Law and procedure relating to proceedings before - PowerPoint Presentation

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Law and procedure relating to proceedings before nclt

MANISHA CHAUDHARY KARAN MALHOTRA ADVOCATE ADVOCATE MANAGING PARTNER ASSOCIATEUKCA LAW CHAMBERSE-2, KAILASH COLONY, NEW DELHI-110048PHONE: +91-11-46098991, 46098992Email: delhi @ukca.inWebsite: www.ukca.in

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REVIEW OF COMPANIES LAW & ESTABLISHMENT OF NCLT

Eradi Committee was constituted, to review law relating to insolvency and Winding up of Companies and laws like The Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).The Committee made various recommendations, which were incorporated in the Companies (Amendment) Bill, 2001. The said Bill was subsequently passed and became the Companies (Amendment) Act, 2002.The Companies (Second Amendment) Act, 2002 paved way for setting up of the NCLT and NCALT.However, Madras High Court in R. Gandhi V. Union of India, held that NCLT is against the basic structure of the constitution as it has been awarded with all the powers which are conferred to the High Court except, Article 266.2

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Subsequently, Hon’ble Supreme Court in

Union of India Vs. R. Gandhi/ Madras Bar Association upheld the Constitutional validity of NCLT. Hence establishment of NCLT and NCLAT were considerably delayed. NOWConstitution of NCLT (COMPANIES Act 2013)The Central Government shall, by notification, constitute, a Tribunal to be known as the National Company Law Tribunal consisting of a President and Judicial and Technical members, as the Central Government may deem necessary. (Section 408)Constitution of NCALTThe Central Government shall, by notification, constitute, an Appellate Tribunal to be known as the National Company Law Appellate Tribunal consisting of a chairperson and Judicial and Technical members, for hearing appeals against the orders of the Tribunal. (Section 410)3

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Power to Punish for Contempt

Now the tribunal shall also have the same jurisdiction, power & authority in respect of contempt of it, as of the High court.(Section 425)Procedure, Power and Natural justiceThe tribunal and appellate tribunal shall not be bound by the CPC but shall be guided by the principles of natural justiceIt shall have the powers to regulate its own procedure.All proceeding before tribunal and the appellate tribunal shall be deemed to be judicial proceedings within the meaning of section 193 and 228of Cr.P.c. However the tribunal and appellate tribunal will have the power of the civil courts under CPC regarding summoning and evidence etc. (Section 424)4

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CONSOLIDATION OF CORPORATE JURISDICTION

NCLT is to replace CLB, BIFR, and Company Court in the Hon'ble High Courts, and consolidate the jurisdiction of Judicial Courts and Quasi judicial tribunals.POWERS OF NCLT INCLUDE :All the powers of BIFR for revival and rehabilitation of sick industrial companies.Power of High Court in the matters of mergers, demergers, amalgamations, winding up, Reduction of capital.Most of the powers of the Company Law Board under the Companies Act, 1956. Power to order repayment of deposits accepted by Non- Banking Financial Companies as provided in section 45QA of the Reserve Bank of India Act, 1934.Power to Review its own orders5

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Consolidation of Jurisdiction of Corporate law

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ADVANTAGES OF CONSOLIDATION OF CORPORATE JURISDICTION

Appeals will be streamlinedAppeals against the order of the NCLT will go to NCLAT, exclusively dedicated for this purpose. Further appeal to the Hon’ble Supreme Court will only be on any question of law, thereby reducing the delay in appeals (Section 423).Earlier, the decisions of the Company Law Board were challenged before the High Court and then in the Supreme Court.Uniformity of Judgements Instead of getting different decisions on the same matter by different High Courts, consolidation of jurisdiction will help the Tribunal Members and Judges in delivering uniform decisions and thereby removing any ambiguity and friction. 8

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Reduces the burden on the Hon’ble High Courts.Avoid multiplicity of litigation before various Forums (High Courts, CLB, BIFR, AAIFR). Focused attention to company matters. Advantage of having a single body dealing in company matters is that attention is focused to such matters only. High Court which was dealing in other matters took a long time to dispose off Company related matters. This will Reduce time for adjudication process. At present, at the CLB, a matter takes six months to two years, while at the BIFR, it takes five-six years. But at the NCLT, it may take just three to nine months. 9

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Consolidating professionals under one roof.Handling company disputes involves a lot of attention, and specialization.Often one requires experts to handle matters in relation to CLB, BIFR and the High Courts.Consolidation of Corporate jurisdiction will lead to convergence rather than divergence.Requirement for a specialist in matters relating to BIFR or CLB or HC will reduce considerably.10

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INCORPORATION OF A COMPANY

Section 7: (1) There shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated, the following documents and information for registration, namely:—(a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed; (b) a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made there under in respect of registration and matters precedent or incidental thereto have been complied with;11

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(

c) an affidavit from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;(d) the address for correspondence till its registered office is established;(e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;12

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(

f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed; and(g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed.(2) The Registrar on the basis of documents and information filed under sub-section (1) shall register all the documents and information referred to in that subsection in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act. 13

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(

3) On and from the date mentioned in the certificate of incorporation issued under sub-section (2), the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which(4) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (1) till its dissolution under this Act.(5) If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under section 447. shall also be included in the certificate.14

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(

6) Without prejudice to the provisions of sub-section (5) where, at any time after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of subsection (1) shall each be liable for action under section 447.(7) Without prejudice to the provisions of sub-section (6), where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants,—15

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(a) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or

(b) direct that liability of the members shall be unlimited; or(c) direct removal of the name of the company from the register of companies; or(d) pass an order for the winding up of the company; or(e) pass such other orders as it may deem fit:Provided that before making any order under this sub-section,—(i) the company shall be given a reasonable opportunity of being heard in the matter; and(ii) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.16

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Alteration of articles

Section 14. (1) Subject to the provisions of this Act and the conditions contained in its memorandum, if any, a company may, by a special resolution, alter its articles including alterations having the effect of conversion of—(a) a private company into a public company; or(b) a public company into a private company:Provided that where a company being a private company alters its articles in such a manner that they no longer include the restrictions and limitations which are required to be included in the articles of a private company under this Act, the company shall, as from the date of such alteration, cease to be a private company:Provided further that any alteration having the effect of conversion of a public company into a private company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit.17

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(2) Every alteration of the articles under this section and a copy of the order of the

Tribunal approving the alteration as per sub-section (1) shall be filed with the Registrar, together with a printed copy of the altered articles, within a period of fifteen days in such manner as may be prescribed, who shall register the same.(3) Any alteration of the articles registered under sub-section (2) shall, subject to the provisions of this Act, be valid as if it were originally in the articles.18

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Variation of shareholders’ rights.

Section 48: (1) Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class -: (a) if provision with respect to such variation is contained in the memorandum or articles of the company; or(b) in the absence of any such provision in the memorandum or articles, if such variation is not prohibited by the terms of issue of the shares of that class:19

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Provided that if variation by one class of shareholders affects the rights of any other class of shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and the provisions of this section shall apply to such variation.

(2) Where the holders of not less than ten per cent. of the issued shares of a class did not consent to such variation or vote in favour of the special resolution for the variation, they may apply to the Tribunal to have the variation cancelled, and where any such application is made, the variation shall not have effect unless and until it is confirmed by the Tribunal :20

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Provided that an application under this section shall be made within twenty-one days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(3) The decision of the Tribunal on any application under sub-section (2) shall be binding on the shareholders.(4) The company shall, within thirty days of the date of the order of the Tribunal , file a copy thereof with the Registrar.(5) Where any default is made in complying with the provisions of this section, the company shall be punishable with fine 21

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which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.

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Issue and redemption of preference shares

Section 55: (1) No company limited by shares shall, after the commencement of this Act, issue any preference shares which are irredeemable.(2) A company limited by shares may, if so authorised by its articles, issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue subject to such conditions as may be prescribed: Provided that a company may issue preference shares for a period exceeding twenty years for infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an annual basis at the option of such preferential shareholders:23

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Provided

further that—(a) no such shares shall be redeemed except out of the profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of such redemption;(b) no such shares shall be redeemed unless they are fully paid;(c) where such shares are proposed to be redeemed out of the profits of the company, there shall, out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to a reserve, to be called the Capital Redemption Reserve Account, and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the Capital Redemption Reserve Account were paid-up share capital of the company; and24

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(d) (

i) in case of such class of companies, as may be prescribed and whose financial statement comply with the accounting standards prescribed for such class of companies under section 133, the premium, if any, payable on redemption shall be provided for out of the profits of the company, before the shares are redeemed:Provided also that premium, if any, payable on redemption of any preference shares issued on or before the commencement of this Act by any such company shall be provided for out of the profits of the company or out of the company’s securities premium account, before such shares are redeemed.25

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(ii) in a case not falling under sub-clause (i) above, the premium, if any, payable on redemption shall be provided for out of the profits of the company or out of the company’s securities premium account, before such shares are redeemed.

(3) Where a company is not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed preference shares), it may, with the consent of the holders of three-fourths in value of such preference shares and with the approval of the Tribunal , on a petition made by it in this behalf, issue further redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the unredeemed preference shares, and on the issue of such further redeemable preference shares, the unredeemed preference shares shall be deemed to have been redeemed26

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Provided that the

Tribunal, shall, while giving approval under this sub-section, order the redemption forthwith of preference shares held by such persons who have not consented to the issue of further redeemable preference shares.Explanation.—For the removal of doubts, it is hereby declared that the issue of further redeemable preference shares or the redemption of preference shares under this section shall not be deemed to be an increase or, as the case may be, a reduction, in the share capital of the company.27

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(4) The capital redemption reserve account may, notwithstanding anything in this section, be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

Explanation.—For the purposes of sub-section (2), the term ‘‘infrastructure projects’’ means the infrastructure projects specified in Schedule VI.28

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Transfer and transmission of securities

Section 56: (1) A company shall not register a transfer of securities of the company, or the interest of a member in the company in the case of a company having no share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository, unless a proper instrument of transfer, in such form as may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee has been delivered to the company by the transferor or the transferee within a period of sixty days from the date of execution, along with the certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment of securities:29

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Provided that where the instrument of transfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit.

(2) Nothing in sub-section (1) shall prejudice the power of the company to register, on receipt of an intimation of transmission of any right to securities by operation of law from any person to whom such right has been transmitted.(3) Where an application is made by the transferor alone and relates to partly paid shares, the transfer shall not be registered, unless the company gives the notice of the application, in such manner as may be prescribed, to the transferee and the transferee gives no objection to the transfer within two weeks from the receipt of notice.30

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(4) Every company shall, unless prohibited by any provision of law or any order of Court,

Tribunal or other authority, deliver the certificates of all securities allotted, transferred or transmitted—(a) within a period of two months from the date of incorporation, in the case of subscribers to the memorandum;(b) within a period of two months from the date of allotment, in the case of any allotment of any of its shares;(c) within a period of one month from the date of receipt by the company of the instrument of transfer under sub-section (1) or, as the case may be, of the intimation of transmission under sub-section (2), in the case of a transfer or transmission of securities;31

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(d) within a period of six months from the date of allotment in the case of any allotment of debenture:

Provided that where the securities are dealt with in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities.(5) The transfer of any security or other interest of a deceased person in a company made by his legal representative shall, even if the legal representative is not a holder thereof, be valid as if he had been the holder at the time of the execution of the instrument of transfer.32

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(6) Where any default is made in complying with the provisions of sub-sections (1) to (5), the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five

lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.(7) Without prejudice to any liability under the Depositories Act, 1996, where any depository or depository participant, with an intention to defraud a person, has transferred shares, it shall be liable under section 447.33

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Refusal of registration and appeal against refusal.

Section 58. (1) If a private company limited by shares refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any securities or interest of a member in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferor and the transferee or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal.34

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(2) Without prejudice to sub-section (1), the securities or other interest of any member in a public company shall be freely transferable:

Provided that any contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as a contract.(3) The transferee may appeal to the Tribunal, against the refusal within a period of thirty days from the date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, was delivered to the company.35

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(4) If a public company without sufficient cause refuses to register the transfer of securities within a period of thirty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, is delivered to the company, the transferee may, within a period of sixty days of such refusal or where no intimation has been received from the company, within ninety days of the delivery of the instrument of transfer or intimation of transmission, appeal to the

Tribunal .(5) The Tribunal, while dealing with an appeal made under sub-section (3) or subsection (4), may, after hearing the parties, either dismiss the appeal, or by order— 36

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(a) direct that the transfer or transmission shall be registered by the company and the company shall comply with such order within a period of ten days of the receipt of the order; or

(b) direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved.(6) If a person contravenes the order of the Tribunal under this section, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.37

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Rectification of register of members

Section 59: (1) If the name of any person is, without sufficient cause, entered in the register of members of a company, or after having been entered in the register, is, without sufficient cause, omitted there from, or if a default is made, or unnecessary delay takes place in entering in the register, the fact of any person having become or ceased to be a member, the person aggrieved, or any member of the company, or the company may appeal in such form as may be prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture holders residing outside India, for rectification of the register.38

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(2) The Tribunal

may, after hearing the parties to the appeal under sub-section (1) by order, either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order or direct rectification of the records of the depository or the register and in the latter case, direct the company to pay damages, if any, sustained by the party aggrieved.(3) The provisions of this section shall not restrict the right of a holder of securities, to transfer such securities and any person acquiring such securities shall be entitled to voting rights unless the voting rights have been suspended by an order of the Tribunal.39

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(4) Where the transfer of securities is in contravention of any of the provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 or this Act or any other law for the time being in force, the

Tribunal may, on an application made by the depository, company, depository participant, the holder of the securities or the Securities and Exchange Board, direct any company or a depository to set right the contravention and rectify its register or records concerned.40

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(5) If any default is made in complying with the order of the Tribunal

under this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both.41

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Power of limited company to alter its share capital.

Section 61: (1) A limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting to—(a) increase its authorised share capital by such amount as it thinks expedient;(b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares:Provided that no consolidation and division which results in changes in the voting percentage of shareholders shall take effect unless it is approved by the Tribunal on an application made in the prescribed manner;(c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination;42

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(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled(2) The cancellation of shares under sub-section (1) shall not be deemed to be a reduction of share capital.43

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Further issue of share capital

Section 62: (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered—(a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer subject to the following conditions, namely:—(i) the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;44

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(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in clause (

i) shall contain a statement of this right;(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and the company;(b) to employees under a scheme of employees’ stock option, subject to special resolution passed by company and subject to such conditions as may be prescribed; or45

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(c) to any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered

valuer subject to such conditions as may be prescribed.(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be despatched through registered post or speed post or through electronic mode to all the existing shareholders at least three days before the opening of the issue.46

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(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company:

Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting.47

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(4) Notwithstanding anything contained in sub-section (3), where any debentures have been issued, or loan has been obtained from any Government by a company, and if that Government considers it necessary in the public interest so to do, it may, by order, direct that such debentures or loans or any part thereof shall be converted into shares in the company on such terms and conditions as appear to the Government to be reasonable in the circumstances of the case even if terms of the issue of such debentures or the raising of such loans do not include a term for providing for an option for such conversion:

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Provided that where the terms and conditions of such conversion are not acceptable to the company, it may, within sixty days from the date of communication of such order, appeal to the

Tribunal which shall after hearing the company and the Government pass such order as it deems fit.(5) In determining the terms and conditions of conversion under sub-section (4), the Government shall have due regard to the financial position of the company, the terms of issue of debentures or loans, as the case may be, the rate of interest payable on such debentures or loans and such other matters as it may consider necessary.49

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(6) Where the Government has, by an order made under sub-section (4), directed that any debenture or loan or any part thereof shall be converted into shares in a company and where no appeal has been preferred to the

Tribunal under sub-section (4) or where such appeal has been dismissed, the memorandum of such company shall, where such order has the effect of increasing the authorised share capital of the company, stand altered and the authorised share capital of such company shall stand increased by an amount equal to the amount of the value of shares which such debentures or loans or part thereof has been converted into.50

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Debentures.

Section 71: (1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption: Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting.(2) No company shall issue any debentures carrying any voting rights.(3) Secured debentures may be issued by a company subject to such terms and conditions as may be prescribed.51

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(4) Where debentures are issued by a company under this section, the company shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend and the amount credited to such account shall not be utilised by the company except for the redemption of debentures.

(5) No company shall issue a prospectus or make an offer or invitation to the public or to its members exceeding five hundred for the subscription of its debentures, unless the company has, before such issue or offer, appointed one or more debenture trustees and the conditions governing the appointment of such trustees shall be such as may be prescribed.52

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(6) A debenture trustee shall take steps to protect the interests of the debenture holders and redress their grievances in accordance with such rules as may be prescribed.

(7) Any provision contained in a trust deed for securing the issue of debentures, or in any contract with the debenture-holders secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from, or indemnifying him against, any liability for breach of trust, where he fails to show the degree of care and due diligence required of him as a trustee, having regard to the provisions of the trust deed conferring on him any power, authority or discretion:53

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Provided that the liability of the debenture trustee shall be subject to such exemptions as may be agreed upon by a majority of debenture-holders holding not less than three fourths in value of the total debentures at a meeting held for the purpose.

(8) A company shall pay interest and redeem the debentures in accordance with the terms and conditions of their issue.(9) Where at any time the debenture trustee comes to a conclusion that the assets of the company are insufficient or are likely to become insufficient to discharge the principal amount as and when it becomes due, the debenture trustee may file a petition before the Tribunal and the Tribunal may, after hearing the company and any other person interested in the matter, by order, impose such restrictions on the incurring of any further liabilities by the company as the Tribunal may consider necessary in the interests of the debenture-holders.54

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(10) Where a company fails to redeem the debentures on the date of their maturity or fails to pay interest on the debentures when it is due, the

Tribunal may, on the application of any or all of the debenture-holders, or debenture trustee and, after hearing the parties concerned, direct, by order, the company to redeem the debentures forthwith on payment of principal and interest due thereon.(11) If any default is made in complying with the order of the Tribunal under thissection, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than two lakh rupees but which may extend to five lakh rupees, or with both.55

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(12) A contract with the company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

(13) The Central Government may prescribe the procedure, for securing the issue of debentures, the form of debenture trust deed, the procedure for the debenture-holders to inspect the trust deed and to obtain copies thereof, quantum of debenture redemption reserve required to be created and such other matters56

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Prohibition on acceptance of deposits from public.

