New Era of Corporate Adjudication

NCLT & NCLAT

(Under Companies Act, 2013)

CS Ranjeet Pandey - FCS, LL.B.

Central Council Member
Ranjeet Pandey & Associates
Practising Company Secretary
Mobile: 09810558049, 011 – 46074119
e-mail: cs.ranjeet@gmail.com
 Benches of NCLT
Benches of Tribunal (Section 419):

 CG to notify benches of the Tribunal;

 Principal Bench to be in New Delhi presided by
President;
 Power of Tribunal to be exercise by two members
bench, some class of cases - single bench may
exercise powers;
 Rehabilitation, restructuring, reviving or winding up,
of companies, president to constitute one or more
Special Benches consisting of three or more Members,
majority necessarily being of Judicial Members;
 NCLT – REPRESENTATION, LIMITATION
Right of Legal Representation (Section 432):

 Any party to the proceeding or appeal may appear in person

 Party may authorise PCS or CA or CWA or Legal Practitioner

or any other person to present his case before the NCLT or
NCLAT, as the case may be.

Limitation (Section 433):

 The provisions of the Limitation Act, 1963 to apply to any

proceeding before Tribunal or appeal before NCLAT

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Matters before NCLT & NCLAT
 What all before NCLT ??
Matters before NCLT Section / provisions
Removal of Name of Company First proviso to Sec. 7(7)
Change of Financial Year Section 2(41)
Conversion of Company from Public to Private Section 14(1)
Variation of Right of Members. Section 48
Rollover of Preference Shares – Consent of 75 % Section 55(3)
holders

Appeal against refusal to register transfer Section 58

Rectification of Register of Members Section 59
Consolidation and division which results in Section 61
changes in the voting percentage of shareholders

Reduction of Capital Section 66

Extension of time for re-payment of deposits Section 74(3)
 What all before NCLT ??
Matters before NCLT Section / provisions
Members’ application for calling AGM/EGM by Section 97(1), Section
Company 98
Appeal against refusal to allow inspection of Section 119(4)
minutes of AGM
Approval for voluntary revision of FS or DR Section 131(1), 134
Removal of Auditors
Application by members for Investigation of affairs
(100 or 10%).
Winding-up
Compromise and Arrangement
Revival of Sick Company
Oppression and Mismanagement Section 241 – 244
Class Action Suit Section 245
Removal of Name
 REMOVAL OF NAME UNDER SECTION 7
 False or incorrect information or representation
 Suppressing any material fact information in any of
the documents

 Section 7(7) - Tribunal may by order:

 Alteration in MOA/AOA, or
 Direct that liability of the members shall be unlimited;
 Direct removal of the name of company from the ROC; or
 Pass an order for the winding up of the company; or
 Pass such other orders as it may deem fit:
 REMOVAL OF NAME UNDER SECTION 7

a. Reasonable opportunity of being heard; and

b. The Tribunal shall take into consideration the

transactions entered into by the company,
including the obligations, if any, contracted or
payment of any liability.
Application under sub-section (7) of Section 7 shall be
filed to the Tribunal in Form No. NCT 1 and shall be
accompanied with such documents as are mentioned in
Annexure –B, which is as under:

a) MOA & AOA,

b) Balance Sheet,
c) Affidavit verifying petition in Form No. NCT.6
d) Bank Draft evidencing Fees,
e) Memo of appearance or Vakalatnama,
f) Board Resolution.

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 Application shall set out the following particulars:

 Name, date of incorporation, name and address of the

subscribers, promoters and first directors; and

 The details of false or incorrect information or

representation or material facts or information
suppressed.

