NCLT – Understanding National Company Law Tribunal and its power

National Company Law Tribunal is the outcome of the Eradi Committee. NCLT was intended to be introduced in the Indian legal system in 2002 under the framework of Companies Act, 1956 however, due to the litigation with respect to the constitutional validity of NCLT which went for over 10 years, therefore, it was notified under the Companies Act, 2013. It is a quasi-judicial authority incorporated for dealing with corporate disputes that are of civil nature arising under the Companies Act. However, a difference could be witnessed in the powers and functions of NCLT under the previous Companies Act and the 2013 Act. The constitutional validity of the NCLT and specified allied provisions contained in the Act were re-challenged. Supreme Court had preserved the constitutional validity of the NCLT, however, specific provisions were rendered as a violation of the constitutional principles.

NCLT works on the lines of a normal Court of law in the country and is obliged to fairly and without any biases determine the facts of each case and decide with matters in accordance with principles of natural justice and in the continuance of such decisions, offer conclusions from decisions in the form of orders. The orders so formed by NCLT could assist in resolving a situation, rectifying a wrong done by any corporate or levying penalties and costs and might alter the rights, obligations, duties or privileges of the concerned parties. The Tribunal isn’t required to adhere to the severe rules with respect to appreciation of any evidence or procedural law.

Major Functions of NCLT

Registration of Companies

The new Companies Act, 2013 has enabled questioning the legitimacy of companies because of specific procedural errors during incorporation and registration. NCLT has been empowered in taking several steps, from cancelling the registration of a company to dissolving any company. The Tribunal could even render the liability or charge of members to unlimited. With this approach, NCLT can de-register any company in specific situations when the registration certificate has been obtained by wrongful manner or illegal means under section 7(7) of the Companies Act, 2013.

Transfer of shares

NCLT is also empowered to hear grievances of rejection of companies in transferring shares and securities and under section 58- 59 of the Act which were at the outset were under the purview of the Company Law Board. Going back to Companies Act, 1956 the solution available for rejection of transmission or transfer were limited only to the shares and debentures of a company but as of now the prospect has been raised under the Companies Act, 2013 and the now covers all the securities which are issued by any company. 

Deposits

The Chapter V of the Act deals with deposits and was notified several times in 2014 and Company Law Board was the prime authority for taking up the cases under said chapter. Now, such powers under the chapter V of the Act have been vested with NCLT. The provisions with respect to the deposits under the Companies Act, 2013 were notified prior to the inception of the NCLT. Unhappy depositors now have a remedy of class actions suits for seeking remedy for the omissions and acts on part of the company that impacts their rights as depositors.

Power to investigate

As per the provision of the Companies Act, 2013 investigation about the affairs of the company could be ordered with the help of an application of 100 members whereas previously the application of 200 members was needed for the same. Moreover, if a person who isn’t related to a company and is able to persuade NCLT about the presence of conditions for ordering an investigation then NCLT has the power for ordering an investigation. An investigation which is ordered by the NCLT could be conducted within India or anywhere in the world. The provisions are drafted for offering and seeking help from the courts and investigation agencies and of foreign countries.

Freezing assets of a company

The NCLT isn’t just empowered to freezing the assets of a company for using them at a later stage when such company comes under investigation or scrutiny, such investigation could also be ordered on the request of others in specific conditions.

Converting a public limited company into a private limited company

Sections 13-18 of the Companies Act, 2013 read with rules control the conversion of a Public limited company into the Private limited company, such conversion needs an erstwhile confirmation from the NCLT. NCLT has the power under section 459 of the Act, for imposing specific conditions or restrictions and might subject granting approvals to such conditions.

source: https://cleartax.in/s/national-company-law-tribunal

M/S GEO MILLER & CO.PVT.LTD. V. CHAIRMAN, RAJASTHAN VIDYUT UTPADAN NIGAM LTD

SC-The Hon’ble SC affirmed the view of the Rajasthan HC that the entire dispute seems concocted so as to pursue a monetary claim against the respondents, taking advantage of the provisions of the Arbitration and Conciliation Act, 1996. The appellant’s own default in sleeping over his right for 14 years will not constitute a case of ‘undue hardship’ justifying extension of time under Section 43(3) of the 1996 Act or show ‘sufficient cause’ for condonation of delay under Section 5 of the Limitation Act. The appellant should have approached the Court for appointment of an arbitrator under Section 8(2) of the Indian Arbitration Act, 1940 within the appropriate limitation period.-Hon'ble Justices N.V. Ramana,Mohan M. Shantanagoudar and Ajay Rastogi [03-09-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/ms-geo-miller-and-copvtltd-vs-chairman,-rajasthan-vidyut-utpadan-nigam-ltd

M.J.THULSIRAMAN V. COMMR.

SC- The Hon’ble SC while dismissing the Appeal against the Madras HC held that the “Bakers Choultry”, and the rock inscription therein, constitute a “specific endowment” as defined under the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959, and the same is not the private property of the appellants. The contents of the rock inscription are sufficient to hold that there has been a valid divestment of the right to receive a certain part of the income, with the inscription also stipulating a bar on the right of the Manager to transfer the choultry.- Hon'ble Justices N.V. Ramana,Mohan M. Shantanagoudar and Ajay Rastogi [03-09-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/mjthulsiraman-vs-commr

SEP. SATGUR SINGH V. UNION OF INDIA

SC-Without finding any error in the order of discharge of the Appellant and dismissing the Appeal, the Hon’ble SC opined that the parameters laid down in para 5(a) of the Army Instructions dated December 28, 1988 stand satisfied. The appellant has not given any explanation of his absence from duty on seven occasions. The Commanding Officer has recorded that the appellant is a habitual offender. As the absence of duty was on several different occasions for which he was imposed punishment of imprisonment, hence, the order of discharge cannot be said to be unjustified.-Hon'ble Justices L.Nageswara Rao and Hemant Gupta [02-09-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/sep-satgur-singh-vs-union-of-india

SYED ZAINUL ABEDEEN V. RAJASTHAN BOARD OF MUSLIM WAQF.