Section 73: (1) On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter:Provided that nothing in this sub-section shall apply to a banking company and nonbanking financial company as defined in the Reserve Bank of India Act, 1934 and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.57

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(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:—

(a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;58

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(b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;

(c) depositing such sum which shall not be less than fifteen per cent. of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;(d) providing such deposit insurance in such manner and to such extent as may be prescribed;59

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(e) certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits; and

(f) providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company:Provided that in case where a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as ‘‘unsecured deposits’’ and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits60

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(3) Every deposit accepted by a company under sub-section (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub-section.

(4) Where a company fails to repay the deposit or part thereof or any interest thereon under sub-section (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other order as the Tribunal may deem fit.(5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits.61

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Repayment of deposits, etc accepted before commencement of this Act.

Section 74: (1) Where in respect of any deposit accepted by a company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall—(a) file, within a period of three months from such commencement or from the date on which such payments, are due, with the Registrar a statement of all the deposits accepted by the company and sums remaining unpaid on such amount with the interest payable thereon along with the arrangements made for such repayment, not withstanding anything contained in any other law for the time being in force or under the terms and conditions subject to which the deposit was accepted or any scheme framed under any law; and62

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(b) repay within one year from such commencement or from the date on which such payments are due, whichever is earlier.

(2) The Tribunal may on an application made by the company, after considering the financial condition of the company, the amount of deposit or part thereof and the interest payable thereon and such other matters, allow further time as considered reasonable to the company to repay the deposit.63

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(3) If a company fails to repay the deposit or part thereof or any interest thereon within the time specified in sub-section (1) or such further time as may be allowed by the

Tribunal under sub-section (2), the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both.64

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Damages for fraud.

Section 75: (1) Where a company fails to repay the deposit or part thereof or any interest thereon referred to in section 74 within the time specified in sub-section (1) of that section or such further time as may be allowed by the Tribunal under sub-section (2) of that section, and it is proved that the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to the provisions contained in subsection (3) of that section and liability under section 447, be personally responsible, without any limitation of liability, for all or any of the losses or damages that may have been incurred by the depositors.65

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(2) Any suit, proceedings or other action may be taken by any person, group of persons or any association of persons who had incurred any loss as a result of the failure of the company to repay the deposits or part thereof or any interest thereon.

66

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Power of Tribunal to call annual general meeting.

Section 97: (1) If any default is made in holding the annual general meeting of a company under section 96, the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient:Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the Tribunal, be deemed to be an annual general meeting of the company under this Act.67

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Power of Tribunal to call meetings of members, etc.

Section 98: (1) If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles of the company, the Tribunal may, either suo motu or on the application of any director or member of the company who would be entitled to vote at the meeting,—(a) order a meeting of the company to be called, held and conducted in such manner as the Tribunal thinks fit; and68

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(b) give such ancillary or consequential directions as the

Tribunal thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act or articles of the company:Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.(2) Any meeting called, held and conducted in accordance with any order made under sub-section (1) shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.69

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Punishment for default in complying with provisions of sections 96-98

Section 99: If any default is made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in complying with any directions of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues.70

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Inspection of minute-books of general meeting.

Section 119: (1) The books containing the minutes of the proceedings of any general meeting of a company or of a resolution passed by postal ballot, shall—(a) be kept at the registered office of the company; and(b) be open, during business hours, to the inspection by any member without charge, subject to such reasonable restrictions as the company may, by its articles or in general meeting, impose, so, however, that not less than two hours in each business day are allowed for inspection.71

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(2) Any member shall be entitled to be furnished, within seven working days after he has made a request in that behalf to the company, and on payment of such fees as may be prescribed, with a copy of any minutes referred to in sub-section(1).

(3) If any inspection under sub-section (1) is refused, or if any copy required under sub-section(2) is not furnished within the time specified therein, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees for each such refusal or default, as the case may be.(4) In the case of any such refusal or default, the Tribunal may, without prejudice to any action being taken under sub-section (3), by order, direct an immediate inspection of the minute-books or direct that the copy required shall forthwith be sent to the person requiring it.72

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Investor Education and Protection Fund.

Section 125: (1) The Central Government shall establish a Fund to be called the Investor Education and Protection Fund (herein referred to as the Fund).(2) There shall be credited to the Fund—(a) the amount given by the Central Government by way of grants after due appropriation made by Parliament by law in this behalf for being utilised for the purposes of the Fund;(b) donations given to the Fund by the Central Government, State Governments, companies or any other institution for the purposes of the Fund;73

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(c) the amount in the Unpaid Dividend Account of companies transferred to the Fund under sub-section (5) of section 124;

(d) the amount in the general revenue account of the Central Government which had been transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956, as it stood immediately before the commencement of the Companies (Amendment) Act, 1999, and remaining unpaid or unclaimed on the commencement of this Act;(e) the amount lying in the Investor Education and Protection Fund under section 205C of the Companies Act, 1956;(f) the interest or other income received out of investments made from the Fund;74

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(g) the amount received under sub-section (4) of section 38;

(h) the application money received by companies for allotment of any securities and due for refund;(i) matured deposits with companies other than banking companies;(j) matured debentures with companies;(k) interest accrued on the amounts referred to in clauses (h) to (j);(l) sale proceeds of fractional shares arising out of issuance of bonus shares, merger and amalgamation for seven or more years;75

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(m) redemption amount of preference shares remaining unpaid or unclaimed for seven or more years; and(n) such other amount as may be prescribed:

Provided that no such amount referred to in clauses (h) to (j) shall form part of the Fund unless such amount has remained unclaimed and unpaid for a period of seven years from the date it became due for payment.76

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(3) The Fund shall be utilised for—(a) the refund in respect of unclaimed dividends, matured deposits, matured debentures, the application money due for refund and interest thereon;

(b) promotion of investors’ education, awareness and protection;(c) distribution of any disgorged amount among eligible and identifiable applicants for shares or debentures, shareholders, debenture-holders or depositors who have suffered losses due to wrong actions by any person, in accordance with the orders made by the Court which had ordered disgorgement;77

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(d) reimbursement of legal expenses incurred in pursuing class action suits under sections 37 and 245 by members, debenture-holders or depositors as may be sanctioned by the

Tribunal; and(e) any other purpose incidental thereto, in accordance with such rules as may be prescribed: Provided that the person whose amounts referred to in clauses (a) to (d) of sub-section (2) of section 205C transferred to Investor Education and Protection Fund, after the expiry of the period of seven years as per provisions of the Companies Act, 1956, shall be entitled to get refund out of the Fund in respect of such claims in accordance with rules made under this section78

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Explanation.—The disgorged amount refers to the amount received through disgorgement or disposal of securities.

(4) Any person claiming to be entitled to the amount referred in sub-section (2) may apply to the authority constituted under sub-section (5) for the payment of the money claimed.(5) The Central Government shall constitute, by notification, an authority for administration of the Fund consisting of a chairperson and such other members, not exceeding seven and a chief executive officer, as the Central Government may appoint.79

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(6) The manner of administration of the Fund, appointment of chairperson, members and chief executive officer, holding of meetings of the authority shall be in accordance with such rules as may be prescribed.

(7) The Central Government may provide to the authority such offices, officers, employees and other resources in accordance with such rules as may be prescribed.(8) The authority shall administer the Fund and maintain separate accounts and other relevant records in relation to the Fund in such form as may be prescribed after consultation with the Comptroller and Auditor-General of India.80

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(9) It shall be competent for the authority constituted under sub-section (5) to spend money out of the Fund for carrying out the objects specified in sub-section (3).

(10) The accounts of the Fund shall be audited by the Comptroller and Auditor General of India at such intervals as may be specified by him and such audited accounts together with the audit report thereon shall be forwarded annually by the authority to the Central Government.(11) The authority shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor-General of India to be laid before each House of Parliament.81

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Re-opening of accounts on court’s or Tribunal’s orders.

Section 130: (1) A company shall not re-open its books of account and not recast its financial statements, unless an application in this regard is made by the Central Government, the Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal to the effect that—(i) the relevant earlier accounts were prepared in a fraudulent manner; or(ii) the affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements:82

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Provided that the court or the Tribunal

, as the case may be, shall give notice to the Central Government, the Income-tax authorities, the Securities and Exchange Board or any other statutory regulatory body or authority concerned and shall take into consideration the representations, if any, made by that Government or the authorities, Securities and Exchange Board or the body or authority concerned before passing any order under this section.(2) Without prejudice to the provisions contained in this Act the accounts so revised or re-cast under sub-section (1) shall be final.83

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Voluntary revision of financial statements or Board’s report.

Section 131: (1) If it appears to the directors of a company that—(a) the financial statement of the company; or(b) the report of the Board, do not comply with the provisions of section 129 or section 134 they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made by the company in such form and manner as may be prescribed and a copy of the order passed by the Tribunal shall be filed with the Registrar:84

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Provided that the Tribunal

shall give notice to the Central Government and the Income- tax authorities and shall take into consideration the representations, if any, made by that Government or the authorities before passing any order under his section:Provided further that such revised financial statement or report shall not be prepared or filed more than once in a financial yearProvided also that the detailed reasons for revision of such financial statement or report shall also be disclosed in the Board's report in the relevant financial year in which such revision is being made85

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(2) Where copies of the previous financial statement or report have been sent out to members or delivered to the Registrar or laid before the company in general meeting, the revisions must be confined to—

(a) the correction in respect of which the previous financial statement or report do not comply with the provisions of section 129 or section 134; and(b) the making of any necessary consequential alternation.(3)The Central Government may make rules as to the application of the provisions of this Act in relation to revised financial statement or a revised director's report and such rules may, in particular—86

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(a) make different provisions according to which the previous financial statement or report are replaced or are supplemented by a document indicating the corrections to be made;

(b) make provisions with respect to the functions of the company's auditor in relation to the revised financial statement or report.(c) require the directors to take such steps as may be prescribed.87

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Removal, resignation of auditor and giving of special notice.

Section 140: (1) The auditor appointed under section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the Central Government in that behalf in the prescribed manner:Provided that before taking any action under this sub-section, the auditor concerned shall be given a reasonable opportunity of being heard.(2) The auditor who has resigned from the company shall file within a period of thirty days from the date of resignation, a statement in the prescribed form with the company and the Registrar, and in case of companies referred to in sub-section (5) of section 139, the auditor shall also file such statement with the Comptroller and Auditor-General of India, indicating the reasons and other facts as may be relevant with regard to his resignation.88

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(3) If the auditor does not comply with sub-section (2), he or it shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

(4) (i) Special notice shall be required for a resolution at an annual general meeting appointing as auditor a person other than a retiring auditor, or providing expressly that a retiring auditor shall not be re-appointed, except where the retiring auditor has completed a consecutive tenure of five years or, as the case may be, ten years, as provided under sub-section (2) of section 139.89

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(ii) On receipt of notice of such a resolution, the company shall forthwith send a copy thereof to the retiring auditor.

(iii) Where notice is given of such a resolution and the retiring auditor makes with respect thereto representation in writing to the company (not exceeding a reasonable length and requests its notification to members of the company, the company shall, unless the representation is received by it too late for it to do so,—(a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and(b) send a copy of the representation to every member of the company to whom notice of the meeting is sent, whether before or after the receipt of the representation by the company,90

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and if a copy of the representation is not sent as aforesaid because it was received too late or because of the company’s default, the auditor may (without prejudice to his right to be heard orally) require that the representation shall be read out at the meeting:

Provided that if a copy of representation is not sent as aforesaid, a copy thereof shall be filed with the Registrar:Provided further that if the Tribunal is satisfied on an application either of the company or of any other aggrieved person that the rights conferred by this sub-section are being abused by the auditor, then, the copy of the representation may not be sent and the representation need not be read out at the meeting91

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(5) Without prejudice to any action under the provisions of this Act or any other law for the time being in force, the

Tribunal either suo motu or on an application made to it by the Central Government or by any person concerned, if it is satisfied that the auditor of a company has, whether directly or indirectly, acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, it may, by order, direct the company to change its auditors:92

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Provided that if the application is made by the Central Government and the

Tribunal is satisfied that any change of the auditor is required, it shall within fifteen days of receipt of such application, make an order that he shall not function as an auditor and the Central Government may appoint another auditor in his place:Provided further that an auditor, whether individual or firm, against whom final order has been passed by the Tribunal under this section shall not be eligible to be appointed as an auditor of any company for a period of five years from the date of passing of the order and the auditor shall also be liable for action under section 447.93

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Explanation I.—It is hereby clarified that the case of a firm, the liability shall be of the firm and that of every partner or partners who acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its director or officers.

Explanation II.—For the purposes of this Chapter the word “auditor” includes a firm of auditors.94

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Removal of directors.

Section 169: (1) A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard:Provided that nothing contained in this sub-section shall apply where the company has availed itself of the option given to it under section 163 to appoint not less than two thirds of the total number of directors according to the principle of proportional representation.95

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(2) A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed.

(3) On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting.96

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(4) Where notice has been given of a resolution to remove a director under this section and the director concerned makes with respect thereto representation in writing to the company and requests its notification to members of the company, the company shall, if the time permits it to do so,—

(a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and(b) send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representation by the company),97

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and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s default, the director may without prejudice to his right to be heard orally require that the representation shall be read out at the meeting:

Provided that copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application to be paid in whole or in part by the director notwithstanding that he is not a party to it.98

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(5) A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-section (2).

(6) A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed.(7) If the vacancy is not filled under sub-section(5), it may be filled as a casual vacancy in accordance with the provisions of this Act:99

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Provided that the director who was removed from office shall not be re-appointed as a director by the Board of Directors.

(8) Nothing in this section shall be taken— (a) as depriving a person removed under this section of any compensation or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director; or(b) as derogating from any power to remove a director under other provisions of this Act.100

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Compensation for loss of office of managing or whole-time director or manager.

Section 202: (1) A company may make payment to a managing or whole-time director or manager, but not to any other director, by way of compensation for loss of office, or as consideration for retirement from office or in connection with such loss or retirement.(2) No payment shall be made under sub-section(1) in the following cases, namely:—(a) where the director resigns from his office as a result of the reconstruction of the company, or of its amalgamation with any other body corporate or bodies corporate,101

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and is appointed as the managing or whole-time director, manager or other officer of the reconstructed company or of the body corporate resulting from the amalgamation;

(b) where the director resigns from his office otherwise than on the reconstruction of the company or its amalgamation as aforesaid;(c) where the office of the director is vacated under sub-section (1) of section 167;(d) where the company is being wound up, whether by an order of the Tribunal or voluntarily, provided the winding up was due to the negligence or default of the director;102

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(e) where the director has been guilty of fraud or breach of trust in relation to, or of gross negligence in or gross mismanagement of, the conduct of the affairs of the company or any subsidiary company or holding company thereof; and

(f) where the director has instigated, or has taken part directly or indirectly in bringing about, the termination of his office.(3) Any payment made to a managing or whole-time director or manager in pursuance of sub-section (1) shall not exceed the remuneration which he would have earned if he had been in office for the remainder of his term or for three years, whichever is shorter, calculated on the basis of the average remuneration actually earned by him during a period of three years immediately preceding the date on which he ceased to hold office, or where he held the office for a lesser period than three years, during such period:103

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Provided that no such payment shall be made to the director in the event of the commencement of the winding up of the company, whether before or at any time within twelve months after, the date on which he ceased to hold office, if the assets of the company on the winding up, after deducting the expenses thereof, are not sufficient to repay to the shareholders the share capital, including the premiums, if any, contributed by them.

(4) Nothing in this section shall be deemed to prohibit the payment to a managing or whole-time director, or manager, of any remuneration for services rendered by him to the company in any other capacity.104

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Investigation into affairs of the company.

Section 210: (1) Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company,—(a) on the receipt of a report of the Registrar or inspector under section 208;(b) on intimation of a special resolution passed by a company that the affairs of the company ought to be investigated; or(c) in public interest, it may order an investigation into the affairs of the company.105

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(2) Where an order is passed by a court or the Tribunal

in any proceedings before it that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company.(3) For the purposes of this section, the Central Government may appoint one or more persons as inspectors to investigate into the affairs of the company and to report thereon in such manner as the Central Government may direct.106

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Investigationinto company’s affairs in other cases

Section 213: The Tribunal may,—(a) on an application made by—(i) not less than one hundred members or members holding not less than one-tenth of the total voting power, in the case of a company having a share capital; or(ii) not less than one-fifth of the persons on the company’s register of members, in the case of a company having no share capital, and supported by such evidence as may be necessary for the purpose of showing that the applicants have good reasons for seeking an order for conducting an investigation into the affairs of the company; or107

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(b) on an application made to it by any other person or otherwise, if it is satisfied that there are circumstances suggesting that—

(i) the business of the company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose;(ii) persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or108

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(iii) the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, or the manager, of the company,

order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the company ought to be investigated by an inspector or inspectors appointed by the Central Government and where such an order is passed, the Central Government shall appoint one or more competent persons as inspectors to investigate into the affairs of the company in respect of such matters and to report thereupon to it in such manner as the Central Government may direct:109

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Provided that if after investigation it is proved that—(i

) the business of the company is being conducted with intent to defraud its creditors, members or any other persons or otherwise for a fraudulent or unlawful purpose, or that the company was formed for any fraudulent or unlawful purpose; or(ii) any person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud,110

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then, every officer of the company who is in default and the person or persons concerned in the formation of the company or the management of its affairs shall be punishable for fraud in the manner as provided in section 447.

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Security for payment of costs and expenses of investigation

Section 214: Where an investigation is ordered by the Central Government in pursuance of clause (b) of sub-section (1) of section 210, or in pursuance of an order made by the Tribunal under section 213, the Central Government may before appointing an inspector under subsection(3) of section 210 or clause (b) of section 213, require the applicant to give such security not exceeding twenty-five thousand rupees as may be prescribed, as it may think fit, for payment of the costs and expenses of the investigation and such security shall be refunded to the applicant if the investigation results in prosecution.112

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Investigation of ownership of company

Section 216: (1) Where it appears to the Central Government that there is a reason so to do, it may appoint one or more inspectors to investigate and report on matters relating to the company, and its membership for the purpose of determining the true persons—(a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or(b) who are or have been able to control or to materially influence the policy of the company.113

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(2) Without prejudice to its powers under sub-section (1), the Central Government shall appoint one or more inspectors under that sub-section, if the

Tribunal, in the course of any proceeding before it, directs by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purposes specified in sub-section (1).(3) While appointing an inspector under sub-section(1), the Central Government may define the scope of the investigation, whether as respects the matters or the period to which it is to extend or otherwise, and in particular, may limit the investigation to matters connected with particular shares or debentures.114

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(4) Subject to the terms of appointment of an inspector, his powers shall extend to the investigation of any circumstances suggesting the existence of any arrangement or understanding which, though not legally binding, is or was observed or is likely to be observed in practice and which is relevant for the purposes of his investigation.