 The details of such documents in or declaration filed or

made for incorporating such company,

 The involvement of promoters, subscribers and first

directors in committing fraud during the course of
incorporation;

 The Tribunal may pass orders in accordance with clauses (a),

(b), (c), (d) and (e) of sub-section (7) of section 7.
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Change of Financial Year
 CHANGE OF FINANCIAL YEAR {SECTION- 2(41)}

 Application by a company or body corporate, which is a

holding company or a subsidiary of a company
incorporated outside India and is required to follow a
different financial year for consolidation of its accounts
outside India

 The Tribunal may, if it is satisfied, allow any period as

its financial year, whether or not that period is a year:
The Petition under sub-section (41) of Section 2 be filed to the
Tribunal in Form No. NCT 1 and shall be accompanied with such
documents as are mentioned in Annexure –B, which is as under:

1. Copy of the memorandum and Articles of Association.

2. Copy of balance sheet of companies.

3. Affidavit verifying the petition.

4. Bank draft evidencing payment of application fee.

5. Memorandum of appearance or the executed Vakalatnama,

as the case may be

6. Copy of the Board Resolution.

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 Admission of Petition

 Form GNL 1

 Report of Registrar

 Hearing and presentation of matter.

 Order of Tribunal

 Filing of Order in Form INC 28.

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Conversion from Public to Private
Any alteration having the effect of conversion of a public co. into a
private Co. shall not take effect except with approval of the Tribunal
which shall make such order as it may deem fit. [Section-14(2)]

A Petition shall, not less than 3 months from the date of passing of
special resolution, be filed to the Tribunal in Form No. NCT. 1 and
shall be accompanied with following documents (Rule 70):

 MOA & AOA,

 Copy of the documents showing that the company ceased to

become a public company.

 Affidavit verifying the petition.

 Bank draft evidencing payment of application fee.

 Memorandum of appearance with copy of the Board Resolution

or the executed Vakalatnama, as the case may be. 17
Every petition filed shall set out the following particulars:

 Date of BM and date of GM at which the proposed

alteration was approved;

 State at which the registered office of the company was

situated;

 Number of members in the company, number of members

attended the meeting and number of members of voted for
and against;

 Reason for conversion & effect of such conversion on

shareholders, creditors, debentureholders and other
related parties.

 Listed or unlisted public company.

 Nature of the company: limited by shares, limited by

guarantee and unlimited company, section 8 Co. 18
 A list of creditors and debenture holders, drawn up to the latest
practicable date preceding the date of filing of petition by not
more than two months, setting forth the following details:

 An affidavit, signed by the CS, if any and by two directors, one

of whom shall be a managing director, where there is one - that
the list of creditors is correct, and that the estimated value are
proper estimates of the values of debts and claims and that there
are no other debts of, or claims against, the company to their
knowledge.

 List of creditors shall be kept at the registered office and shall be

available for inspection.

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The company shall at least 14 days before the date of hearing:

 Advertise the petition in accordance with rule 7;

 Serve individual notice(s) in Form NCT. No. 3B; and
 Serve, a notice together with the copy of the petition to the CG,
ROC and to the SEBI, to other the regulatory body, viz IRDA

Objection received - serve a copy thereof to the ROC on or before

the date of hearing.

Tribunal may allow the conversion.

May disallow the conversion, if:

 Not in interest of the company or

 is being made with a view to contravene or to avoid complying
with the provisions of the Act.

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Oppression and Mismanagement
 Section 241 lays down eligibility criteria for filing an application
for relief against oppression and mismanagement.

 According to Sub Section (1) following members shall have right

to apply:

 In case of Company having Share Capital: Not less than 100

member or not less than 1/10 of the total number of members
whichever is less or any member(s) holding not less than
1/10th of the issue share capital.

 In case of Company without Share Capital: Not less than

1/10th of the total number of members

(Note: The Tribunal may waive all or any of the requirement

specified therein)

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 O&M
Step 1 : Application to be made to the Tribunal

 An Application, shall be filed in the Form No. NCT. 1.

 If there are more than One Applicant – the Letter of

Consent signed by the rest of the members so entitled, shall
be annexed to the Application, and the names and
addresses of all the members shall be set out in a schedule
to the Application.

