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TMI Blog2017 (4) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... Media Private Limited ("the company") inter alia entering into a scheme of arrangement with its equity shareholders for purchase of 60,00,000 of its own equity shares of Rs.l each (fully paid up) by the company for an agreed consideration of Rs. 15,00,00,000 (Rs. Fifteen Crores only) at Rs. 22.50 per share, thus resulting in the cancellation of the corresponding 60,00,000 equity shares ("the Scheme or "Scheme"). Clause 11: 11.2 Upon the coming into effect of this scheme 60,00,000 (sixty lacs) shares of the company as proposed to be bought back pursuant to the scheme would stand cancelled, and the paid up capital of the company will be written off by Rs. 60,00,000/- (sixty lacs only). 11.3 The amount of consideration i.e the value paid to the shareholders in respect to the buy-back of shares shall be adjusted against the paid up share capital of the company to the extent of the share capital being reduced. 11.4 The amount of consideration over and above the par value of the share capital shall be first adjusted against the share premium account of the company and balance, if any, would be adjusted against the credit balance outstanding in the profit and loss account. 2. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Sections 100 to 104 of the Act, being obtained by the company from court. 20.1.3. Filing of Court Order and Scheme with the Registrar of Companies, Delhi and Haryana at New Delhi Certified copy of the order of the Court sanctioning this Scheme along with the scheme as approved by the Court being filed with the Registrar of Companies, National Territory of Delhi and Haryana by the company. 20.1.4 Approval of the Central Government or any other authority The requisite sanction, consent or approval of the government or regulatory authorities which by law may be necessary forthe implementation of the scheme. 4. Clause 17 of the Scheme contemplates the filing of an application before the High Court for directions for dispensation or convening of the meeting of the members and creditors of the Petitioner with all reasonable dispatch, and in pursuance of the same the Petitioner herein had moved an application before the Hon'ble High Court of Delhi seeking for dispensation with convening the meetings of the equity shareholders, secured and unsecured creditors of the Petitioner. The Hon'ble High Court of Delhi on the basis of consents having been obtained and produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2017 when the Learned Counsel for the Petitioner took us through the Scheme, the salient features of which has been already extracted in preceding paragraph 6of this Order, we confronted the counsel for the Petitioner with a poser as to whether the Scheme complies with the provisions of Section 230 of the Companies Act, 2013, particularly sub section (10) of Section 230 which is reproduced below for ready reference: "No compromise or arrangement in respect of any buy-back of securities under this section shall be sanctioned by the Tribunal unless such buy-back is in accordance with the provisions of section 68." 9. A perusal of the above provision clearly demonstrates that where the Scheme contemplates buy-back of shares, as also contemplated herein, such compromise or arrangement can be sanctioned by this Tribunal only if it is in compliance with the provisions of Section 68 of the 2013 Act. Learned counsel for the petitioner was candid enough to state that it does not fulfill the requirement of sub section (10) of Section 230 but put forth an argument that the petitioner was not required to comply with it in as much as the petition came to be originally filed before the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of this case two crucial issues arise for our consideration:- i. Whether the Petitioner is right in contending that a "Vested Right" had accrued to it under the 1956 Act which cannot be taken away by the notification of the provisions relating to sanction of compromises and arrangements by this Tribunal under the 2013 Act as in relation to substantive rights the subsequent enactment, namely 2013 Act can be only prospective and not retrospective; ii. Whether in relation to transferred cases from Hon'ble High Courts relating to sanction of compromise and arrangements the provisions of the 1956 Act should alone be applied as against those of 2013 Act. 10. Before venturing to answer the above issues, it would be appropriate to consider the general scheme of the 2013 Act and refer in particular to the relevant provisions of the 2013 Act. It would also be necessary to consider the notifications issued by the Ministry of Corporate Affairs for the Central Government, a reference of some of which has already been made in the preceding paragraph of the present order. 11. The Companies Act, 2013 received the assent of the President of India on 29.08.2013 and was published in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent dates of notifications issued, bringing into force the relevant provisions of the 2013 Act in relation to compromise and arrangements: Date from which made applicable Notified Provisions Relating to 12.09.2013 Sections 407 to 414 Constitution of NCLT & NCLAT etc., 12.09.2013 Section 469 Power of Central Government to make rules 12.09.2013 Section 470 Power to remove Difficulties 01.04.2014 Section 68 Buy Back of Shares 01.06.2016 Sections 415 to 433 Benches of Tribunal, Procedure etc. 01.06.2016 Section 434 except clause (c) of sub-section (1) Transfer of proceedings from erstwhile CLB to NCLTS 15.12.2016 Section 230 except sub-section (11) & (12) and Sections 231, 232 Inter alia, relating to Compromise, Arrangements & Amalgamations 14. Consequent to the notification dated 07.12.2016 issued by the Central Government and made effective from 15.12.2016, wherein provisions of Sections 230 to 232, save sub sections (11) and (12) of Section 230 having been brought into force, the Central Government had issued two other Notifications as already noticed in the preceding paragraph of the order, namely S.0.3676 (E) dated 07.12.2016 titled "Companies (Rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment. Provided further that only such proceedings relating to cases other than winding-up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal: Provided further that- (i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; Shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959."(Italics supplied) (2) 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 courts, to the Tribunal under this section. 15. A bare reading of Clause (c) of sub section (1) of Section 434 would clearly make it evident that only in relation to proceedings relating to winding up of companies which have not been transferred from the High Courts and in relation to all proceedings for which ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the one which has been transferred and hence this Tribunal cannot invoke the said provisions to deal with matters or proceedings or cases relating to arbitration, compromises, arrangements or reconstruction. 18. It is also pertinent to notice that this Tribunal is a creature of the 2013 Act and cannot travel beyond the contours of the same unless specifically empowered and cannot arrogate to itself powers beyond it. A reading of sub-section (2) of Section 470 of the 2013 Act as extracted above also makes it clear that even though anything done or any action taken or purported to have been done or taken can be deemed to have been done or taken under the corresponding provisions of 2013 Act notwithstanding the repeal of the 1956 Act, provided the same is not inconsistent with the provisions of the 2013 Act. In the instant case, as already pointed out, the Scheme which contemplates the action of buy back of shares exceeding the statutory prescribed maximum under Section 68 of 2013 Act by the Petitioner is inconsistent with the provisions of 2013 Act as compared to the repealed enactment, namely 1956 Act and hence the said action on the part of the Petitioner cannot be saved by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Again when one of us (M.M.Kumar, President, National Company Law Tribunal) sitting in the Full Bench of the Punjab & Haryana High Court and while authoring the judgment rendered in Parshotam Dass v. State of Haryana AIR 2003 Pb&Hry 301 in connection with right of intra- court appeal as provided in Section 100A of CPC which was sought to be taken away by virtue of 2002 Amendment Act, has observed in relation to vested right as follows: An acquired or vested right would be one which is acquired and enjoyed and it would not include a right which is yet to accrue on some future date. Reference in this regard may be made to cases relating to public services. It is fairly well settled that in cases where a person has already earned promotion, the same cannot be impliedly taken away by subsequent amendment of the statutory rules because it becomes a vested right. It is further advantageous to point out that mere existence of a right to appeal on the date of repeal of a statute cannot be considered a vested right or an accrued right. An available right would become vested right only when it is exercised otherwise it would continue to embryological rights. 21. Applying the above yards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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