SC-Dismissing the appeal and without finding any manifest error with the observation of the Courts that the suit filed by the appellant/plaintiff under Sec. 6 of the Wakf Act, 1954 was barred by limitation ,the Hon’ble SC held that once the property after the survey has been registered in the list of wakfs as Wakf-Al-Allah on the basis of the finding recorded by the Survey Commissioner in its report dated 2nd January, 1965, the dispute regarding the nature of wakfs registered is open to be examined only within the four corners of Sec. 6 of Act, 1954.The plea of the appellant that Sec. 6 has been erroneously referred to and the limitation has to be guided by Sec. 113 of the Limitation Act, is without substance and deserves rejection.-Hon'ble Justices N.V. Ramana and Ajay Rastogi [30-08-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/syed-zainul-abedeen-vs-rajasthan-board-of-muslim-waqf

EX.SEPOY (WASHERMAN) RAM KHILAWAN V. UNION OF INDIA

SC-The Hon’ble SC allowed the Appeal in a case challenging the orders passed by the Armed Forces Tribunal regarding the discharge of the Appellant from service. It held that the discharge is covered by clause (iii) of Rule 13(3)(III) of the Army Rules, 1954, as the discharge of the appellant was only on the ground of his medical unfitness for further service, therefore, he could not be invalidated out of service without the recommendation of the Invalidating Board. Such discharge which was not under the residual clause (v) but under clause (iii) of Rule 13(3)(III) of the Rules and which was made without reference to Invalidating Medical Board, is not legally sustainable.-Hon'ble Justices L.Nageswara Rao and Hemant Gupta [02-09-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/exsepoy-(washerman)-ram-khilawan-vs-union-of-india

M/S N RAMACHANDRA REDDY V. THE STATE OF TELANGANA

SC- Allowing the appeal in a case relating to invitation of bids for award of work of construction of BT Road in Mahabubabad District of Telangana State, the Hon’ble SC observed that the act of the Chief Engineer to call for a report from Superintending Engineer, Karimnagar was fair and not arbitrary. As the issue does not relate to strict construction of territorial jurisdiction, it is always open for the decision-making authority, to have a report from the independent authority, to arrive at the just decision.-Hon'ble Justices S. Abdul Nazeer and R.Subhash Reddy [28-08-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/ms-n-ramachandra-reddy-vs-the-state-of-telangana

CHANDRAKANT BABAN MOTKARI . V. GOTIRAM LAXMAN MOTKARI(D) BY LRS.

SC-In a case relating to a property matter, the Hon’ble SC while dismissing the Appeal opined that the Kabuliyatnama was never in the name of the elder brother and the certificate under Sec. 32M of the Bombay Tenancy and Agricultural Lands Act, 1948 was granted in favour of the younger brother. The Agreement to Sell never matured into a sale deed and this was not a case where a suit was required to be stayed and the question of tenancy remitted to the Mamlatdar. The long drawn out proceedings initiated by the grandsons of Laxman were proceedings by “side wind”, which have dragged on for the last 16 years.-Hon'ble Justices Sanjay Kishan Kaul and K.M. Joseph[27-08-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/chandrakant-baban-motkari-vs-gotiram-laxman-motkari(d)-by-lrs

NATIONAL HIGHWAYS AUTHORITY OF INDIA V. SAYEDABAD TEA CO. LTD. AND ORS

SC-Setting aside the Calcutta HC orders, in as case relating to appointment of an Arbitrator by the Central Government with respect to Sec. 3G(5) of the National Highways Act, 1956,the Hon’ble SC held that in view of the power being vested exclusively with the Central Government to appoint an Arbitrator under Sec. 3G(5) of the Act 1956, being a special enactment, the application filed under Sec. 11(6) of the Arbitration and Conciliation Act 1996 for appointment of an Arbitrator was not maintainable and provisions of the Act, 1996 could not be invoked for the purpose.-Hon'ble Justices N.V. Ramana,Mohan M. Shantanagoudar and Ajay Rastogi[27-08-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/national-highways-authority-of-india-vs-sayedabad-tea-co-ltd-and-ors

RAMESHWAR . V. THE STATE OF MADHYA PRADESH

SC-Affirming the conviction of appellant No.2-Balaram under Sec. 302 IPC read with Sec. 34 IPC and the sentence of life imprisonment imposed upon him, the Hon’ble SC opined that the presence of appellant No.2 has been established by consistent evidence of the eye-witnesses and he was armed with rifle and thus shared the common intention acting in concert with accused Rameshwar and has been proved to have acted in furtherance of the common intention. To invoke Section 34 IPC, it must be established that the criminal act was done by more than one person in furtherance of common intention of all. -Hon'ble Justices R.Banumathi and A.S. Bopanna[21-08-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/rameshwar-vs-the-state-of-madhya-pradesh

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