115

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Protection ofemployees during investigation.

Section 218: (1) Notwithstanding anything contained in any other law for the time being in force, if—(a) during the course of any investigation of the affairs and other matters of or relating to a company, other body corporate or person under section 210, section 212, section 213 or section 219 or of the membership and other matters of or relating to a company, or the ownership of shares in or debentures of a company or body corporate, or the affairs and other matters of or relating to a company, other body corporate or person, under section 216; or (b) during the pendency of any proceeding against any person concerned in the conduct and management of the affairs of a company under Chapter XVI,116

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such company, other body corporate or person proposes—(

i) to discharge or suspend any employee; or(ii) to punish him, whether by dismissal, removal, reduction in rank or otherwise; or (iii) to change the terms of employment to his disadvantage, the company, other body corporate or person, as the case may be, shall obtain approval of the Tribunal of the action proposed against the employee and if the Tribunal has any objection to the action proposed, it shall send by post notice thereof in writing to the company, other body corporate or person concerned.117

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(2) If the company, other body corporate or person concerned does not receive within thirty days of making of application under sub-section (1), the approval of the

Tribunal, then and only then, the company, other body corporate or person concerned may proceed to take against the employee, the action proposed.(3) If the company, other body corporate or person concerned is dissatisfied with the objection raised by the Tribunal, it may, within a period of thirty days of the receipt of the notice of the objection, prefer an appeal to the Appellate Tribunal in such manner and on payment of such fees as may be prescribed.118

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(4) The decision of the Appellate Tribunal

on such appeal shall be final and binding on the Tribunal and on the company, other body corporate or person concerned.(5) For the removal of doubts, it is hereby declared that the provisions of this section shall have effect without prejudice to the provisions of any other law for the time being in force.119

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Freezing of assets of company on inquiry and investigation

Section 221: (1) Where it appears to the Tribunal, on a reference made to it by the Central Government or in connection with any inquiry or investigation into the affairs of a company under this Chapter or on any complaint made by such number of members as specified under sub-section (1) of section 244 or a creditor having one lakh amount outstanding against the company or any other person having a reasonable ground to believe that the removal, transfer or disposal of funds, assets, properties of the company is likely to take place in a manner that is prejudicial to the interests of the company or its shareholders or creditors or in public interest, it may by order direct that such transfer, removal or disposal shall not take place during such period not exceeding three years as may be specified in the order or may take place subject to such conditions and restrictions as the Tribunal may deem fit.120

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(2) In case of any removal, transfer or disposal of funds, assets, or properties of the company in contravention of the order of the

Tribunal under sub-section (1), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.121

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Imposition of restrictions upon securities.

Section 222: (1) Where it appears to the Tribunal, in connection with any investigation under section 216 or on a complaint made by any person in this behalf, that there is good reason to find out the relevant facts about any securities issued or to be issued by a company and the Tribunal is of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that the securities shall be subject to such restrictions as it may deem fit for such period not exceeding three years as may be specified in the order.122

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(2) Where securities in any company are issued or transferred or acted upon in contravention of an order of the

Tribunal under sub-section (1), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.123

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Actions to be taken in pursuance of inspector’s report.

Section 224: (1) If, from an inspector’s report, made under section 223, it appears to the Central Government that any person has, in relation to the company or in relation to any other body corporate or other person whose affairs have been investigated under this Chapter been guilty of any offence for which he is criminally liable, the Central Government may prosecute such person for the offence and it shall be the duty of all officers and other employees of the company or body corporate to give the Central Government the necessary assistance in connection with the prosecution.124

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(2) If any company or other body corporate is liable to be wound up under this Act and it appears to the Central Government from any such report made under section 223 that it is expedient so to do by reason of any such circumstances as are referred to in section 213, the Central Government may, unless the company or body corporate is already being wound up by the

Tribunal, cause to be presented to the Tribunal by any person authorised by the Central Government in this behalf—(a) a petition for the winding up of the company or body corporate on the ground that it is just and equitable that it should be wound up;(b) an application under section 241; or(c) both.125

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(3) If from any such report as aforesaid, it appears to the Central Government that proceedings ought, in the public interest, to be brought by the company or any body corporate whose affairs have been investigated under this Chapter—

(a) for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation, or the management of the affairs, of such company or body corporate; or(b) for the recovery of any property of such company or body corporate which has been misapplied or wrongfully retained,126

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the Central Government may itself bring proceedings for winding up in the name of such company or body corporate.

(4) The Central Government, shall be indemnified by such company or body corporate against any costs or expenses incurred by it in, or in connection with, any proceedings brought by virtue of sub-section (3).(5) Where the report made by an inspector states that fraud has taken place in a company and due to such fraud any director, key managerial personnel, other officer of the company or any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any other manner, the Central Government may file an application before the Tribunal for appropriate orders with regard to disgorgement of such asset, property, or cash, as the case may be, and also for holding such director, key managerial personnel, officer or other person liable personally without any limitation of liability.127

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Voluntary winding up of company, etc., not to stop investigation proceedings.

Section 226: An investigation under this Chapter may be initiated notwithstanding, and no such investigation shall be stopped or suspended by reason only of, the fact that—(a) an application has been made under section 241;(b) the company has passed a special resolution for voluntary winding up; or (c) any other proceeding for the winding up of the company is pending before the Tribunal :128

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Provided that where a winding up order is passed by the

Tribunal in a proceeding referred to in clause (c), the inspector shall inform the Tribunal about the pendency of the investigation proceedings before him and the Tribunal shall pass such order as it may deem fit:Provided further that nothing in the winding up order shall absolve any director or other employee of the company from participating in the proceedings before the inspector or any liability as a result of the finding by the inspector.129

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Legal advisers and bankers not to disclose certain information

Section 227: Nothing in this Chapter shall require the disclosure to the Tribunal or to the Central Government or to the Registrar or to an inspector appointed by the Central Government—(a) by a legal adviser, of any privileged communication made to him in that capacity, except as respects the name and address of his client; or(b) by the bankers of any company, body corporate, or other person, of any information as to the affairs of any of their customers, other than such company, body corporate, or person.130

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Power to compromise or make arrangement with creditors and members.

Section 230. (1) Where a compromise or arrangement is proposed—(a) between a company and its creditors or any class of them; or(b) between a company and its members or any class of them, the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs.Explanation.—For the purposes of this sub-section, arrangement includes a reorganization of the company’s share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods.131

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(

2) The company or any other person, by whom an application is made under subsection (1), shall disclose to the Tribunal by affidavit—(a) all material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report on the accounts of the company and the pendency of any investigation or proceedings against the company;(b) reduction of share capital of the company, if any, included in the compromise or arrangement; (c) any scheme of corporate debt restructuring consented to by not less than seventy-five per cent. of the secured creditors in value, including—(i) a creditor’s responsibility statement in the prescribed form;(ii) safeguards for the protection of other secured and unsecured creditors;132

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(

iii) report by the auditor that the fund requirements of the company after the corporate debt restructuring as approved shall conform to the liquidity test based upon the estimates provided to them by the Board;(iv) where the company proposes to adopt the corporate debt restructuring guidelines specified by the Reserve Bank of India, a statement to that effect; and(v) a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer.3) Where a meeting is proposed to be called in pursuance of an order of the Tribunal under sub-section (1), a notice of such meeting shall be sent to all the creditors or class of creditors and to all the members or class of members and the debenture-holders of the company, individually at the address registered with the company which shall be accompanied by a statement disclosing the details of the compromise or arrangement , a copy of the 133

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valuation report, if any, and explaining their effect on creditors, key managerial personnel, promoters and non-promoter members, and the debenture-holders and the effect of the compromise or arrangement on any material interests of the directors of the company or the debenture trustees, and such other matters as may be prescribed:

Provided that such notice and other documents shall also be placed on the website of the company, if any, and in case of a listed company, these documents shall be sent to the Securities and Exchange Board and stock exchange where the securities of the companies are listed, for placing on their website and shall also be published in newspapers in such manner as may be prescribed:Provided further that where the notice for the meeting is also issued by way of an advertisement, it shall indicate the time within which copies of the compromise or arrangement shall be made available to the concerned persons free of charge from the registered office of the company.134

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(

4) A notice under sub-section (3) shall provide that the persons to whom the notice is sent may vote in the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of such notice:Provided that any objection to the compromise or arrangement shall be made only by persons holding not less than ten per cent. of the shareholding or having outstanding debt amounting to not less than five per cent. of the total outstanding debt as per the latest audited financial statement.(5) A notice under sub-section (3) along with all the documents in such form as may be prescribed shall also be sent to the Central Government, the income-tax authorities, the Reserve Bank of India, the Securities and Exchange Board, the Registrar, the respective stock exchanges, the Official Liquidator, the Competition Commission of India established under sub-section135

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(

1) of section 7 of the Competition Act, 2002, if necessary, and such other sectoral regulators or authorities which are likely to be affected by the compromise or arrangement and shall require that representations, if any, to be made by them shall be made within a period of thirty days from the date of receipt of such notice, failing which, it shall be presumed that they have no representations to make on the proposals.(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing three-fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator and the contributories of the company.136

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(

7) An order made by the Tribunal under sub-section (6) shall provide for all or any of the following matters, namely:—(a) where the compromise or arrangement provides for conversion of preference shares into equity shares, such preference shareholders shall be given an option to either obtain arrears of dividend in cash or accept equity shares equal to the value of the dividend payable;(b) the protection of any class of creditors;(c) if the compromise or arrangement results in the variation of the shareholders’ rights, it shall be given effect to under the provisions of section 48;(d) if the compromise or arrangement is agreed to by the creditors under sub-section (6), any proceedings pending before the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall abate;137

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e

) such other matters including exit offer to dissenting shareholders, if any, as are in the opinion of the Tribunal necessary to effectively implement the terms of the compromise or arrangement:Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company's auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under section 133.(8) The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt of the order.(9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety per cent. value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement.(10) 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.

138

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11

) Any compromise or arrangement may include takeover offer made in such manner as may be prescribed:Provided that in case of listed companies, takeover offer shall be as per the regulations framed by the Securities and Exchange Board(12) An aggrieved party may make an application to the Tribunal in the event of any grievances with respect to the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on application, pass such order as it may deem fit.Explanation.—For the removal of doubts, it is hereby declared that the provisions of section 66 shall not apply to the reduction of share capital effected in pursuance of the order of the Tribunal under this section.139

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Power of tribunal to enforce compromise or arrangement

Section 231: (1) Where the Tribunal makes an order under section 230 sanctioning a compromise or an arrangement in respect of a company, it—(a) shall have power to supervise the implementation of the compromise or arrangement; and(b) may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper implementation of the compromise or arrangement.140

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(2) If the

Tribunal is satisfied that the compromise or arrangement sanctioned under section 230 cannot be implemented satisfactorily with or without modifications, and the company is unable to pay its debts as per the scheme, it may make an order for winding up the company and such an order shall be deemed to be an order made under section 273.(3) The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of this Act sanctioning a compromise or an arrangement.141

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Merger and amalgamation of companies

Section 232: (1) Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal—(a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of the company or companies involving merger or the amalgamation of any two or more companies; and(b) that under the scheme, the whole or any part of the undertaking, property or liabilities of any company (hereinafter referred to as the transferor company) is required to be transferred to another142

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company (hereinafter referred to as the transferee company), or is proposed to be divided among and transferred to two or more companies,

the Tribunal may on such application, order a meeting of the creditors or class of creditors or the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal may direct and the provisions of sub-sections (3) to (6) of section 230 shall apply mutatis mutandis. (2) Where an order has been made by the Tribunal under sub-section (1), merging companies or the companies in respect of which a division is proposed, shall also be required to circulate the following for the meeting so ordered by the Tribunal, namely:—143

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(a) the draft of the proposed terms of the scheme drawn up and adopted by the directors of the merging company;

(b) confirmation that a copy of the draft scheme has been filed with the Registrar;(c) a report adopted by the directors of the merging companies explaining effect of compromise on each class of shareholders, key managerial personnel, promoters and non-promoter shareholders laying out in particular the share exchange ratio, specifying any special valuation difficulties;(d) the report of the expert with regard to valuation, if any;(e) a supplementary accounting statement if the last annual accounts of any of the merging company144

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relate to a financial year ending more than six months before the first meeting of the company summoned for the purposes of approving the scheme.

(3) The Tribunal, after satisfying itself that the procedure specified in sub-sections (1) and (2) has been complied with, may, by order, sanction the compromise or arrangement or by a subsequent order, make provision for the following matters, namely:—(a) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of the transferor company from a date to be determined by the parties unless the Tribunal, for reasons to be recorded by it in writing, decides otherwise;145

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(b) the allotment or appropriation by the transferee company of any shares, debentures, policies or other like instruments in the company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person:

Provided that a transferee company shall not, as a result of the compromise or arrangement, hold any shares in its own name or in the name of any trust whether on its behalf or on behalf of any of its subsidiary or associate companies and any such shares shall be cancelled or extinguished;(c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company on the date of transfer;146

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(d) dissolution, without winding-up, of any transferor company;

(e) the provision to be made for any persons who, within such time and in such manner as the Tribunal directs, dissent from the compromise or arrangement;(f) where share capital is held by any non-resident shareholder under the foreign direct investment norms or guidelines specified by the Central Government or in accordance with any law for the time being in force, the allotment of shares of the transferee company to such shareholder shall be in the manner specified in the order;(g) the transfer of the employees of the transferor company to the transferee company;147

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h) where the transferor company is a listed company and the transferee company is an unlisted company,—

(A) the transferee company shall remain an unlisted company until it becomes a listed company;(B) if shareholders of the transferor company decide to opt out of the transferee company, provision shall be made for payment of the value of shares held by them and other benefits in accordance with a pre-determined price formula or after a valuation is made, and the arrangements under this provision may be made by the Tribunal : Provided that the amount of payment or valuation under this clause for any share shall not be less than what has been specified by the Securities and Exchange Board under any regulations framed by it;148

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(i) where the transferor company is dissolved, the fee, if any, paid by the transferor company on its

authorised capital shall be set-off against any fees payable by the transferee company on its authorised capital subsequent to the amalgamation; and(j) such incidental, consequential and supplemental matters as are deemed necessary to secure that the merger or amalgamation is fully and effectively carried out: Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company’s auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under section 133.(4) Where an order under this section provides for149

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the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to the transferee company and the liabilities shall be transferred to and become the liabilities of the transferee company and any property may, if the order so directs, be freed from any charge which shall by virtue of the compromise or arrangement, cease to have effect.

(5) Every company in relation to which the order is made shall cause a certified copy of the order to be filed with the Registrar for registration within thirty days of the receipt of certified copy of the order.(6) The scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date.150

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(7) Every company in relation to which the order is made shall, until the completion of the scheme, file a statement in such form and within such time as may be prescribed with the Registrar every year duly certified by a chartered accountant or a cost accountant or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the

Tribunal or not.(8) If a transferor company or a transferee company contravenes the provisions of this section, the transferor company or the transferee company, as the case may be, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of such transferor or transferee company who is in default, shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both.151

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Explanation.

—For the purposes of this section,—(i) in a scheme involving a merger, where under the scheme the undertaking, property and liabilities of one or more companies, including the company in respect of which the compromise or arrangement is proposed, are to be transferred to another existing company, it is a merger by absorption, or where the undertaking, property and liabilities of two or more companies, including the company in respect of which the compromise or arrangement is proposed, are to be transferred to a new company, whether or not a public company, it is a merger by formation of a new company;(ii) references to merging companies are in relation to a merger by absorption, to the transferor and transferee companies, and, in relation to a merger by formation of a new company, to the transferor companies;152

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(iii) a scheme involves a division, where under the scheme the undertaking, property and liabilities of the company in respect of which the compromise or arrangement is proposed are to be divided among and transferred to two or more companies each of which is either an existing company or a new company; and

(iv) property includes assets, rights and interests of every description and liabilities include debts and obligations of every description.153

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PREVENTION OF OPPRESSION AND MISMANAGEMENT

APPLICATION TO TRIBUNAL FOR REILEF IN CASE OF OPPRESSION Section 241. (1) Any member of a company who complains that— (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company or(b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the154

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company’s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under the Chapter.(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter.155

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POWERS OF TRIBUNAL

Section 242. (1) If, on any application made under section 241, the Tribunal is of the opinion— (a) that the company’s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company; and(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the that sub-section may provide for—matters complained of, make such order as it thinks fit.(2) Without prejudice to the generality of the powers under sub-section (1), an order under (a) the regulation of conduct of affairs of the company in future156

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(

b) the purchase of shares or interests of any members of the company by other members thereof or by the company(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital(d) restrictions on the transfer or allotment of the shares of the company(e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case(f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in Section (e): Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned157

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(

g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference;(h) removal of the managing director, manager or any of the directors of the company;(i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under Section (h);(k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct;

158

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(

l) imposition of costs as may be deemed fit by the Tribunal;(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made.(3) A certified copy of the order of the Tribunal; under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal;(4) The Tribunal; may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company’s affairs upon such terms and conditions as appear to it to be just and equitable.(5) Where an order of the Tribunal; under sub-section (1) makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the

Tribunal

;

, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.

159

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(

6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered.(7) A certified copy of every order altering, or giving leave to alter, a company’s memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same.(8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

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Consequence of termination or modification of certain agreements

Section 243: (1) Where an order made under section 242 terminates, sets aside or modifies an agreement such as is referred to in sub-section (2) of that section,—(a) such order shall not give rise to any claims whatever against the company by any person for damages or for compensation for loss of office or in any other respect either in pursuance of the agreement or otherwise;(b) no managing director or other director or manager whose agreement is so terminated or set aside shall, for a period of five years from the date of the order terminating or setting aside the agreement, without the leave of the Tribunal; be appointed, or act, as the managing director or other director or manager of the company:Provided that the Tribunal; shall not grant leave under this Section unless notice of the intention to apply for161

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leave has been served on the Central Government and that Government has been given a reasonable opportunity of being heard in the matter.

