TMI BlogNATIONAL COMPANY LAW TRIBUNALX X X X Extracts X X X X X X X X Extracts X X X X ..... NATIONAL COMPANY LAW TRIBUNAL - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 15-4-2015 - - Chapter XXVII of the Companies Act, 2013 ( Act for short) provides for the establishment of National Company Law Tribunal ( Tribunal for short)) and National Company Law Appellate Tribunal ( Appellate Tribunal for short) for the disposal of legal disputes relating to the Companies Act. Constitution Section 408 of the Act provides that the Central Government, by notification, constitute, with effect from such date as may be specified therein, a Tribunal to be known as the National Company Law Tribunal . The Tribunal shall consist of a President and such number of judicial and technical members, as the Central Government may deem necessary, to be appointed it by notification. The Tribunal shall discharge such powers and functions as are, or may be, conferred on it by or under this Act or any other law for the time being in force. Qualification of President Section 409(1) provides that the President shall be a person who is or has been a Judge of a High Court for five years. Appointment of President Section 412(1) of the Act prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that the President of the Tribunal shall be appointed after consultation with the Chief Justice of India. Term of President Section 413 (1) of the Act provides that the President 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. The President shall hold office until he attains the age of sixty seven years. Resignation of President Section 416 provides that the President of the Tribunal may, by notice in writing under his hand addressed to the Central Government resign from his office. The President 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 President Section 417 provides that the Central Government may, after consultation with the Chief Justice of India, remove from office of the President, who- has been adjudged an insolvent; or has been convicted of an offence which, in the opinion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Government, involves moral turpitude; or has become physically or mentally incapable of acting as such President; or has acquired such financial or other interests as is likely to affect prejudicially his functions as President; or has so abused his position as to render his continuance in office prejudice to the public interest. The President 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 President 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 President 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behavior or incapacity referred to in Section 417(2). Suspension of President Section 417(3) provides that the Central Government may, with the concurrence of the Chief Justice of India, suspend from office the President 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 President of the Tribunal. Judicial Member Section 407(b) defines the term judicial member as a member of the Tribunal appointed as such and includes the President of the Tribunal. Qualification of Judicial Member Section 409 (2) of the Act provides that a person shall not be qualified for appointment as a Judicial Member unless he- is, or has been, a judge of a High Court; or is, or has been, a District Judge for at least five years; or has for at least ten years been an Advocate of a Court. The explanation to Section 409(2) provides that in computing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period during which a person has been an Advocate of a Court, there shall be included any period during which the person has held judicial office or the office of a member of a tribunal or any post, under the Union or a State, requiring the special knowledge of law after he became an Advocate. Technical Member Section 407(e) defines the term Technical member as a member of the Tribunal appointed as such. Qualification of Technical Member Section 409 (3) of the Act provides that a person shall not be qualified for appointment as a Technical Member unless he- has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian Legal Service out of which at least three years shall be in the pay scale of Joint Secretary to the Government of India or equivalent or above in that service; or is, or has been, in practice as a Chartered Accountant for at least fifteen years; or is, or has been, in practice as a Company Secretary for at least fifteen years; or is, or has been, in practice as a Cost Accountant for at least fifteen years; or is a person of proven ability, integrity and standing having special knowledge and experi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, of not less than fifteen 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; or is, or has been, for at least five years, a presiding officer of a Labor Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947. Selection of members Section 412 (2) provides that the Members of the 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 pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for appointment as Members. No appointment of the Members of the 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 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(2) provides that a member of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 President of the Tribunal Section 415 provides that in the event of the occurrence of any vacancy in the office of the President of the Tribunal, by reason of his death, resignation or otherwise, the senior most member shall act as the President of the Tribunal until the date on which a new President 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- has been adjudged an insolvent; or has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or has become physically or mentally incapable of acting as such Member; or has acquired such financial or other interests as is likely to affect prejudicially his functions as member; or has so abused his position as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Benches of Tribunal Section 419 provides that the Central Government shall constitute such numbers of Benches of the Tribunal, as may, by notification, be specified. The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over by the President of the Tribunal. The powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member. It shall be competent for the Members of the Tribunal authorized in this behalf to function as a Bench consisting of a single Judicial Member and exercise the functions of the Tribunal in respect of such class of cases of such matters pertaining to such class of cases, as the President may, by general or special order, specify. At any stage of the hearing of any such case or matter it appears to the Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the President, or, as the case may be, referred to him for transfer, to such Bench as the President may deem fit. The President shall, for the disposal of any case relating to rehabilitation, restructuring, reviving or winding up of companies, constitute one or more Special Benches consisting of three or more Members, majority necessarily being of Judicial Members. Expeditious disposal by Tribunal Section 422 of the Act provides that every application or petition presented before the Tribunal shall be dealt with and disposed of by it as expeditiously as possible and every endeavor shall be made by the Tribunal for the disposal of the application or petition within three months from the date of its presentation before the Tribunal. Where any application or petition is not disposed of within three months, the Tribunal shall record the reasons for not disposing of the application or petition within three months and the President 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 Tribunal Section 424 provides that the Tribunal while dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of any proceeding 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 mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter which may be prescribed. Power to seek assistance of Chief Metropolitan Magistrate etc., Section 429 provides that the Tribunal may, in any proceeding relating to a sick company or winding up of any other company, in order to take into custody or under its control all property, books of account or other documents, request, in writing, the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector within whose jurisdiction any such property, books of account or other documents of such sick or other company, any situate or found to take possession thereof and the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector, as the case may be, shall, on such request being made to him- take possession of such property, books of account or other documents; and cause the same to be entrusted to the Tribunal or other person authorized by it. For the purpose of securing compliance with the above, the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector may take or cause to be taken such steps and use or cause to be used such force as may, in his opinion, be necessary. No Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector done in pursuance of this section shall be called in question in any Court or before any authority on any ground whatsoever. Orders of Tribunal Section 420 (1) provides that the Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such others thereof as it thinks fit. Section 419(5) provides that if the Members of a Bench differ in opinion on any point or points, it shall be decided according to the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred to the President for hearing on such point or points by one or more other Members of the Tribunal and such point or points shall be decided according to the opinion of the majority of Members who have heard the case, including those who first heard it. Section 420 (3) provides that the Tribunal shall send a copy of every order passed to all parties concerned. Rectification of order Section 420 (2) provides that the Tribunal may, at any time with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to the notice by the parties. No such amendment shall be made in respect of any order against which an appeal has been preferred under this Act . Execution of order Section 424(3) provides that any order made by the Tribunal may be enforced by that Tribunal 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 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Appeal from orders of Tribunal Section 421 (1) provides that any person aggrieved by an order of the Tribunal may prefer any appeal to the National Company Law Appellate Tribunal. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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