 A copy of every Application made under this rule shall be

served on the company, other respondents and all such
persons as the Tribunal may direct. [Rule 3(3)]
Section 242 (Powers of Tribunal)

If Tribunal is of the opinion that the Complaints are justified then

it may pass any order to bring the complaints on an end, which
includes following:

1) The regulation of conduct of affairs of the company in future.

2) Purchase of shares or interests of any members.
3) Restrictions on the transfer or allotment of Shares,
4) Removal of MD/Manager and/or Director of the Company.
5) Recovery of undue gains made by the any MD, Manager or
director including transfer to IEPF or repayment to identifiable
victims.
6) Manner of Takeover of Management of the Company
7) Appointment of any other person to manage the Company.
8) Imposition of Costs (If Tribunal Deemed it fit)
9) Any other matter for which, in the opinion of the Tribunal, it is
just and equitable that the provision should be made.
Class Action Suit
 Action by affected person – Class Action Suit

Class Action & Background:

 A class action or a representative action is a form of

lawsuit in which a large group of stakeholders
collectively bring a claim to court and/or in which a group
of defendants is being sued.

 Enforce accountability of management towards all

stakeholders.

 The proposed introduction of Class Action is Fall-out of

Satyam fraud, wherein Indian investors have not got any
compensation, whereas US ADR holders has been
compensated appropriately by way of CAS.
 Class Action Suit(CAS)…….
Who can file CAS ??
 Co. having Share Capital:
• 100 members or 10 % of no. of members, whichever is
less.
• Member/Members – holding 10 % of issued capital.
 Co. not having Share Capital - 1/5th of total number of
Members.
 Depositors: 100 depositors or 10 % of no. of depositors,
whichever is less.

Can a representative file CAS ??

 An application may be filed or any other action may be

taken under this section by any person, group of persons or
any association of persons representing the persons affected
by any specified act or omission [Section 245(10)].
 Class Action Suit(CAS)…..

Audit firm / Experts / PCS be made liable for CAS ??

Audit firm/each partner shall be liable for CAS:

 Any improper or misleading statement in the audit report or

 If acted in a fraudulent, unlawful or wrongful manner.

Apart from Auditors, other professionals shall also be liable for

class action, if given above statement or acted in abovesaid
manner as an expert or advisor or consultant.
 Class Action Suit(CAS)….
Available Remedies:
 Restraining company from:
• Committing act ultra-vires to MOA/AOA;
• Committing breach of any provision of MOA/AOA;
• Acting on any resolution passed in suppression of
material facts;
• Doing an act contrary to Act or any other law;
• Taking action contrary to any resolution passed by the
members;
 Declaring a resolution altering MOA/AOA as void - if
passed by suppression of material facts or obtained by mis-
statement to the members or depositors;

 to claim damages or compensation or demand any other

suitable action from/against Company, Auditors, Experts /
advisor / consultant;

 to seek any other remedy as the Tribunal may deem fit.

 Class Action Suit(CAS)…..
Exclusion:

 Provision of Section 245 not applicable to Banking

Companies, however no such exemption is provided for
under Section 34-36.

Matters to be considered by Tribunal while admitting CAS:

 Cause of action is one which the member or depositor could

pursue in his own right rather than through an order of
tribunal (Individual vs. Class Action)
 Where the cause of action is an act or omission that is yet to
occur, whether the act or omission could be, and in the
circumstances would be likely to be (i) authorised by the
company before it occurs; or (ii) ratified by the company after
it occurs;
 Cause of action is an act or omission that has already
occurred, whether the act or omission could be, and in the
circumstances would be likely to be, ratified by the company.
 Class Action Suit(CAS)…..
Process to be followed on Admission:

On admission of application, the Tribunal shall have regard to:

• Public notice to all the members or depositors of the class;

• All similar applications should be consolidated into a single
application;
• Class members or depositors should be allowed to choose one
lead applicant ;
• If they unable to come to a consensus, the Tribunal to appoint
a lead applicant;
• Two class action applications for the same cause of action
shall not be allowed;
• The cost or expenses connected with the application for class
action shall be defrayed by the company or any other person
responsible for any oppressive act.
 Class Action Suit(CAS)…..
Rule 6 (Right to apply under section 245)

An Application under Section 245(1) shall be filled in Form No. NCT.1.