(2) Any person who knowingly acts as a managing director or other director or manager of a company in contravention of Section (b) of sub-section (1), and every other director of the company who is knowingly a party to such contravention, shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to five lakh rupees, or with both.162

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RIGHT TO APPLY UNDER SECTION 241

Section 244.: (1) The following members of a company shall have the right to apply under section 241, namely:—(a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares;(b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members:Provided that the Tribunal; may, on an application made to it in this behalf, waive all or any of the requirements specified in Section (a) or Section (b) so as to enable the members to apply under section 241.163

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Explanation.

—For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member.(2) Where any members of a company are entitled to make an application under subsection(1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.164

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OPPORTUNITIES FOR COMPANY SECRETARIES, cost accountants, charted accountants

165

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ADMINISTRATORS

Section 259 of the Companies Act, 2013 provides that an interim or a company administrator shall be appointed by the Tribunal; from a databank maintained by the Central Government comprising of company secretaries, chartered accountants, cost and work accountants and other professionals.RIGHT TO LEGAL REPRESENTATION Section 432 of the Companies Act, 2013 states that a party to any proceeding before the NCLT or NCLAT may either appear in person or authorise one or more chartered accountants, company secretaries, cost and accountants or legal practitioners to appear on his/her behalf.166

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LIQUIDATORS

Section 275 of the Companies Act, 2013 provides that the Tribunal; may appoint as a provisional or company liquidator from a panel maintained by the central government, comprising of, an advocate, company secretary, chartered accountant, cost and works accountant, Or firms or body corporate of advocates, company secretaries, chartered accountants, etc. Or a firm or body corporate which is a combination of professionals, having at least 10 years experience.Section 310 further provides the appointment of a company liquidator by the directors of the company in case of Voluntary Winding up.167

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TECHNICAL MEMBERS

Section 409(3) provides that the following persons shall be eligible for becoming a Technical member :Who has for the past 15 years been a member of the Indian Corporate Law Service or Indian Legal Service orChartered Accountant for at least 15 years orCost Accountant for at least 15 years orCompany Secretary for at least 15 years orA person of proven ability and integrity and standing having special knowledge and experience for at least 15 years, in law, Industrial finance, industrial management or administration, industrial reconstruction, investment accountancy, labour)168

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matters or such other disciplines related to management, conduct of affairs, revival, rehabilitation and winding up of companies

A presiding officer of a labour court, Tribunal; or national Tribunal; constituted under the industrial Dispute Act, 1947(For at least 5 years169

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ADVANTAGES FOR PROFESSIONALS

A boon for professionalsA clear reading of all the provisions listed above reveal the endeavor of the law makers to consolidate professionals, having expertise in the field of corporate law, under one roof. This would help in :Expeditiously dealing with company law matters. Paving way for private liquidators.Reducing friction. Consolidating professionals under one roof. 170

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Reduction of capital

Section 66: (1) Subject to confirmation by the Tribunal; on an application by the company, a company limited by shares or limited by guarantee and having a share capital may, by a special resolution, reduce the share capital it , may—(a) extinguish or reduce the liability on any of its shares in respect of the share capital not paid-up or(b) either with or without extinguishing or reducing liability on any of its shares—(i) cancel any paid-up share capital which is lost or is unrepresented by available assets or(ii) pay off any paid-up share capital which is in excess of the wants of the company, 171

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alter its memorandum by reducing the amount of its share capital and of its shares accordingly: Provided that no such reduction shall be made if the company is in arrears in the repayment of any deposits accepted by it, either before or after the commencement of this Act, or the interest payable thereon.(2) The Tribunal; shall give notice of every application made to it under sub-section (1) to the Central Government, Registrar and to the Securities and Exchange Board, in the case of listed companies, and the creditors of the company and shall take into consideration the representations, if any, made to it by that Government, Registrar, the Securities and Exchange Board and the creditors within a period of three months from the date of receipt of the notice Where no representation has been received within the said period, it shall be presumed that they have no objection to the reduction.(3) The Tribunal;, if it is satisfied that the debt or claim of every creditor of the company has been discharged or determined or has been secured or his consent is obtained, may make an order confirming the reduction of share capital on such terms and conditions as it deems fit:172

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Provided that no application for reduction of share capital shall be sanctioned by the

Tribunal; unless the accounting treatment, proposed by the company for such reduction is in conformity with the accounting standards specified in section 133 or any other provision of this Act and a certificate to that effect by the company’s auditor has been filed with the Tribunal;(4) The order of confirmation of the reduction of share capital by the Tribunal; under sub-section (3) shall be published by the company in a manner as the Tribunal; may direct.(5) The company shall deliver a certified copy of the order of the Tribunal; under subsection (3) and of a minute approved by the Tribunal; showing—(a) the amount of share capital

(b) the number of shares into which it is to be divided(c

) the amount of each share and

(

d

) the amount, if any, at the date of registration deemed to be paid-up on each share, to the Registrar within thirty days of the receipt of the copy of the order, who shall register the same and issue a certificate to that effect.

(

6

)

Nothing in this section shall apply to buy-back of its own securities by a company under section 68.

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(

7) A member of the company, past or present, shall not be liable to any call or contribution in respect of any share held by him exceeding the amount of difference, if any, between the amount paid on the share, or reduced amount, if any, which is to be deemed to have been paid thereon, as the case may be, and the amount of the share as fixed by the order of reduction.(8) Where the name of any creditor entitled to object to the reduction of share capital under this section is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with respect to his debt or claim, not entered on the list of creditors, and after such reduction, the company is unable, within the meaning of sub-section (2) of section 271, to pay the amount of his debt or claim,—174

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(

a) every person, who was a member of the company on the date of the registration of the order for reduction by the Registrar, shall be liable to contribute to the payment of that debt or claim, an amount not exceeding the amount which he would have been liable to contribute if the company had commenced winding up on the day immediately before the said date; and(b) if the company is wound up, the Tribunal; may, on the application of any such creditor and proof of his ignorance as aforesaid, if it thinks fit, settle a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up.(9) Nothing in sub-section (8) shall affect the rights of the contributories among themselves.175

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(10

) If any officer of the company—(a) knowingly conceals the name of any creditor entitled to object to the reduction(b) knowingly misrepresents the nature or amount of the debt or claim of any creditor, or(c) abets or is privy to any such concealment or misrepresentation as aforesaid, he shall be liable under section 447.(11) If a company fails to comply with the provisions of sub-section (4), (Publishing of the order )it shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees.176

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REVIVAL AND REHABILITATION OF SICK COMPANIES

Section 253. Determination of Sickness (1) Where on a demand by the secured creditors of a company representing fifty per cent. or more of its outstanding amount of debt, the company has failed to pay the debt within a period of thirty days of the service of the notice of demand or to secure or compound it to the reasonable satisfaction of the creditors, any secured creditor may file an application to the Tribunal; in the prescribed manner along with the relevant evidence for such default, non-repayment or failure to offer security or compound it, for a determination that the company be declared as a sick company.(2) The applicant under sub-section (1) may, along with an application under that subsection or at any stage of the proceedings thereafter, make an application for the stay of any proceeding for the winding up of the company or for execution, distress or the like against any property and assets177

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of the company or for the appointment of a receiver in respect thereof and that no suit for the recovery of any money or for the enforcement of any security against the company shall lie or be proceeded with.3) The Tribunal; may pass an order in respect of an application under sub-section (2) which shall be operative for a period of one hundred and twenty days.4) The company referred to in sub-section (1) may also file an application to the Tribunal on one or more of the grounds specified in sub-sections (1) and (2) above.(5) Without prejudice to the provisions of sub-sections (1) to (4), the Central Government or the Reserve Bank of India or a State Government or a public financial institution or a State level institution or a scheduled bank may, if it has sufficient reasons to believe that any company has become, for the purposes of this Act, a sick company, make a reference in respect of such company to the Tribunal for determination of the measures which may be adopted with respect to such company:178

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Provided that a reference shall not be made under this sub-section in respect of any company by—

(a) the Government of any State unless all or any of the undertakings belonging to such company are situated in such State (b) a public financial institution or a State level institution or a scheduled bank unless it has, by reason of any financial assistance or obligation rendered by it, or undertaken by it, with respect to such company, an interest in such company.(6) Where an application under sub-section (1) or (4) has been filed— (a) the company shall not dispose of or otherwise enter into any obligation with regard to, its properties or assets except as required in the normal course of business; (b) the Board of Directors shall not take any steps likely to prejudice the interests of the creditors.179

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(

7) The Tribunal shall, within a period of sixty days of the receipt of an application under sub-section (1) or (4), determine whether the company is a sick company or not: Provided that no such determination shall be made in respect of an application under sub-section (1) unless the company has been given notice of the application and a reasonable opportunity to reply to the notice within thirty days of the receipt thereof.(8) If the Tribunal is satisfied that a company has become a sick company, the Tribunal shall, after considering all the relevant facts and circumstances of the case, decide, as soon as may be, by an order in writing, whether it is practicable for the company to make the repayment of its debts referred to in sub-section (1) within a reasonable time.(9) If the

Tribunal deems fit under sub-section (8) that it is practicable for a sick company to pay its debts referred to in that sub-section within a reasonable time, the

Tribunal

shall, by order in writing and subject to such restrictions or conditions as may be specified in the order, give such time to the company as it may deem fit to make repayment of the debt.

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Application for revival and rehabilitation

Section 254: (1) On the determination of a company as a sick company by the Tribunal under section 253, any secured creditor of that company or the company may make an application to the Tribunal for the determination of the measures that may be adopted with respect to the revival and rehabilitation of such company:Provided that in case any reference had been made before the Tribunal and a scheme for revival and rehabilitation submitted, such reference shall abate if the secured creditors representing three-fourths in value of the amount outstanding against financial assistance disbursed to the borrower have taken measures to recover their secured debt under sub-section (4) of section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002:181

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Provided further that no reference shall be made under this section if the secured creditors representing three-fourths in value of the amount outstanding against financial assistance disbursed to the borrower have taken measures to recover their secured debt under sub-section (

4) of section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002:Provided also that where the financial assets of the sick company had been acquired by any securitisation company or reconstruction company under sub-section (1) of section 5 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, no such application shall be made without the consent of securitisation company or reconstruction company which has acquired such assets.182

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(

2) An application shall be accompanied by— (a) audited financial statements of the company (b) such particulars and documents, along with such fees as may be prescribed and (c) a draft scheme of revival and rehabilitation of the company Where the sick company has no draft scheme of revival and rehabilitation to offer, it shall file a declaration to that effect along with the application.(3) An application shall be made to the Tribunal within a period of sixty days from the date of determination of the company as a sick company by the Tribunal under section 253.183

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Exclusion of certain time in computing period of Limitation

section 255 provides that in computing the period of limitation for any suit or application, In the name and on behalf of a company for which an application has been made to the Tribunal for a determination to be declared as a sick company or at any stage thereafter, the period during which the stay order provided under sub section (3) of section b253, was applicable shall be excluded.184

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APPOINTMENT OF INTERIM ADMINISTRATOR

Section 256: (1) On the receipt of an application under section 254, the Tribunal shall, not later than seven days from such receipt,—(a) fix a date for hearing not later than ninety days from date of its receipt(b) appoint an interim administrator to convene a meeting of creditors of the company in accordance with the provisions of section 257 to be held not later than forty-five days from receipt of the order of the Tribunal appointing him to consider whether on the basis of the particulars and documents furnished with the application made under section 254, the draft scheme, if any, filed along with such application or otherwise and any other material available, it is possible to revive and rehabilitate the sick company and such other matters, which the interim administrator185

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may consider necessary for the purpose and to submit his report to the Tribunal within sixty days from the date of the order Provided that where no draft scheme is filed by the company and a declaration has been made to that effect by the Board of Directors, the Tribunal may direct the interim administrator to take over the management of the company and (c) issue such other directions to the interim administrator as the Tribunal may consider necessary to protect and preserve the assets of the sick company and for its proper management. (2) Where an interim administrator has been directed to take over the management of the company, the directors and the management of the company shall extend all possible assistance and cooperation to the interim administrator to manage the affairs of the company.186

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COMMITTEE OF CREDITORS

Section 257: (1) The interim administrator shall appoint a committee of creditors with such number of members as he may determine, but not exceeding seven, and as far as possible a representative each of every class of creditors should be represented in that committee. (2) The holding of the meeting of the committee of creditors and the procedure to be followed at such meetings, including the appointment of its chairperson, shall be decided by the interim administrator. (3) The interim administrator may direct any promoter, director or any key managerial personnel to attend any meeting of the committee of creditors and to furnish such information as may be considered necessary by the interim administrator.187

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ORDER OF THE TRIBUNAL

Section 258: On the date of hearing fixed by the Tribunal and on consideration of the report of the interim administrator filed under sub-section (1) of section 256, if the Tribunal is satisfied that the creditors representing three-fourths in value of the amount outstanding against the sick company present and voting have resolved that— (a) it is not possible to revive and rehabilitate such company, the Tribunal shall record such opinion and order that the proceedings for the winding up of the company be initiated; or (b) by adopting certain measures the sick company may be revived and rehabilitated, the Tribunal shall appoint a company administrator for the company and cause such administrator to prepare a scheme of revival and rehabilitation of the sick company Provided that the Tribunal may, if it thinks fit, appoint an interim administrator as the company administrator.188

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APPOINTMENT OF ADMINISTRATOR

Section 259: (1) The interim administrator or the company administrator, as the case may be, shall be appointed by the Tribunal from a databank maintained by the Central Government or any institute or agency authorised by the Central Government in a manner as may be prescribed consisting of the names of company secretaries, chartered accountants, cost accountants and such other professionals as may, by notification, be specified by the Central Government. (2) The terms and conditions of the appointment of interim and company administrators shall be such as may be ordered by the Tribunal . (3) The Tribunal may direct the company administrator to take over the assets or management of the company and for the purpose of assisting him in the management of the company, the company administrator may, with the approval of the Tribunal , engage the services of suitable expert or experts.189

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Power and duties of companies administrator

Section 260: (1) The company administrator shall perform such functions as the Tribunal may direct. (2) Without prejudice to the provisions of sub-section (1), the company administrator may cause to be prepared with respect to the company— (a) a complete inventory of— (i) all assets and liabilities of whatever nature (ii) all books of account, registers, maps, plans, records, documents of title and all other documents of whatever nature (b) a list of shareholders and a list of creditors showing separately in the list of creditors, the secured creditors and unsecured creditors 190

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(c) a valuation report in respect of the shares and assets in order to arrive at the reserve price for the sale of any industrial undertaking of the company or for the fixation of the lease rent or share exchange ratio; (d) an estimate of the reserve price, lease rent or share exchange ratio (e) proforma accounts of the company, where no up-to-date audited accounts are available and (f) a list of workmen of the company and their dues referred to in sub-section (3) of section 325.191

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SCHEME OF REVIVAL AND REHABILITATION

261. (1) The company administrator shall prepare or cause to be prepared a scheme of revival and rehabilitation of the sick company after considering the draft scheme filed along with the application under section 254. (2) A scheme prepared in relation to any sick company under sub-section (1) may provide for any one or more of the following measures, namely:— (a) the financial reconstruction of the sick company (b) the proper management of the sick company by any change in, or by taking over, the management of such company; (c) the amalgamation of—192

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(

i) the sick company with any other company or(ii) any other company with the sick company(d) takeover of the sick company by a solvent company(e) the sale or lease of a part or whole of any asset or business of the sick company(f) the rationalisation of managerial personnel, supervisory staff and workmen in accordance with law(g) such other preventive, ameliorative and remedial measures as may be appropriate(h) repayment or rescheduling or restructuring of the debts or obligations of the sick company to any of its creditors or class of creditors(i) such incidental, consequential or supplemental measures as may be necessary or expedient in connection with or for the purposes of the measures specified in sections (a) to (h).193

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Sanction of scheme

Section 262: (1) The scheme prepared by the company administrator under section 261 shall be placed before the creditors of the sick company in a meeting convened for their approval by the company administrator within the period of sixty days from his appointment, which may be extended by the Tribunal up to a period not exceeding one hundred twenty days.(2) The company administrator shall convene separate meetings of secured and unsecured creditors of the sick company and if the scheme is approved by the unsecured creditors representing one-fourth in value of the amount owed by the company to such creditors and the secured creditors, representing three-fourths in value of the amount outstanding against financial assistance disbursed by such creditors to the sick company, the company administrator shall submit the scheme before the Tribunal for sanctioning the scheme:194

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The

Tribunal shall send the draft scheme, to the sick company and the company administrator and in the case of amalgamation, also to any company concerned, and may publish or cause to be published the draft scheme in brief in such daily newspaper as it may consider necessary, for suggestions and objections, if ant within such period as the Tribunal may specify. Where a sanctioned scheme provides for the transfer of any property or liability of the sick company to any other company or person or where such scheme provides for the transfer of any property or liability of any other company or person in favour of the sick company, then by virtue of and to the extent provided in the scheme, on and from the date of coming into operation of the sanctioned scheme or any provision thereof, the property shall be transferred to and vest in and the liability shall become the liability of such other company or person or as the case may be, the sick Company.195

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SCHEME TO BE BINDING

Section 263: On and from the date of the coming into operation of the sanctioned scheme or any provision , the scheme or such provision shall be binding on the sick company Scheme to be binding. and the transferee company or, as the case may be, the other company and also on the employees, shareholders, creditors and guarantors of the said companies.IMPLEMENTATION OF THE SCHEMESection 264: (1) The Tribunal shall, for the purpose of effective implementation of the scheme, have power to enforce, modify or terminate any contract or agreement or any obligation pursuant to such agreement or contract entered into by the company with any other person. (2) The Tribunal may, if it deems necessary or expedient so to do, by order in writing,196

