved and shall be in such form and accompanied by such fees, as may be prescribed;
• The Appellate Tribunal may entertain an appeal after the expiry of the said period of forty five days from the date aforesaid, but within a further period not exceeding forty five days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period;
• On the receipt of an appeal, the Appellate Tribunal shall, after giving the parties a reasonable opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against;
• The Appellate Tribunal shall send a copy of every order made by it to the Tribunal and the parties to appeal.

Expeditious disposal by Tribunal

Section 422 of the Act provides that every appeal presented before the Appellate Tribunal shall be dealt with and disposed of by it as expeditiously as possible and every endeavor shall be made by the Appellate Tribunal for the disposal of the application or petition within three months from the date of its presentation before the Appellate Tribunal.   Where any application or petition is not disposed of within three months, the Appellate Tribunal shall record the reasons for not disposing of the application or petition within three months and the Chairperson may after taking into account the reasons so recorded, extend the period by such period not exceeding ninety days as he may consider necessary.

Procedure before Appellate Tribunal

Section 424 provides that the Appellate Tribunal while disposing of an appeal  before it, 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, and, subject to the other provisions of this Act and of any rules made there under, the Tribunal shall have power to regulate their own procedure.   The Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit in respect of the following matters, namely:-

• summoning and enforcing the attendance of any person and examining him on oath;
• requiring the discovery and production of documents;
• receiving evidence on affidavits;
• subject to the provisions of Section 123 and 124 of the Indian Evidence Act, 1872 requisitioning any public record or document or a copy of such record or document from any office;
• issuing commissions for the examination of witnesses or documents;
• dismissing a representation for default or deciding it ex-parte;
• setting aside any order of dismissal of any representation for default or any order passed by it ex-parte; and
• any other matter which may be prescribed.

Execution of order

Section 424(3) provides that any order made by the Appellate  Tribunal may be enforced by that Appellate  in the same manner as if it were a decree made by a Court in a suit pending therein and it shall be lawful for the Appellate Tribunal to send for execution of its orders to the court within the local limits of whose jurisdiction-

• in the case of an order against a company, the registered office of the company is situate; or
• in the case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain.

Power to punish for contempt

Section 425 provides that the Appellate Tribunal shall have the same jurisdiction, powers and authority in respect of contempt of themselves as the High Court has and may exercise, for this purposes, the powers under the provisions of the Contempt of Courts Act, 1971 which shall have the effect subject to modifications that-

• the reference therein to a High Court shall be construed as including a reference to the Tribunal; and
• the reference to Advocate-General in Section 15 of the said Act shall be construed as a reference to such Law Officers as the Central Government may, specify in this behalf.

PROVISIONS COMMON TO TRIBUNAL AND APPELLATE TRIBUNAL

Legal Representation

Section 432 provides that a party to any proceedings before the Tribunal or appeal before the Appellate Tribunal 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

to present his case before the Tribunal or Appellate Tribunal as the case may be.

Limitation

Section 433 provides that the provisions of the Limitation Act, 1963 shall, as far as may be, apply to proceedings before the Tribunal or appeal before the Appellate Tribunal.

Civil Court has no jurisdiction

Section 430 provides that no civil court shall have jurisdiction to entertain any suit or proceedings in respect of any matter which the Tribunal or the appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.

Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings

Section 431 provides that no act or proceeding of the tribunal or the Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence of any vacancy or defect in the constitution of the Tribunal or the Appellate Tribunal, as the case may be.

Judicial proceedings

Section 424 (4) provides that all proceeding s before the Tribunal or the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 and for the purposes of section 196 of the Indian Penal Code and the Tribunal and the Appellate Tribunal shall be deemed to be civil court for the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.

Staff of Tribunal and Appellate Tribunal

Section 418 provides that the Central Government shall, in consultation with the Tribunal and the Appellate Tribunal, provide with such officers and other employees as it may be necessary for the exercise of the powers and discharge of their functions.    The Officers and the employees shall discharge their functions under the general superintendence and control of the President, or as the case may be, the Chairperson, or any other Member to whom powers for exercising such superintendence and control are  delegated by him.

The pay and allowances and other conditions of service of the officers and the employees of the Tribunal and the Appellate Tribunal shall be such as may be prescribed.

President, Members, Officers etc., to be public servants

Section 427 provides that the President, Members, Officers and employees of the Tribunal and the Chairperson, Members, Officers and other employees of the Appellate Tribunal shall be deemed to be public servants within the meaning of Section 21 of the Indian Penal Code.

Delegation of powers

Section 426 provides that the Tribunal or the Appellate Tribunal may, by general or special order, direct, subject to such conditions, if any, as may be specified in the order, any of its officers or employees or any other person authorized by it to inquire into any matter connected with any proceedings or, as the case may be, appeal before it and report to it in such manner as may be specified in the order.

Protection of action taken in good faith

Section 428 provides that no suit, prosecution or other legal proceedings shall lie against the Tribunal, the President, Member, officer or other employee or against the Appellate Tribunal, the Chairperson, Member, officer or other employees thereof or liquidator or any other person authorized by the Tribunal or the Appellate Tribunal for the discharge of any function under this Act in respect of any loss or damage caused or likely to be caused by any action which is in good faith done or intended to be done in pursuance of this Act.

Appeal to Supreme Court

Section 423 provides that any person aggrieved by any order of the Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of receipt of the order the Appellate Tribunal to him on any question of law arising out of such order.   The Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within sixty days, allow it to be filed within a further period not exceeding sixty days.

Transfer of certain pending proceedings

Section 424 of the Act enables the Central Government to notify the date on which transfer the pending cases before various authorities to the Tribunal and the Appellate Tribunal.

• All matters, proceedings or cases pending before the Company Law Board immediately before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases, in accordance with the provisions of this Act;

Any person aggrieved by any decision or order of the Company Law Board made before such date may file an appeal before the High Court within sixty days from the date of communication of the decision or order of the Company Law Bord to him on any question of law arising out of such order.   The High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing an appeal within the said period, allow it to be filed within a further period not exceeding sixty days.

• All proceedings under the Companies Act including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer;

Abated cases

Any appeal preferred to the Appellate Authority for Industrial and Financial Reconstruction or any reference made or inquiry pending to or before the Board of Industrial and Financial Reconstruction or any proceeding of whatever nature pending before the Appellate Authority for Industrial and Financial Reconstruction or the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Proceedings)Act, 1985 immediately before the commencement of this Act shall stand abated.

A company, in respect of which such appeal or reference or inquiry stands abated may make a reference to the Tribunal within one hundred and eighty days from the commencement of this act in accordance with the provisions of this Act.  No fees shall be required to be paid for making such reference by a Company whose appeal or reference or inquiry stands abated.

Rule for transfer of cases

Section 434 (2) provides that the Central Government may make rules consistent with the provisions of this Act to ensure timely transfer of all matters, proceedings or cases pending before the Company Law Board or the Court to the Tribunal under this section.