A copy of every Application shall be served on the company, other
respondents and all such persons as the Tribunal may direct.

Rule 8 (Conducting a class action suit)

1) Tribunal while considering the admissibility of an Application under

Section 245 take into account the following:

(a) whether the class has so many members that joining them
individually would be impractical, making a class action desirable;
(b) whether there are questions of law or fact common to the class;
(c) whether the claims or defences of the representative parties are
typical of the claims or defences of the class;
(d) whether the representative parties will fairly and adequately
protect the interests of the class.
 Application – Common Point
Format Form Number
Format of Application / Petition NCT. 1
Notice of Admission NCT. 2
Notice of Motion NCT. 3
Advertisement Dealing Petition NCT. 3A
Individual Notice NCT. 3B
General Heading of Proceeding NCT. 4
Notice of Hearing NCT. 5
Affidavit verifying Petition NCT. 6
Affidavit by way of Evidence NCT. 7
Application for execution of Order NCT. 8
General Form NCT. 9
Application for Regn. Of Clerks NCT. 10
 Application – Common Point
Format Form Number
Memorandum of Appearance NCT. 12
Petition u/s 66 NCT. 13
Summons for Directions NCT. 14
Order on Summon for Directions NCT. 15
Format for List of Creditors NCT. 16
Affidavit verifying List of Creditors NCT. 17
Notice to Creditors NCT. 18
Notice / Advertisement of Petition/ Application and NCT. 19
List of Creditors
Affidavit for Proof of Services NCT. 20
Affidavit as to result of notices issued NCT. 21
Notice to Creditors to come in and prove NCT. 22
 Application – Common Point
Format Form Number

Affidavit of Creditors proving debt NCT. 23

Advertisement of hearing of Petition NCT. 24

Order confirming reduction and approving minutes NCT. 25

Form of Minute NCT. 26

Notice of Registration of Order or Minute NCT. 27

 Heading, Brief description of Petitioner, Company & Respondents, if
any.
 Concise narration of material facts only. Full particulars of fraud,
undue influence and coercion to be stated.
 Specific instances of acts of O&M, Grieviance, etc.
 In case of winding up petitions, specific averments as to admission of
liability/quantified debt.

 Petition should be accompanied by an affidavit sworn before the

person specified in Section 558 of the Companies Act, 1956 / Section
355 of the Companies Act, 2013;

 Multiple Reliefs – A petitioner shall be entitled to seek one or more

reliefs provided that they are consequential to one another.

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INTERIM RELIEFS:

 Interim relief should not exceed the final relief.

 The Interim relief should not amount to grant of the final relief.
 Purpose is to maintain the last non-contested status quo.

FINAL RELIEFS:

 Order to conduct the Company in a manner not prejudicial to the

interest of members and to public interest;
 Order restitution for losses caused to the company.
 Order to put to an end the matters complained.
 Such other relief, as the Hon’ble Court may desire to grant, in the
interest of justice.

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Reply:

 Reply to the petition by the Respondent.

 Reply to be submitted within time line prescribed under an Order.
 It should be para wise reply of original averment supported by
Affidavit.

Rejoinder:

 Rejoinder by the Petitioner on the Reply filed by Respondent.

 Reply to be submitted within time line prescribed under an Order.
 It should be para wise reply of original averment supported by
Affidavit.
 No new facts. New facts only through amendment application.

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 Know Legal Provision

Understand the Procedure

Briefing – Understanding the case and Facts

Know the Right Format / Forms

Drafting

Pleading

Appearance & Argument

Its not about
winning or loosing !!

Success is a journey,
not the destination !!
CS Ranjeet Pandey
Central Council Member, ICSI
Practising Company Secretary
# 09810558049, 011 – 46074119
cs.ranjeet@gmail.com