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authorise

the company administrator appointed under section 259 to implement a sanctioned scheme till its successful implementation on such terms and conditions as may be specified in the order and may for that purpose require him to file periodic reports on the implementation of the sanctioned scheme.(3) Where the whole or substantial assets of the undertaking of the sick company are sold under a sanctioned scheme, the sale proceeds shall be applied towards implementation of the scheme in such manner as the Tribunal may direct: Provided that debtors and creditors shall have the power to scrutinise and make an appeal for review of the value before final order of fixing value.(4) Where it is difficult to implement the scheme for any reason or the scheme fails due to non-implementation of obligations under the scheme by the parties concerned, the company administrator authorised to implement the scheme and where there is no such administrator,197

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the company, the secured creditors, or the transferee company in a case of amalgamation, may make an application before the

Tribunal for modification of the scheme or to declare the scheme as failed and that the company may be wound up. (5) The Tribunal shall, within thirty days of presentation of an application under sub-section (4), pass an order for modification of the scheme or, as the case may be, declaring the scheme as failed and pass an order for the winding up of the company if three-fourths in value of the secured creditors consent to the modification of the scheme or winding up of the company.(6) Where an application under sub-section (4) has been made before the Tribunal and such application is pending before it, such application shall abate, if the secured creditors representing not less than three-fourths in value of the amount outstanding against financial assistance disbursed to the sick company have taken any measures to recover their secured debt under sub-section (4) of section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.198

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WINDING UP OF COMPANY ON REPORT OF COMPANY ADMINISTRATION

Section 265. (1) If the scheme is not approved by the creditors in the manner specified in sub-section (2) of section 262, the company administrator shall submit a report to the Tribunal within fifteen days and the Tribunal shall order for the winding up of the sick company. (2) On the passing of an order under sub-section (1), the Tribunal shall conduct the proceedings for winding up of the sick company in accordance with the provisions of Chapter XX.199

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POWER OF TRIBUNAL TO ASSESS DAMAGES AGAINST DELIQUENT DIRECTORS, etc

Section 266: (1) If, in the course of the scrutiny or implementation of any scheme or proposal including the draft scheme or proposal, it appears to the Tribunal that any person who has taken part in the promotion, formation or management of the sick company or its undertaking, including any director, manager, officer or employee of the sick company who are or have been in employment of such company,—(a) has misapplied or retained, or become liable or accountable for, any money or property of the sick company; or(b) has been guilty of any misfeasance, malfeasance, non-feasance or breach of trust in relation to the sick company, it may, by order, direct him to repay or restore the money or property, with or without interest, as it thinks just, or to contribute such sum to the assets of the sick company or the other person, entitled thereto by way of compensation in respect of the misapplication, retainer, misfeasance, malfeasance, non-feasance or breach of trust as the Tribunal thinks just and proper:200

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Provided that such direction by the

Tribunal shall be without prejudice to any other legal action that may be taken against the person including any punishment for fraud in the manner as provided in section 447.(2) If the Tribunal is satisfied on the basis of the information and evidence in its possession with respect to any person who is or was a director or an officer or other employee of the sick company, that such person by himself or along with others had diverted the funds or other property of such company for any purpose other than the purposes of the company or had managed the affairs of the company in a manner highly detrimental to the interests of the company, the Tribunal shall, by order, direct the public financial201

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institutions, scheduled banks and State level institutions not to provide, for a maximum period of ten years from the date of the order, any financial assistance to such person or any firm of which such person is a partner or any company or other body corporate of which such person is a director, by whatever name called, or to disqualify the said director, promoter, manager from being appointed as a director in any company registered under this Act for a maximum period of six years.

(3) No order shall be made by the Tribunal under this section against any person unless such person has been given a reasonable opportunity of being heard.202

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PUNISHMENT FOR CERTAIN OFFENCES

Section 267. Whoever violates the provisions of this Chapter or any scheme, or any order, of the Tribunal or the Appellate Tribunal or makes a false statement or gives false evidence before the Tribunal or the Appellate Tribunal or attempts to tamper with the records of reference or appeal filed under this Act, he shall be punishable with imprisonment for a term which may extend to seven years and with fine which may extend to ten lakh rupees.203

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BAR OF JURISDICTION

Section 268. No appeal shall lie in any court or other authority and no civil court shall have any jurisdiction in respect of any matter in respect of which the Tribunal or the Appellate Tribunal is empowered by or under this Chapter and no injunction shall be granted by any court or other authority in respect of any action taken or proposed to be taken in pursuance of any power conferred by or under this Chapter.204

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REHABILITAION AND INSOLVENCY FUND

Section 269. (1) There shall be formed a Fund to be called the Rehabilitation and Insolvency Fund for the purposes of rehabilitation, revival and liquidation of the sick companies.(2) There shall be credited to the Fund—(a) the grants made by the Central Government for the purposes of the Fund;(b) the amount deposited by the companies as contribution to the Fund;(c) the amount given to the Fund from any other source; and(d) the income from investment of the amount in the Fund.(3) A company which has contributed any amount to the Fund shall, in the event of proceedings initiated in respect of such company under this Chapter or Chapter XX, may make an application to the Tribunal for withdrawal of funds not exceeding the amount contributed by it, for making payments to workmen, protecting the assets of the company or meeting the incidental costs during proceedings.(4) The Fund shall be managed by an administrator to be appointed by the Central Government in such manner as may be prescribed

205

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WINDING UPMODES OF WINDING UP.Section 270: (1) provides that The winding up of a company may be either— (a) by the Tribunal ; or (b) voluntary.(2) Notwithstanding anything contained in any other Act, the provisions of this Act with respect to winding up shall apply to the winding up of a company in any of the modes specified under sub-section (1).206

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Circumstances in which company

may be wound up by Tribunal.Section 271: (1) A company may, on a petition under section 272, be wound up by the Tribunal ,—(a) if the company is unable to pay its debts(b) if the company has, by special resolution, resolved that the company be wound up by the Tribunal (c) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;(d) if the Tribunal has ordered the winding up of the company under Chapter XIX(e) if on an application made by the Registrar or any other person authorized by the Central Government by notification under this Act, the Tribunal is of the opinion that the affairs207

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of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up

(f) if the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years; or (g) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.208

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(2) A company shall be deemed to be unable to pay its debts,—

(a) if a creditor, by assignment or otherwise, to whom the company is indebted for an amount exceeding one lakh rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand requiring the company to pay the amount so due and the company has failed to pay the sum within twenty-one days after the receipt of such demand or to provide adequate security or re-structure or compound the debt to the reasonable satisfaction of the creditor;(b) if any execution or other process issued on a decree or order of any court or Tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part; or(c) if it is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Tribunal shall take into account the contingent and prospective liabilities of the company.209

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Petition for winding up

Section 272: (1) Subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by—(a) the company;(b) any creditor or creditors, including any contingent or prospective creditor or creditors;(c) any contributory or contributories;(d) all or any of the persons specified in Sections (a), (b) and (c) together;(e) the Registrar;(f) any person authorised by the Central Government in that behalf; or(g) in a case falling under Section (c) of sub-section (1) of section 271, by the Central Government or a State Government.210

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(

2) A secured creditor, the holder of any debentures, whether or not any trustee or trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures shall be deemed to be creditors within the meaning of Section (b) of sub-section (1).(3) A contributory shall be entitled to present a petition for the winding up of a company, notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of its liabilities, and shares in respect of which he is a contributory or some of them were either originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up or have devolved on him through the death of a former holder.211

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(4) The Registrar shall be entitled to present a petition for winding up under subsection (1) on any of the grounds specified in sub-section (1) of section 271, except on the grounds specified in Section (b), Section (d) or Section (g) of that sub-section:

Provided that the Registrar shall not present a petition on the ground that the company is unable to pay its debts unless it appears to him either from the financial condition of the company as disclosed in its balance sheet or from the report of an inspector appointed under section 210 that the company is unable to pay its debts:Provided further that the Registrar shall obtain the previous sanction of the Central Government to the presentation of a petition:Provided also that the Central Government shall not accord its sanction unless the company has been given a reasonable opportunity of making representations.212

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(

5) A petition presented by the company for winding up before the Tribunal shall be admitted only if accompanied by a statement of affairs in such form and in such manner as may be prescribed.(6) Before a petition for winding up of a company presented by a contingent or prospective creditor is admitted, the leave of the Tribunal shall be obtained for the admission of the petition and such leave shall not be granted, unless in the opinion of the Tribunal there is a prima facie case for the winding up of the company and until such security for costs has been given as the Tribunal thinks reasonable.(7) A copy of the petition made under this section shall also be filed with the Registrar and the Registrar shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of receipt of such petition213

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POWER OF TRIBUNAL

Section 273. (1) The Tribunal may, on receipt of a petition for winding up under section 272 pass any of the following orders, namely:—(a) dismiss it, with or without costs;(b) make any interim order as it thinks fit;(c) appoint a provisional liquidator of the company till the making of a winding up order;(d) make an order for the winding up of the company with or without costs; or(e) any other order as it thinks fit:214

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Provided that an order under this sub-section shall be made within ninety days from the date of presentation of the petition

Provided further that before appointing a provisional liquidator under Section (c), the Tribunal shall give notice to the company and afford a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such noticeProvided also that the Tribunal shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the company has no assets.215

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(2) Where a petition is presented on the ground that it is just and equitable that the company should be wound up, the

Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing the other remedy.216

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Directions for filing statement of affairs.

Section 274: (1) Where a petition for winding up is filed before the Tribunal by any person other than the company, the Tribunal shall, if satisfied that a prima facie case for winding up of the company is made out, by an order direct the company to file its objections along with a statement of its affairs within thirty days of the order in such form and in such manner as may be prescribed: Provided that the Tribunal may allow a further period of thirty days in a situation of contingency or special circumstances: Provided further that the Tribunal may direct the petitioner to deposit such security for costs as it may consider reasonable as a precondition to issue directions to the company.(2) A company, which fails to file the statement of affairs as referred to in sub-section (1), shall forfeit the right to oppose the petition and such directors and officers of the company as found responsible for such non-compliance, shall be liable for punishment under sub-section (4).217

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(3) The directors and other officers of the company, in respect of which an order for winding up is passed by the

Tribunal under Section (d) of sub-section (1) of section 273, shall, within a period of thirty days of such order, submit, at the cost of the company, the books of account of the company completed and audited up to the date of the order, to such liquidator and in the manner specified by the Tribunal.(4) If any director or officer of the company contravenes the provisions of this section, the director or the officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.(5) The complaint may be filed in this behalf before the Special Court by Registrar, provisional liquidator, Company Liquidator or any person authorised by the Tribunal.218

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Company Liquidators and their appointments.

Section 275: (1) For the purposes of winding up of a company by the Tribunal, the Tribunal at the time of the passing of the order of winding up, shall appoint an Official Liquidator or a liquidator from the panel maintained under sub-section (2) as the Company Liquidator.(2) The provisional liquidator or the Company Liquidator, as the case may be, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered accountants, advocates, company secretaries, cost accountants or firms or bodies corporate having such chartered accountants, advocates, company secretaries, cost accountants and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years’ experience in company matters.219

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(3) Where a provisional liquidator is appointed by the

Tribunal, the Tribunal may limit and restrict his powers by the order appointing him or it or by a subsequent order, but otherwise he shall have the same powers as a liquidator.(4) The Central Government may remove the name of any person or firm or bodycorporate from the panel maintained under sub-section (2) on the grounds of misconduct, fraud, misfeasance, breach of duties or professional incompetence: Provided that the Central Government before removing him or it from the panel shall give him or it a reasonable opportunity of being heard.220

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(

5) The terms and conditions of appointment of a provisional liquidator or Company Liquidator and the fee payable to him or it shall be specified by the Tribunal on the basis of task required to be performed, experience, qualification of such liquidator and size of the company.(6) On appointment as provisional liquidator or Company Liquidator, as the case may be, such liquidator shall file a declaration within seven days from the date of appointment in the prescribed form disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the Tribunal and such obligation shall continue throughout the term of his appointment.(7) While passing a winding up order, the Tribunal may appoint a provisional liquidator, if any, appointed under Section (c) of sub-section (1) of section 273, as the Company Liquidator for the conduct of the proceedings for the winding up of the company.221

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Removal and replacement of liquidator.

Section 276: (1) The Tribunal may, on a reasonable cause being shown and for reasons to be recorded in writing, remove the provisional liquidator or the Company Liquidator, as the case may be, as liquidator of the company on any of the following grounds, namely:—(a) misconduct(b) fraud or misfeasance(c) professional incompetence or failure to exercise due care and diligence in performance of the powers and functions(d) inability to act as provisional liquidator or as the case may be, Company Liquidator(e) conflict of interest or lack of independence during the term of his appointment that would justify removal.222

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(2) In the event of death, resignation or removal of the provisional liquidator or as the case may be, Company Liquidator, the

Tribunal may transfer the work assigned to him or it to another Company Liquidator for reasons to be recorded in writing.(3) Where the Tribunal is of the opinion that any liquidator is responsible for causing any loss or damage to the company due to fraud or misfeasance or failure to exercise due care and diligence in the performance of his or its powers and functions, the Tribunal may recover or cause to be recovered such loss or damage from the liquidator and pass such other orders as it may think fit.(4) The Tribunal shall, before passing any order under this section, provide a reasonable opportunity of being heard to the provisional liquidator or, as the case may be, Company Liquidator.223

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Intimation to Company Liquidator, provisional liquidator and Registrar.

Section 277. (1) Where the Tribunal makes an order for appointment of provisional liquidator or for the winding up of a company, it shall, within a period not exceeding seven days from the date of passing of the order, cause intimation thereof to be sent to the Company Liquidator or provisional liquidator, as the case may be, and the Registrar.(2) On receipt of the copy of order of appointment of provisional liquidator or winding up order, the Registrar shall make an endorsement to that effect in his records relating to the company and notify in the Official Gazette that such an order has been made and in the case of a listed company, the Registrar shall intimate about such appointment or order, as the case may be, to the stock exchange or exchanges where the securities of the company are listed.(3) The winding up order shall be deemed to be a notice of discharge to the officers, employees and workmen of the company, except when the business of the company is continued.224

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(4) Within three weeks from the date of passing of winding up order, the Company Liquidator shall make an application to the

Tribunal for constitution of a winding up committee to assist and monitor the progress of liquidation proceedings by the Company Liquidator in carrying out the function as provided in sub-section (5) and such winding up committee shall comprise of the following persons, namely:—(i) Official Liquidator attached to the Tribunal(ii) nominee of secured creditors; and(iii) a professional nominated by the Tribunal.(5) The Company Liquidator shall be the convener of the meetings of the winding up committee which shall assist and monitor the liquidation proceedings in following areas of liquidation functions, namely:—(i) taking over assets(ii) examination of the statement of affairs225

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(iii) recovery of property, cash or any other assets of the company including benefits derived there from

(iv) review of audit reports and accounts of the company(v) sale of assets(vi) finalisation of list of creditors and contributories(vii) compromise, abandonment and settlement of claims;(viii) payment of dividends, if any and(ix) any other function, as the Tribunal may direct from time to time.(6) The Company Liquidator shall place before the Tribunal a report along with minutes of the meetings of the committee on monthly basis duly signed by the members present in the meeting for consideration till the final report for dissolution of the company is submitted before the Tribunal.(7) The Company Liquidator shall prepare the draft final report for consideration and approval of the winding up committee.(8) The final report so approved by the winding up committee shall be submitted by the Company Liquidator before the Tribunal for passing of a dissolution order in respect of the company.226

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Effect of winding up order.

278. The order for the winding up of a company shall operate in favour of all the creditors and all contributories of the company as if it had been made out on the joint petition of creditors and contributories.227

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Stay of suits, etc., on winding up order.

Section 279. (1) When a winding up order has been passed or a provisional liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, by or against the company, except with the leave of the Tribunal and subject to such terms as the Tribunal may impose: Provided that any application to the Tribunal seeking leave under this section shall be disposed of by the Tribunal within sixty days.(2) Nothing in sub-section (1) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.228

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Jurisdiction of Tribunal.

Section 280: The Tribunal shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of,—(a) any suit or proceeding by or against the company(b) any claim made by or against the company, including claims by or against any of its branches in India(c) any application made under section 233(d) any scheme submitted under section 262(e) any question of priorities or any other question whatsoever, whether of law or facts, including those relating to assets, business, actions, rights, entitlements, privileges, benefits, duties, responsibilities, obligations or in any matter arising out of, or in relation to winding up of the company, whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made or such scheme has been submitted, or is submitted, before or after the order for the winding up of the company is made.229

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Submission of report by Company Liquidator.

Section 281. (1) Where the Tribunal has made a winding up order or appointed a Company Liquidator, such liquidator shall, within sixty days from the order, submit to the Tribunal, a report containing the following particulars, namely:—(a) the nature and details of the assets of the company including their location and value, stating separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held by the companyProvided that the valuation of the assets shall be obtained from registered valuers for this purpose(b) amount of capital issued, subscribed and paid-up(c) the existing and contingent liabilities of the company including names, addresses and occupations of its creditors, stating separately the amount of secured and unsecured debts, and in the case of secured debts, particulars of the securities given, whether by the company or an officer thereof, their value and the dates on which they were given230

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(d) the debts due to the company and the names, addresses and occupations of the persons from whom they are due and the amount likely to be

realised on account thereof(e) guarantees, if any, extended by the company(f) list of contributories and dues, if any, payable by them and details of any unpaid call(g) details of trade marks and intellectual properties, if any, owned by the company(h) details of subsisting contracts, joint ventures and collaborations, if any(i) details of holding and subsidiary companies, if any(j) details of legal cases filed by or against the company; and(k) any other information which the Tribunal may direct or the Company Liquidator may consider necessary to include.231

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2) The Company Liquidator shall include in his report the manner in which the company was promoted or formed and whether in his opinion any fraud has been committed by any person in its promotion or formation or by any officer of the company in relation to the company since the formation thereof and any other matters which, in his opinion, it is desirable to bring to the notice of the

Tribunal.(3) The Company Liquidator shall also make a report on the viability of the business of the company or the steps which, in his opinion, are necessary for maximizing the value of the assets of the company.(4) The Company Liquidator may also, if he thinks fit, make any further report or reports.(5) Any person describing himself in writing to be a creditor or a contributory of the company shall be entitled by himself or by his agent at all reasonable times to inspect the report submitted in accordance with this section and take copies thereof or extracts there from on payment of the prescribed fees.232

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Directions of Tribunal on report of Company Liquidator.

Section 282. (1) The Tribunal shall, on consideration of the report of the Company Liquidator, fix a time limit within which the entire proceedings shall be completed and the company be dissolved: Provided that the Tribunal may, if it is of the opinion, at any stage of the proceedings, or on examination of the reports submitted to it by the Company Liquidator and after hearing the Company Liquidator, creditors or contributories or any other interested person, that it will not be advantageous or economical to continue the proceedings, revise the time limit within which the entire proceedings shall be completed and the company be dissolved.(2) The Tribunal may, on examination of the reports submitted to it by the Company Liquidator and after hearing the Company Liquidator, creditors or contributories or any other interested person, order sale of the company as a going concern or its assets or part thereof:233

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Provided that the Tribunal may, where it considers fit, appoint a sale committee comprising such creditors, promoters and officers of the company as the

Tribunal may decide to assist the Company Liquidator in sale under this sub-section.(3) Where a report is received from the Company Liquidator or the Central Government or any person that a fraud has been committed in respect of the company, the Tribunal shall, without prejudice to the process of winding up, order for investigation under section 210, and on consideration of the report of such investigation it may pass order and give directions under sections 339 to 342 or direct the Company Liquidator to file a criminal complaint against persons who were involved in the commission of fraud.(4) The Tribunal may order for taking such steps and measures, as may be necessary, to protect, preserve or enhance the value of the assets of the company.(5) The Tribunal may pass such other order or give such other directions as it considers fit.234

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Custody of company's properties.

Section 283: (1) Where a winding up order has been made or where a provisional liquidator has been appointed, the Company Liquidator or the provisional liquidator, as the case may be, shall, on the order of the Tribunal, forthwith take into his or its custody or control all the property, effects and actionable claims to which the company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the company.(2) Notwithstanding anything contained in sub-section (1), all the property and effects of the company shall be deemed to be in the custody of the Tribunal from the date of the order for the winding up of the company.(3) On an application by the Company Liquidator or otherwise, the Tribunal may, at any time after the making of a winding up order, require any contributory for the time being on the list of contributories, and any trustee, receiver, banker, agent, officer or other employee of the company, to pay, deliver, surrender or transfer forthwith, or within such time as the Tribunal directs, to the Company Liquidator, any money, property or books and papers in his custody or under his control to which the company is or appears to be entitled.235

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Settlement of list of contributories and application of assets.

Section 285. (1) As soon as may be after the passing of a winding up order by the Tribunal, the Tribunal shall settle a list of contributories, cause rectification of register of members in all cases where rectification is required in pursuance of this Act and shall cause the assets of the company to be applied for the discharge of its liability:Provided that where it appears to the Tribunal that it would not be necessary to make calls on or adjust the rights of contributories, the Tribunal may dispense with the settlement of a list of contributories.(2) In settling the list of contributories, the Tribunal shall distinguish between those who are contributories in their own right and those who are contributories as being representatives of, or liable for the debts of, others.(3) While settling the list of contributories, the Tribunal shall include every person, who is or has been a member, who shall be liable to contribute to the assets of the company an amount sufficient for payment of the debts and liabilities and the costs, charges and236

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expenses of winding up, and for the adjustment of the rights of the contributories among themselves, subject to the following conditions, namely:—

(a) a person who has been a member shall not be liable to contribute if he has ceased to be a member for the preceding one year or more before the commencement of the winding up;(b) a person who has been a member shall not be liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member;(c) no person who has been a member shall be liable to contribute unless it appears to the Tribunal that the present members are unable to satisfy the contributions required to be made by them in pursuance of this Act;(d) in the case of a company limited by shares, no contribution shall be required from any person, who is or has been a member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as such member;(e) in the case of a company limited by guarantee, no contribution shall be required from any person, who is or has been a member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up but if the company has a share capital, such member shall be liable to contribute to the extent of any sum unpaid on any shares held by him as if the company were a company limited by shares237

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Obligations of directors and managers.

Section 286. In the case of a limited company, any person who is or has been a director or manager, whose liability is unlimited under the provisions of this Act, shall, in addition to his liability, if any, to contribute as an ordinary member, be liable to make a further contribution as if he were at the commencement of winding up, a member of an unlimited company:Provided that —(a) a person who has been a director or manager shall not be liable to make such further contribution, if he has ceased to hold office for a year or upwards before the commencement of the winding up; (b) a person who has been a director or manager shall not be liable to make such further contribution in respect of any debt or liability of the company contracted after he ceased to hold office;(c) subject to the articles of the company, a director or manager shall not be liable to make such further contribution unless the Tribunal deems it necessary to require the contribution in order to satisfy the debts and238

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Advisory committee.

Section 287. (1) The Tribunal may, while passing an order of winding up of a company, direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the Tribunal on such matters as the Tribunal may direct.(2) The advisory committee appointed by the Tribunal shall consist of not more than twelve members, being creditors and contributories of the company or such other persons in such proportion as the Tribunal may, keeping in view the circumstances of the company under liquidation, direct.(3) The Company Liquidator shall convene a meeting of creditors and contributories, as ascertained from the books and documents, of the company within thirty days from the date of order of winding up for enabling the Tribunal to determine the persons who may be members of the advisory committee.(4) The advisory committee shall have the right to inspect the books of account and other documents, assets and properties of the company under liquidation at a reasonable time.(5) The provisions relating to the convening of the meetings, the procedure to be followed thereat and other matters relating other matters relating to conduct of business by the advisory committee shall be such as may be prescribed.(6) The meeting of advisory committee shall be chaired by the Company Liquidator.

239

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Submission of periodical reports to Tribunal.

Section 288. (1) The Company Liquidator shall make periodical reports to the Tribunal and in any case make a report at the end of each quarter with respect to the progress of the winding up of the company in such form and manner as may be prescribed.(2) The Tribunal may, on an application by the Company Liquidator, review the orders made by it and make such modifications as it thinks fit.240

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Power of Tribunal on application for stay of winding up.

Section 289. (1) The Tribunal may, at any time after making a winding up order, on an application of promoter, shareholders or creditors or any other interested person, if satisfied, make an order that it is just and fair that an opportunity to revive and rehabilitate the company be provided staying the proceedings for such time but not exceeding one hundred and eighty days and on such terms and conditions as it thinks fit:Provided that an order under this sub-section shall be made by the Tribunal only when the application is accompanied with a scheme for rehabilitation.(2) The Tribunal may, while passing the order under sub-section (1), require the applicant to furnish such security as to costs as it considers fit.241

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(3) Where an order under sub-section (1) is passed by the

Tribunal, the provisions of Chapter XIX shall be followed in respect of the consideration and sanction of the scheme of revival of the company.(4) Without prejudice to the provisions of sub-section (1), the (3) Where an order under sub-section (1) is passed by the Tribunal, the provisions of Chapter XIX shall be followed in respect of the consideration and sanction of the scheme of revival of the company. may at any time after making a winding up order, on an application of the Company Liquidator, make an order staying the winding up proceedings or any part thereof, for such time and on such terms and conditions as it thinks fit.(5) The Tribunal, l may, before making an order, under this section, require the Company Liquidator to furnish to it a report with respect to any facts or matters which are in his opinion relevant to the application.(6) A copy of every order made under this section shall forthwith be forwarded by the Company Liquidator to the Registrar who shall make an endorsement of the order in his books and records relating to the company.242

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Powers and duties of Company Liquidator.

Section 290: (1) Subject to directions by the Tribunal, if any, in this regard, the Company Liquidator, in a winding up of a company by the Tribunal, shall have the power—(a) to carry on the business of the company so far as may be necessary for the beneficial winding up of the company(b) to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose, to use, when necessary, the company’s seal(c) to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels(d) to sell the whole of the undertaking of the company as a going concern(e) to raise any money required on the security of the assets of the company243

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(f) to institute or defend any suit, prosecution or other legal proceeding, civil or criminal, in the name and on behalf of the company

(g) to invite and settle claim of creditors, employees or any other claimant and distribute sale proceeds in accordance with priorities established under this Act(h) to inspect the records and returns of the company on the files of the Registrar or any other authority(i) to prove rank and claim in the insolvency of any contributory for any balance against his estate, and to receive dividends in the insolvency, in respect of that balance, as a separate debt due from the insolvent, and rateably with the other separate creditors(j) to draw, accept, make and endorse any negotiable instruments including cheque, bill of exchange, hundi or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if such instruments had been drawn, accepted, made or endorsed by or on behalf of the company in the course of its business244

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(k) to take out, in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases, the money due shall, for the purpose of enabling the Company Liquidator to take out the letters of administration or recover the money, be deemed to be due to the Company Liquidator himself

(l) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities and for protection of the assets of the company, appoint an agent to do any business which the Company Liquidator is unable to do himself(m) to take all such actions, steps, or to sign, execute and verify any paper, deed, document, application, petition, affidavit, bond or instrument as may be necessary,—245

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(i) for winding up of the company

(ii) for distribution of assets; Powers and(iii) in discharge of his duties and obligations and functions as Company Liquidator; and(n) to apply to the Tribunal for such orders or directions as may be necessary for the winding up of the company.(2) The exercise of powers by the Company Liquidator under sub-section (1) shall be subject to the overall control of the Tribunal.(3) Notwithstanding the provisions of sub-section (1), the Company Liquidator shall perform such other duties as the Tribunal may specify in this behalf.246

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Provision for professional assistance to Company Liquidator.

Section 291. (1) The Company Liquidator may, with the sanction of the Tribunal, appoint one or more chartered accountants or company secretaries or cost accountants or legal practitioners or such other professionals on such terms and conditions, as may be necessary, to assist him in the performance of his duties and functions under this Act.(2) Any person appointed under this section shall disclose forthwith to the Tribunal in the prescribed form any conflict of interest or lack of independence in respect of his appointment.247

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Exercise and control of Company Liquidator's powers.

Section 292. (1) Subject to the provisions of this Act, the Company Liquidator shall, in the administration of the assets of the company and the distribution thereof among its creditors, have regard to any directions which may be given by the resolution of the creditors or contributories at any general meeting or by the advisory committee.(2) Any directions given by the creditors or contributories at any general meeting shall, in case of conflict, be deemed to override any directions given by the advisory committee.(3) The Company Liquidator—(a) may summon meetings of the creditors or contributories, whenever he thinks fit, for the purpose of ascertaining their wishes; and248

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(b) shall summon such meetings at such times, as the creditors or contributories, as the case may be, may, by resolution, direct, or whenever requested in writing to do so by not less than one-tenth in value of the creditors or contributories, as the case may be.

(4) Any person aggrieved by any act or decision of the Company Liquidator may apply to the Tribunal, and the Tribunal may confirm, reverse or modify the act or decision complained of and make such further order as it thinks just and proper in the circumstances.249

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Books to be kept by Company Liquidator.

Section 293. (1) The Company Liquidator shall keep proper books in such manner, as may be prescribed, in which he shall cause entries or minutes to be made of proceedings at meetings and of such other matters as may be prescribed.(2) Any creditor or contributory may, subject to the control of the Tribunal, inspect any such books, personally or through his agent.250

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Audit of Company Liquidator's accounts.

Section 294. (1) The Company Liquidator shall maintain proper and regular books of account including accounts of receipts and payments made by him in such form and manner as may be prescribed.(2) The Company Liquidator shall, at such times as may be prescribed but not less than twice in each year during his tenure of office, present to the Tribunal an account of the receipts and payments as such liquidator in the prescribed form in duplicate, which shall be verified by a declaration in such form and manner as may be prescribed.(3) The Tribunal shall cause the accounts to be audited in such manner as it thinks fit, and for the purpose of the audit, the Company Liquidator shall furnish to the Tribunal with such vouchers and information as the Tribunal may require, and the Tribunal may, at any251

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(4) When the accounts of the company have been audited, one copy thereof shall be filed by the Company Liquidator with the

Tribunal, and the other copy shall be delivered to the Registrar which shall be open to inspection by any creditor, contributory or person interested.(5) Where an account referred to in sub-section (4) relates to a Government company, the Company Liquidator shall forward a copy thereof—(a) to the Central Government, if that Government is a member of the Government company or(b) to any State Government, if that Government is a member of the Government company or(c) to the Central Government and any State Government, if both the Governments are members of the Government company.(6) The Company Liquidator shall cause the accounts when audited, or a summary thereof, to be printed, and shall send a printed copy of the accounts or summary thereof by post to every creditor and every contributory: Provided that the Tribunal may dispense with the compliance of the provisions of this sub-section in any case it deems fit.252

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Payment of debts by contributory and extent of set-off.

Section 295. (1) The Tribunal may, at any time after passing of a winding up order, pass an order requiring any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company, from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act.(2) The Tribunal, in making an order, under sub-section (1), may,—(a) in the case of an unlimited company, allow to the contributory, by way of setoff, any money due to him or to the estate which he represents, from the company, on any independent dealing or contract with the company, but not any money due to him as a member of the company in respect of any dividend or profit; and(b) in the case of a limited company, allow to any director or manager whose liability is unlimited, or to his estate, such set-off.(3) In the case of any company, whether limited or unlimited, when all the creditors have been paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set-off against any subsequent call.253

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Power of Tribunal to make calls.

Section 296. The Tribunal may, at any time after the passing of a winding up order, and either before or after it has ascertained the sufficiency of the assets of the company,—(a) make calls on all or any of the contributories for the time being on the list of the contributories, to the extent of their liability, for payment of any money which the Tribunal considers necessary to satisfy the debts and liabilities of the company, and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves; and(b) make an order for payment of any calls so made.254

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ADJUSTMENT OF RIGHTS OF CONTRIBUTORIES

.Section 297. The Tribunal shall adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled thereto.POWER TO ORDER COSTS.Section 298. The Tribunal may, in the event of the assets of a company being insufficient to satisfy its liabilities, make an order for the payment out of the assets, of the costs, charges Payment of debts by contributory and extent of set-off. Adjustment of rights of contributories. and expenses incurred in the winding up, in such order of priority inter se as the Tribunal thinks just and proper255

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Power to order examination of promoters, directors, etc.

Section 300. (1) Where an order has been made for the winding up of a company by the Tribunal, and the Company Liquidator has made a report to the Tribunal under this Act, stating that in his opinion a fraud has been committed by any person in the promotion, formation, business or conduct of affairs of the company since its formation, the Tribunal may, after considering the report, direct that such person or officer shall attend before the Tribunal on a day appointed by it for that purpose, and be examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as an officer thereof.(2) The Company Liquidator shall take part in the examination, and for that purpose he or it may, if specially authorised by the Tribunal in that behalf, employ such legal assistance as may be sanctioned by the Tribunal.(3) The person shall be examined on oath and shall answer all such questions as the Tribunal may put, or allow to be put, to him.256

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(4) A person ordered to be examined under this section—

(a) shall, before his examination, be furnished at his own cost with a copy of the report of the Company Liquidator; and(b) may at his own cost employ chartered accountants or company secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal under section 432, who shall be at liberty to put to him such questions as the Tribunal may consider just for the purpose of enabling him to explain or qualify any answers given by him.(5) If any such person applies to the Tribunal to be exculpated from any charges made or suggested against him, it shall be the duty of the Company Liquidator to appear on the hearing of such application and call the attention of the Tribunal to any matters which appear to the Company Liquidator to be relevant.257

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(6) If the

Tribunal, after considering any evidence given or hearing witnesses called by the Company Liquidator, allows the application made under sub-section (5), the Tribunal may order payment to the applicant of such costs as it may think fit.(7) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined, a copy be supplied to him and may thereafter be used in evidence against him, and shall be open to inspection by any creditor or contributory at all reasonable times.(8) The Tribunal may, if it thinks fit, adjourn the examination from time to time.(9) An examination under this section may, if the Tribunal so directs, be held before any person or authority authorised by the Tribunal.(10) The powers of the Tribunal under this section as to the conduct of the examination, but not as to costs, may be exercised by the person or authority before whom the examination is held in pursuance of sub-section (9).258

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Arrest of person trying to leave India or abscond.

Section 301 : At any time either before or after passing a winding up order, if the Tribunal is satisfied that a contributory or a person having property, accounts or papers of the company in his possession is about to leave India or otherwise to abscond, or is about to remove or conceal any of his property, for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the company, the Tribunal may cause—(a) the contributory to be detained until such time as the Tribunal may order; and(b) his books and papers and movable property to be seized and safely kept until such time as the Tribunal may order.259

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Dissolution of company by Tribunal.

Section 302: (1) When the affairs of a company have been completely wound up, the Company Liquidator shall make an application to the Tribunal for dissolution of such company.(2) The Tribunal shall on an application filed by the Company Liquidator under sub-section (1) or when the Tribunal is of the opinion that it is just and reasonable in the circumstances of the case that an order for the dissolution of the company should be made, make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.(3) A copy of the order shall, within thirty days from the date thereof, be forwarded by the Company Liquidator to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company.260

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(4) If the Company Liquidator makes a default in forwarding a copy of the order within the period specified in sub-section (3), the Company Liquidator shall be punishable with fine which may extend to five thousand rupees for every day during which the default continues.

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Meeting of creditors.

Section 306. (1) The company shall along with the calling of meeting of the company at which the resolution for the voluntary winding up is to be proposed, cause a meeting of its creditors either on the same day or on the next day and shall cause a notice of such meeting to be sent by registered post to the creditors with the notice of the meeting of the company under section 304.(2) The Board of Directors of the company shall—(a) cause to be presented a full statement of the position of the affairs of the company together with a list of creditors of the company, if any, copy of declaration under section 305 and the estimated amount of the claims before such meeting; and(b) appoint one of the directors to preside at the meeting.262

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(3) Where two-thirds in value of creditors of the company are of the opinion that—

(a) it is in the interest of all parties that the company be wound up voluntarily, the company shall be wound up voluntarily; or(b) the company may not be able to pay for its debts in full from the proceeds of assets sold in voluntary winding up and pass a resolution that it shall be in the interest of all parties if the company is wound up by the Tribunal in accordance with the provisions of Part I of this Chapter, the company shall within fourteen days thereafter file an application before the Tribunal.(4) The notice of any resolution passed at a meeting of creditors in pursuance of this section shall be given by the company to the Registrar within ten days of the passing thereof.(5) If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees and the director of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees, or with both.263

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Publication of resolution to wind up voluntarily.

Section 307. (1) Where a company has passed a resolution for voluntary winding up and a resolution under sub-section (3) of section 306 is passed, it shall within fourteen days of the passing of the resolution give notice of the resolution by advertisement in the Official Gazette and also in a newspaper which is in circulation in the district where the registered office or the principal office of the company is situate.(2) If a company contravenes the provisions of sub-section (1), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees for every day during which such default continues.264

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COMMENCEMENT OF VOLUNTARY WINDING UP.

Section 308. A voluntary winding up shall be deemed to commence on the date of passing of the resolution for voluntary winding up under section 304.EFFECT OF VOLUNTARY WINDING UP.Section 309. In the case of a voluntary winding up, the company shall from the commencement of the winding up cease to carry on its business except as far as required for the beneficial winding up of its business:Provided that the corporate state and corporate powers of the company shall continue until it is dissolved.265

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Appointment of Company Liquidator.

Section 310. (1) The company in its general meeting, where a resolution of voluntary winding up is passed, shall appoint a Company Liquidator from the panel prepared by the Central Government for the purpose of winding up its affairs and distributing the assets of the company and recommend the fee to be paid to the Company Liquidator.(2) Where the creditors have passed a resolution for winding up the company under sub-section (3) of section 306, the appointment of the Company Liquidator under this section shall be effective only after it is approved by the majority of creditors in value of the company:Provided that where such creditors do not approve the appointment of such Company Liquidator, creditors shall appoint another Company Liquidator.266

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(3) The creditors while approving the appointment of Company Liquidator appointed by the company or appointing the Company Liquidator of their own choice, as the case may be, pass suitable resolution with regard to the fee of the Company Liquidator.

(4) On appointment as Company Liquidator, such liquidator shall file a declaration in the prescribed form within seven days of the date of appointment disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the company and the creditors and such obligation shall continue throughout the term of his or its appointment.267

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Power to remove and fill vacancy of Company Liquidator.

Section 311. (1) A Company Liquidator appointed under section 310 may be removed by the company where his appointment has been made by the company and, by the creditors, where the appointment is approved or made by such creditors.(2) Where a Company Liquidator is sought to be removed under this section, he shall be given a notice in writing stating the grounds of removal from his office by the company or the creditors, as the case may be.(3) Where three-fourth members of the company or three-fourth of creditors in value, as the case may be, after consideration of the reply, if any, filed by the Company Liquidator, in their meeting decide to remove the Company Liquidator, he shall vacate his office.(4) If a vacancy occurs by death, resignation, removal or otherwise in the office of any Company Liquidator appointed under section 310, the company or the creditors, as the case may be, fill the vacancy in the manner specified in that section.268

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Notice of appointment of Company Liquidator to be given to Registrar.

Section 312. (1) The company shall give notice to the Registrar of the appointment of a Company Liquidator along with the name and particulars of the Company Liquidator, of every vacancy occurring in the office of Company Liquidator, and of the name of the Company Liquidator appointed to fill every such vacancy within ten days of such appointment or the occurrence of such vacancy.(2) If a company contravenes the provisions of sub-section (1), the company and every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees for every day during which such default continues.269

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Cesser of Board's powers on appointment of Company Liquidator.

Section 313. On the appointment of a Company Liquidator, all the powers of the Board of Directors and of the managing or whole-time directors and manager, if any, shall cease, except for the purpose of giving notice of such appointment of the Company Liquidator to the Registrar.270

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Powers and duties of Company Liquidator in voluntary winding up.

Section 314. (1) The Company Liquidator shall perform such functions and discharge such duties as may be determined from time to time by the company or the creditors, as the case may be.(2) The Company Liquidator shall settle the list of contributories, which shall be prima facie evidence of the liability of the persons named therein to be contributories.(3) The Company Liquidator shall call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, as the case may require, or for any other purpose he may consider necessary.(4) The Company Liquidator shall maintain regular and proper books of account in such form and in such manner as may be prescribed and the members and creditors and any officer authorised by the Central Government may inspect such books of account.271

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5) The Company Liquidator shall prepare quarterly statement of accounts in such form and manner as may be prescribed and file such statement of accounts duly audited within thirty days from the close of each quarter with the Registrar, failing which the Company Liquidator shall be punishable with fine which may extend to five thousand rupees for every day during which the failure continues.

(6) The Company Liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.(7) The Company Liquidator shall observe due care and diligence in the discharge of his duties.(8) If the Company Liquidator fails to comply with the provisions of this section except sub-section (5) he shall be punishable with fine which may extend to ten lakh rupees.272

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Appointment of committees.

315. Where there are no creditors of a company, such company in its general meeting and, where a meeting of creditors is held under section 306, such creditors, as the case may be, may appoint such committees as considered appropriate to supervise the voluntary liquidation and assist the Company Liquidator in discharging his or its functions.273

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Company Liquidator to submit report on progress of winding up.

316. (1) The Company Liquidator shall report quarterly on the progress of winding up of the company in such form and in such manner as may be prescribed to the members and creditors and shall also call a meeting of the members and the creditors as and when necessary but at least one meeting each of creditors and members in every quarter and apprise them of the progress of the winding up of the company in such form and in such manner as may be prescribed.(2) If the Company Liquidator fails to comply with the provisions of sub-section (1), he shall be punishable, in respect of each such failure, with fine which may extend to ten lakh rupees.274

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Report of Company Liquidator to Tribunal for examination of persons.

Section 317: (1) Where the Company Liquidator is of the opinion that a fraud has been committed by any person in respect of the company, he shall immediately make a report to the Tribunal and the Tribunal shall, without prejudice to the process of winding up, order for investigation under section 210 and on consideration of the report of such investigation, the Tribunal may pass such order and give such directions under this Chapter as it may consider necessary including the direction that such person shall attend before the Tribunal on a day appointed by it for that purpose and be examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as officer thereof or otherwise.(2) The provisions of section 300 shall mutatis mutandis apply in relation to any examination directed under sub-section (1).275

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Final meeting and dissolution of company.

318. (1) As soon as the affairs of a company are fully wound up, the Company Liquidator shall prepare a report of the winding up showing that the property and assets of the company have been disposed of and its debt fully discharged or discharged to the satisfaction of the creditors and thereafter call a general meeting of the company for the purpose of laying the final winding up accounts before it and giving any explanation there for.(2) The meeting referred to in sub-section (1) shall be called by the Company Liquidator in such form and manner as may be prescribed.(3) If the majority of the members of the company after considering the report of the Company Liquidator are satisfied that the company shall be wound up, they may pass a resolution for its dissolution.(4) Within two weeks after the meeting, the Company Liquidator shall—(a) send to the Registrar—(i) a copy of the final winding up accounts of the company and shall make a return in respect of each meeting and of the date thereof; and276

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(ii) copies of the resolutions passed in the meetings; and

(b) file an application along with his report under sub-section (1) in such manner as may be prescribed along with the books and papers of the company relating to the winding up, before the Tribunal for passing an order of dissolution of the company. Appointment(5) If the Tribunal is satisfied, after considering the report of the Company Liquidator that the process of winding up has been just and fair, the Tribunal shall pass an order dissolving the company within sixty days of the receipt of the application under sub-section (4).(6) The Company Liquidator shall file a copy of the order under sub-section (5) with the Registrar within thirty days.(7) The Registrar, on receiving the copy of the order passed by the Tribunal under subsection (5), shall forthwith publish a notice in the Official Gazette that the company is dissolved.(8) If the Company Liquidator fails to comply with the provisions of this section, he shall be punishable with fine which may extend to one lakh rupees.277

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Power of Company Liquidator to accept shares, etc., as consideration for sale of property of company.

319. (1) Where a company (the transferor company) is proposed to be, or is in the course of being, wound up voluntarily and the whole or any part of its business or property is proposed to be transferred or sold to another company (the transferee company), the Company Liquidator of the transferor company may, with the sanction of a special resolution of the company conferring on him either a general authority or an authority in respect of any particular arrangement,—(a) receive, by way of compensation wholly or in part for the transfer or sale of shares, policies, or other like interest in the transferee company, for distribution among the members of the transferor company; or(b) enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies or other like interest or in addition thereto, participate in the profits of, or receive any other benefit from, the transferee company:278

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Provided that no such arrangement shall be entered into without the consent of the secured creditors.

(2) Any transfer, sale or other arrangement in pursuance of this section shall be binding on the members of the transferor company.(3) Any member of the transferor company who did not vote in favour of the special resolution and expresses his dissent there from in writing addressed to the Company Liquidator, and left at the registered office of the company within seven days after the passing of the resolution, may require the liquidator either—(a) to abstain from carrying the resolution into effect; or(b) to purchase his interest at a price to be determined b agreement or the registered valuer.(4) If the Company Liquidator elects to purchase the member’s interest, the purchase money, raised by him in such manner as may be determined by a special resolution, shall be paid before the company is dissolved.279

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Distribution of property of company.

320. Subject to the provisions of this Act as to overriding preferential payments under section 326, the assets of a company shall, on its winding up, be applied in satisfaction of its liabilities pari passu and, subject to such application, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company.280

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Arrangement when binding on company and creditors.

Section 321: (1) Any arrangement other than the arrangement referred to in section 319 entered into between the company which is about to be, or is in the course of being wound up and its creditors shall be binding on the company and on the creditors if it is sanctioned by a special resolution of the company and acceded to by the creditors who hold three-fourths in value of the total amount due to all the creditors of the company.(2) Any creditor or contributory may, within three weeks from the completion of the arrangement, apply to the Tribunal and the Tribunal may thereupon amend, vary, confirm or set aside the arrangement.281

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Power to apply to Tribunal to have questions determined, etc.

Section 322: (1) The Company Liquidator or any contributory or creditor may apply to the Tribunal—(a) to determine any question arising in the course of the winding up of a company; or(b) to exercise as respects the enforcing of calls, the staying of proceedings or any other matter, all or any of the powers which the Tribunal might exercise if the company were being wound up by the Tribunal.(2) The Company Liquidator or any creditor or contributory may apply to the Tribunal for an order setting aside any attachment, distress or execution put into force against the estate or effects of the company after the commencement of the winding up.282

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(3) The Tribunal

, if satisfied on an application under sub-section (1) or sub-section (2) that the determination of the question or the required exercise of power or the order applied for will be just and fair, may allow the application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks fit.(4) A copy of an order staying the proceedings in the winding up, made under this section, shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in his books relating to the company.283

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DRAFT RULES UNDER COMPANIES ACT, 2013

CHAPTER XXVII NATIONAL COMPANY LAW TRIBUNAL RULES, 2013 284

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Short title and Commencement –

1. (1) These rules shall be called the National Company Law Tribunal Rules, 2013. (2) They shall come into force on the date of their publication in the Official Gazette. (3) The General Clauses Act, 1897 (10 of 1897) applies to the interpretation of these rules as it applies to the interpretations of a Central Act. (4) The requirements with regard to any approval or proceeding etc of or before the Tribunal provided under any other rule made under the Act shall be in addition to the requirements provided under these rules. (5) These rules shall also be applicable for the proceedings before the Tribunal in case of limited liability partnerships under LLP Act, 2008 or rules made there under and in case of any inconsistency between rules made under the LLP Act, 2008 and these rules, these rules shall apply 285

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Definitions :2. In these rules, unless the context or subject- matter otherwise requires, (1) “Act” means the Companies Act, 2013. (2) “Address for service” shall mean the address furnished by a party or his authorized representative at which service of summons, notices or other processes may be effected by these rules; (3) “Appellate Tribunal” means the National Company Law Appellate Tribunal constituted under section 410 the Act; (4) “Applicant” means a petitioner or an appellant or any other person or entity capable of making an application including an interlocutory application or a petition or an appeal under the Act 286

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Provided that in respect of the matters pertaining to “Revival and Rehabilitation of Sick Companies” under Chapter XIX of the Act, the term “Applicant” shall mean and include the following:

(a) ‘secured creditor (s)’ of a company representing 50% or more of its outstanding amount of debts, which the Company has failed to pay within 30 days of the notice of demand or to secure or compound it to the reasonable satisfaction of the creditor as per the provisions contained in sub-section (1) of section 253 of the Act, (b) the company, on failing to pay the debt to its secured creditors to the extent of 50% or more of its outstanding debts within 30 days of the receipt of notice of demand or to secure or compound it to the reasonable satisfaction of the secured creditor. (c) the Central Government or the Reserve Bank of India or a State Government or a public financial institution or a State Level Institution or a scheduled bank being an authority which has made a reference in respect of sick company to the Tribunal under sub-section (5) of section 253. 287

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(5) “

Application” means any application filed under the provisions of the Act, and also includes any written representation seeking interim orders before the Tribunal. (6) "Annexure" means an Annexure to these rules; (7) “Authorised Representative" means a person authorised in writing by a party to present his case before the Tribunal as the representative of such party as provided under section 432 of the Act; (8) “Bench” means a Bench of the Tribunal constituted under section 419 of the Act. (9) “Body Corporate” means the body corporate as defined in sub-section (11) of section 2 of the Act, and includes: (i) a limited liability partnership registered under the Limited Liability Partnership Act, 2008;

(ii) a limited liability partnership incorporated outside India; (10) “

Central Registry”

means the registry in which all the applications or petitions and documents are received electronically by the Registrar for allocation to the concerned Bench of the Tribunal for disposal;

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(11)

“Certified” means in relation to a copy as hereunder: a) Certified as provided in section 76 of the Indian Evidence Act, 1872; or b) Certified as provided in section 6 of Information Technology Act, 2000 ; or c) A copy of document as may be a downloaded version from e-registry under MCA 21 or any other similar authorized portals or Dedicated Portal Online as may be given name thereto by the Central Government in instance or a photo copy of original pertaining to any company registered with the Office of the Registrar of Companies of the concerned state; and d) A certified copy issued by the Registrar of Companies under the Act; 12) “Certified by Tribunal” means in relation to a copy, certified to be a true copy issued by the Registry of the Tribunal or of a bench of the Tribunal under its hand and seal and as provided in Section 76 of the Indian Evidence Act, 1872; 289

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13) “

Certifying Authority” means a person who has been granted a license to issue a Digital Signature Certificate under section 24 of the Information Technology Act, 2000 (21 of 2000); (14) “Chairperson”, “Judicial Member”, “Member”, “President” and “Technical Member” of the Tribunal or Appellate Tribunal shall have the same meanings as provided in section 407 of the Act; (15) “Court” means the court as defined in sub-section (29) of section 2 of the Act; (16) “Dedicated Portal Online” refers to an “Hyper Text Transfer Protocol” for the purpose of electronic transmission of documents to the Tribunal for hearing and disposal in pursuance of the provisions of the Act and includes MCA-21 portal; (17) “Digital signature” means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3 of the Information Technology Act, 2000 and includes a graphic image of a handwritten signature;

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(18) “

Digital Signature Certificate” means a Digital Signature Certificate issued under sub-section (4) of section 35 of the Information Technology Act, 2000; (19) “Document” means summons , notice, requisition, a pleading, plea, motion, application, request, exhibit, brief, memorandum of law, paper, or any other instrument in paper form or electronic form and other legal process, and registers, whether issued, sent or kept in pursuance of the Act and Rules made there under or any other Act or otherwise; but, does not include orders of the Tribunal; (20) “EDGAR (Electronic Data Gathering, Analysis and Retrieval) Filer Manual” means the current version of the manual prepared by the Tribunal setting out the technical format requirements for an electronic filing of Application or other documents with the Tribunal; 291

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(

21) "Electronic Format" means the computerized format of a document prepared in accordance with Electronic Data Gathering, Analysis, and Retrieval (EDGAR); (22) "Electronic Filer" means an Applicant who files Application or other documents with the Tribunal electronically; (23) “Electronic Filing” is a process by which a filer files a document with the Registry of the Tribunal by means of an online computer transmission of the document in electronic form other than by means of fax or e-mail. (24) “Electronic order” means a computerized, non-paper Tribunal order that a Member or Members of the Tribunal signs by applying his or her digitized signature to the order. (25) “Electronic service” is a method of serving a document upon a party by electronically transmitting the document to that party’s e-mail address. 292

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(26) “

Electronic Registry” means an electronic repository or storage system which receives, stores, protects, preserves and retrieves an application or a Petition or any reply and rejoinder to the application, petition and other addendum to the pleadings in electronic form by the Tribunal; (27) “Fee” means the amount payable in pursuance of the provisions of the Act, and these rules for any petition or application or interlocutory application or a document or for certified copy of document or order of the Tribunal or such other paper as may be specified in “Annexure -B” to these rules and includes any modifications as may be made thereto or any fee as prescribed for electronic filing of documents to the Tribunal by these rules; (28) “Filer” means a person including an authorized representative of that person or any party to the proceedings who files any document with the Tribunal in relation to case filed under the Act, or any rules there under. 293

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(29) “

Filed” means filed in the office of the Registry of the Tribunal; (30) “Filing fees” means the fees as applicable in terms of Annexure- B in connection with the application filed; (31) “Form” means a form specified in Annexure –C; (32) “Party” means a person(s) who files a petition or an application before the Tribunal and includes a respondent(s), the Registrar of Companies or the Regional Director or Ministry of Corporate Affairs and any person who has a right under the Act, or the Reserve Bank of India Act 1934 (2 of 1934) to make suggestions or submissions or objections or file reply; (33) “Petition” means a petition or an application or an Appeal or a Complaint in pursuance of which any proceeding is commenced before the Tribunal. 34) “Person(s) Interested” means a shareholder, creditor or employee of a sick company, transferee company and other company concerned in relation to the term or context referred to in relevant provisions of the Act;

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(35) “

Pleadings” means and includes the original application, petitions, applications, reply, statements, counter claim, additional statement supplementing the original applications and reply statements including electronic form as prescribed by these rules and as may be permitted by the Tribunal; (36) "Pre-fill" means the automated process of data input by the computer system from the database maintained in electronic registry of either the Tribunal or Ministry of Corporate Affairs; (37) “Prescribed” means prescribed by these rules; and ‘prescribed charges’ and ‘prescribed fees’ mean charges or fees prescribed by these rules and where they are not so prescribed, prescribed by the rules of the Tribunal; 38) “Prescribed period” means that the respective or relevant period to be reckoned as defined in the Limitation Act, 1963. (39) Reference" means a reference within the meaning of Rule 108 of these Rules;

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(40) “

Registrar of Companies” includes Additional Registrar, Joint Registrar, Deputy Registrar or an Assistant Registrar. (41) “Registrar” in relation to the Tribunal, means the Registrar appointed to the Principal Bench and in relation to each of the Benches of the Tribunal shall mean an officer of the Central Government so appointed or designated as Registrar or in his absence such other officer of the Tribunal or Bench to whom the powers and functions of the Registrar be delegated. (42) “Registry” means the Registry of the Tribunal or any of its Benches, as the case may be which keeps records of the applications and documents relating thereto; (43) “Reserve Bank” means the Reserve Bank of India and includes its branches and agencies as defined in the Reserve Bank of India Act, 1934; (44) “The rules” mean these rules and include the Rules of the Tribunal regulating the Electronic Filing of Documents and forms prescribed thereto. 296

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(45) “

Sealed” means sealed with the seal of the Tribunal. (46) “Secretary" means Secretary to the Tribunal and in the absence of Secretary, such other officer of the Tribunal to whom the powers and functions of the Secretary be delegated. (47) “Service of Notice or Document” includes the electronic service in addition to other modes of services. (48) “Secured Creditor” means and includes bank or financial institution or any consortium or group of banks or financial institutions which have lent any money to the company and subject to the compliance with the relevant provisions of the Act includes the following- (i) debenture trustee appointed by any bank or financial institution; or (ii) securitization company or reconstruction company, whether acting as such or managing a trust set up by such securitization company or reconstruction company for the securitization or reconstruction, as the case may be; or 297

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(iii)any other trustee holding securities on behalf of a bank or financial institution, in whose favour security interest is created for due repayment by any borrower of any financial assistance;

(iv) any person in whose favour, a charge is created on any asset or assets of a company towards a security for the loan borrowed or secured or extended as a guarantee in whomsoever favour it may be on his behalf or other’s behalf either singularly or jointly in association with other . (49) “Sick Company” means and includes a company, which has failed to pay the debt of its secured creditors within 30 days of the notice of demand or to secure or compound it to the reasonable satisfaction of the secured creditors as per section 253 of the Act; (50) “Transferred Application” or “Transferred Petition” means proceedings which have been transferred to the Tribunal from High Court, or Company Law Board or any other court or Tribunal as provided in section 434 of the Act, and shall also include the matters in respect of which the schemes for revival have been sanctioned as per the provisions of Sick Industrial Companies Act, 1985 298

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(51) “

Tribunal” means the National Company Law Tribunal constituted under section 408 of the Act, and includes its Benches; (52) “Words” expressed in singular may be understood as plural or vice versa if the context so warrants. Likewise, ‘He/his’ may be referred to ‘She/her’ or vice versa. Petition may also be construed as application or appeal or complaint vice versa depending upon the reference which warrants so. (53) “Words and Expressions” used and not defined in these rules but defined in the Act, Competition Act, 2002, the Recovery of Debts Due to Banks And Financial Institutions Act, 1993, the Securitization And Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Securities Contracts (Regulation) Act, 1956 the Securities and Exchange Board of India Act, 1992 the Depositories Act, 1996; Information Technology Act, 2000; and General Clauses Act, 1897, shall have the meanings respectively assigned to them in those Acts and rules made there under. 299

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(54) Till the implementation of the E-filing system by the Tribunal the documents including petitions, applications etc may be filed physically;

GENERAL PROCEDURE Powers to determine procedure in certain circumstances. 3. In a situation not provided for in these rules, the Tribunal may, for reasons to be recorded in writing, determine the procedure in a particular case. 4. Territorial Jurisdiction of the Tribunal and its Benches: 1. The National Company Law Tribunal shall have a principal Bench and such number of other Benches with territorial jurisdiction of each Bench as prescribed in Annexure A.300

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2. If an application or a petition is received or transmitted through electronic mode in the manner as provided in Part III of these rules by registry of a bench which does not have territorial jurisdiction to deal with the matter, the Registry of the Bench shall return or retransmit the application or a petition to the applicant advising him to file it with the Bench having a proper jurisdiction.

3. Notwithstanding anything contained in sub-rule 2 the applicant may apply to the President and the President may thereupon for reason to be recorded direct a Bench other than the Bench before which an application or a petition has been filed to hear such application and issue such orders as may be necessary for the transfer of the application. The President of the Tribunal may delegate this power to any member of Bench(s). 301

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5. Language of the Tribunal

1. The pleadings before the Tribunal may be conducted either in English or in Hindi and in case it is in some other Indian language, it shall be accompanied by a copy translated either in English or in Hindi attested by a translator and counter-signed by the party concerned. 2. All orders and judgements of the Tribunal may be either in English or Hindi. 6. Proceedings and Procedure for Filing Pleadings: 1. Every proceeding shall be dated and shall be instituted in the matter of the Act and in the matter of the company to which it relates. The contents shall be divided into separate paragraphs, neatly and legibly type written, lithographed or printed in double spacing on one side of standard petition paper with an inner margin of about four centimeters width on top and with a right margin of 2.5 cm, and left margin of 5 cm, duly paginated, indexed and stitched together in paper book form. Numbers 302

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and dates shall be expressed in figures and where dates given are not according to the English Calendar, the corresponding English dates shall also be given.

2. A petition or an application, including any reply or documents related thereto, to the Tribunal shall be filed to the Registry of the Tribunal or such Bench (s) having territorial jurisdiction thereto in respective forms as provided in Annexure-C as the case may be either by the applicant in person or by his duly authorized representative.3. After introduction of the e-filing mode of petition or application, the Tribunal may after satisfying itself permit the applicant or the respondent or such other party to file a petition or an application referred to in sub-rules (1) and (2) in physical form i. e. by sending the same through registered post or speed post to the concerned registry. In such case, the concerned registry shall receive the application in physical form to scrutinize and scan the application and convert it into electronic file in the manner as practicable as the case may be and process the e-file as if it were an original application received in the regular procedure under sub-rule (1) or under Part III of these rules.303

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4. A petition or application sent by post under sub-rule (3) shall be deemed to have been filed to the Registry on the day on which it is received by the Tribunal.

5. The petition or application under sub-rule (2) or (3) shall be presented in triplicate or as may be decided by the Tribunal. 6. The Applicant shall get the notices endorsed from the Registry for the purpose of service on the respondent and shall file the affidavit of service in proof at least 3 days before the date fixed for hearing.7. The general heading in all proceedings before the Tribunal, in all advertisements and notices shall be in Form No. 4. 8. Every petition or application shall be filed in e-form as provided in Form No. 1 with attachments thereto accompanied by Form No. 2 and in case of an interlocutory application, the same shall be filed in Form No. 1 accompanied by such attachments thereto along with Form No. 3. Interlocutory application shall be in Form 3A. Every petition or application including interlocutory application shall be verified by an affidavit in Form No.6. Notice to be issued by the Tribunal to the opposite party shall be in Form 5. 304

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7. Documents to Accompany the Petition or Application:

(1) A petition or an application shall be accompanied by documents as prescribed in Annexure D and shall be as per the procedure for e-filing manual as may be issued by the Tribunal in such manner and as may be named by the Tribunal and shall be accompanied by an Index of Documents. (2) Documents referred to in sub-rule (1) may be attested as True Copy by the party or the authorized representative and the documents shall be marked serially as Annexures A1, A2, A3 and so on. (3) The petition or application shall be accompanied by a memorandum of appearance or a power of attorney or a duly executed Vakalatnama as specified in Rule 68. 8. Contents of petition - Every petition, other than an application filed under rule 107 shall set forth the name of the company, with its status, date of incorporation, the address of its registered office, authorized capital, paid-up share capital with division of different classes of shares and terms of issue, if any, in the case of preference shares, main objects in brief, for which the company was formed, present business activities of the company, latest audited accounts and auditors report and also latest financial position and shall also set forth concisely under distinct heads the grounds for such petition and the nature of relief(s) prayed for. 305

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9. Contents of interlocutory application -

An application filed subsequent to the filing of the petition applying for any interim order or direction shall, be in Form No. 3 A in Annexure C and shall be accompanied by an affidavit verifying the application in the manner laid down in sub-rule (8) of rule 6 i.e. in Form 6: Provided that it shall not be necessary to present a separate application to seek an interim relief or direction, except for condonation of delay in filing the petition, if, in the original petition, the same is prayed for. 10. Scrutiny of Petition or Application(s): (1) The Registrar shall receive, register the petition (s) or application (s) or otherwise as provided in the rules under this Part. (2) The Registrar, or the officer authorised by him, shall endorse on every petition or application, the date on which it is presented or received through post if the Tribunal or such Bench has granted permission for filing such application (s) in physical form under sub-rule (3) of the rule 6 and sign the endorsement :- (a) If, on scrutiny, the petition or application is found to be in order, it shall be registered and given a serial number. 306

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(b) If the petition or application, on scrutiny, is found to be defective, the Registrar may allow the applicant to rectify the same within seven days from the date of intimation.

(c) If the applicant fails to rectify the defect within the time allowed under sub-rule (b), the Registrar may, by order and for reasons to be recorded in writing, decline to register the petition or application and inform the applicant accordingly within seven days from the time allowed. 3) An appeal against the order passed under clause (c) of sub-rule (2) may be preferred by the person aggrieved within fifteen days from the date of such order to the President of the Principal Bench or any Member to whom the power is vested and at other places designated member of the Bench and such appeal shall be dealt with and disposed of in Chamber by the President or such Member whose decision thereon shall be final. 307

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11. Advertisement detailing petition.

(1) Where any application, petition or reference is required to be advertised, it shall, unless the Tribunal otherwise orders, or these rules otherwise provide, be advertised in Form No 3 B, not less than fourteen days before the date fixed for hearing, at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the proposed company is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district. 2) Every such advertisement shall state: (a) the date on which the application, petition/ reference was presented, (b) the name and address of the applicant petitioner and his authorized representative, if any; (c) the nature and substance of application, petition/ reference; (d) the date fixed for hearing; 308

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(e) a statement to the effect that any person whose interest is likely to be affected by the proposed petition or who intends either to oppose or support the petition/ reference at the hearing shall send a notice of his intention to the petitioner or his authorized representative so as to reach him not later than two days previous to the day fixed for hearing.

(3) Where the advertisement is being given by the company, then the same shall also be placed on the website of the company, if any.(4) An affidavit shall be filed to the Tribunal in, not less than 3 days before the date fixed for hearing, stating whether the petition has been advertised in accordance with this rule and whether the notices, if any, have been duly served upon the persons required to be served: Provided that such an affidavit shall be accompanied with such proof of advertisement or of the service, as may be available. (5) Where the requirements of this rule or the direction of the Tribunal, as regards the advertisement and service of petition, are not complied with, the Tribunal may either dismiss the petition or give such further directions as it thinks fit.309

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(6) The Tribunal may, if it thinks fit, dispense with any advertisement required by this rule.

12. Maintenance of Cash Register: (1) If any payment has been received by way of Indian postal orders or demand drafts or in cash by the Registry, the transaction shall be entered immediately by the Registration Clerk on their receipt side in a Cash Register kept for the purpose. (2) On every next working day or the last working day of the week, the payments received during such day or week by way of Indian postal orders or demand drafts shall be transmitted by the Registration Clerk to the concerned official vested with the work pertaining to the Cashier who after scrutiny and verification shall acknowledge the receipt of all moneys in the Cash Register. (3) The payments received in cash register shall be transmitted by the Registration Clerk to the official as per sub-rule (2) on each day, who after verification shall acknowledge the receipt of all moneys in the Cash Register. 310

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(4) The official under sub-rule (2) and (3) shall deposit all payments received by way of Indian postal order or demand draft or cash in the Bank account of the Tribunal.

13. Notice in Form No. 5 to Opposite Party- (1) The Tribunal shall issue notice in Form No.5 to the respondent to show cause against the application on a date of hearing to be specified therein. Such notice in Form No.5 shall be accompanied by a copy of the application. (2) If the respondent does not appear on the date specified in the notice in Form No.5 or appears and admits, the Tribunal shall forthwith proceed to dispose of the application. (3) If the respondent contests thereto, it may file a reply along with copies of such documents on which it relies on or before the date of hearing and such reply and copies of documents shall form part of the record. 14. Service of Notices and Processes Issued by the Tribunal: (1) Any notice or process to be issued by the Tribunal may be served in electronic form at the valid e-mail address as provided in the petition or application or in the reply. 311

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(2). Such notice or process if to be served physically may be served in any one of the following modes as may be directed by the Tribunal:

(a) by hand delivery through a process server or respective authorized representative; (b) by registered post or speed post with acknowledgement due or; (c) service by the party himself. (3) Where a notice issued by the Tribunal is served by the party himself by "hand delivery", he shall file with the Registrar the acknowledgment together with an affidavit of service. (4) Notwithstanding anything contained in sub-rules (1) and (2), the Tribunal may after taking into account the number of respondents and their place of residence or work or service could not effected in any manner and other circumstances, direct that notice of the petition or application shall be served upon the respondents in any other manner, including any manner of substituted service, as it appears to the Tribunal just and convenient. 312

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(5) A notice or process may also be served on an authorized representative of the applicant or the respondent, as the case may be, in any proceeding or on any person authorized to accept a notice or a process, and such service on the authorized representative shall be deemed to be a proper service.

(6) Where the Tribunal directs a service under sub-rule (4), such amount of charges, as may be determined by the Tribunal from time to time, but not exceeding the actual charges incurred in effecting the service, shall be deposited with the registry of the Tribunal. 15. Filing of Affidavit (1) The Tribunal may direct the parties to give evidence, if any, by affidavit. (2) Notwithstanding anything contained in sub-rule (1), where the Tribunal considers it necessary for just decision of the case, it may order cross-examination of any deponent either through Information and Communication Technology (ICT) facilities like video conferencing or otherwise as may be decided by the Tribunal. 313

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(3) Every affidavit to be filed before the Tribunal shall be in Form No.7

.16. Production of additional evidence before the Bench. (1) The parties to the proceedings shall not be entitled to produce before the Bench additional evidence, either oral or documentary, which was in the possession or knowledge but was not produced before the Inspector (s), appointed by the Central Government for the purpose of investigating the affairs of the concerned company (s), during investigation under Chapter XIV of the Act, but if the Bench requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or if the Inspector (s) so appointed for the said purpose has not given sufficient opportunity to the party to adduce evidence, the Bench, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.314

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(2) Such document may be produced or such witness examined or such evidence adduced either before the Bench or before such authority as the Bench may direct.

(3) If the document is directed to be produced or witness examined or evidence adduced before any authority, he or she shall comply with the direction of the Bench and after compliance send the document, the record of the deposition of the witness or the record of the evidence adduced, to the Bench. (4) Additional evidence/document shall be made available by the Bench to the parties to the proceedings other than the party adducing the evidence and they may be afforded an opportunity to rebut the contents of the said additional evidence.17. Filing of Reply and other Documents by the Respondents: (1) Each respondent may file his reply to the petition or the application and copies of the documents with the registry as specified by the Tribunal. A copy of the reply or the application and the copies of other documents shall be forthwith served on the applicant by the respondent315

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(2) In reply filed under sub-rule (1), the respondent shall specifically admit, deny or explain the facts stated by the applicant in his petition or application and state such additional facts as may be found necessary in his reply.

(3) When the respondent admits the facts stated in the petition or application, the Tribunal may make order in this regard". 18. Filing of Rejoinder: The applicant intending to file rejoinder to the written reply filed by the respondent may do so forthwith with a copy to respondent. 19. Power of the Bench to call for further information/evidence. (1) The Bench may, before passing orders on the petition, require the parties or any one or more of them, to produce such further documentary or other evidence as it may consider necessary - (a) for the purpose of satisfying itself as to the truth of the allegations made in the petition; or (b) for ascertaining any information which, in the opinion of the Bench, is necessary for the purpose of enabling it to pass orders on the petition. 316

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(2) Without prejudice to sub-rule (1), the Bench may, for the purpose of inquiry or investigation, as the case may be, admit such documentary and other mode of recordings in electronic form including e-mails, books of accounts, book or paper, communications, statements, contracts, electronic certificates and such other similar mode of transactions as may legally be permitted to take into account of those as admissible as evidence under the relevant Acts.

(3) Where any party preferring / contesting a petition of oppression and mismanagement raises the issue of forgery or fabrication of any statutory records, then it can move an application for forensic examination. The Bench hearing the matter may send the disputed records for opinion of Central Forensic Science Laboratory at the cost of the party alleging fabrication of records but if this request is refused, the Bench will give reasons thereof. 20. Plural remedies A petition or an application shall be based upon a single cause of action and may seek one or more reliefs provided that they are consequential to one another.317

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21. Admission and Denial of Documents:

The Tribunal may, before framing issues ascertain from parties or their authorised representatives whether they admit or deny documents accompanying the petition or the application or reply, if any, and shall record such admission and denial. 22. Marking of Documents: The documents filed by the applicant shall be marked as "A' series and the documents filed by the respondent shall be marked as "R" series and the Tribunal exhibits shall be marked as 'T' series". 23. Summary dismissal of petition or application: The Tribunal may, after considering the petition or application, summarily dismiss the application, if for reasons to be recorded, the Tribunal is of opinion that there are not sufficient grounds for proceeding therewith. 318

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24. Hearing of petition or applications:

(1) The Tribunal shall notify to the parties the date and place of hearing of the petition or application in such manner as the President or a Member may, by general or special order, direct. (2) Where at any stage prior to the hearing of the petition or application the applicant desires to withdraw his petition or application, he shall make an application to that effect to the Tribunal, and the Tribunal on hearing the applicant and if necessary the others arrayed as opposite parties in the petition or the application or otherwise may permit such withdrawal upon imposing such costs as it may deem fit and proper for the Tribunal in the interest of the justice. 25. Rights of a party to appear before the Bench. (1) Every party may appear before a Bench in person or through an authorized representative 319

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(2) A party may, in writing, authorize an Advocate or a Company Secretary in practice or a Chartered Accountant in practice or Cost Accountant in practice, to function as a representative of such party. A company may appoint and authorize its directors or company secretary or CFO or CEO or manager all under the Act to appear, in its behalf, in any proceedings before the Bench. The Central Government, the Regional Director or the Registrar of Companies or Official Liquidator may authorize an officer or an Advocate. The Company Liquidator shall make his appearance in person.

(3) The officer authorized by the Central Government or the Regional Director or the Registrar of Companies or the Official Liquidator should be an officer not below the rank of officers of Senior Time Scale. In the case of the Company Secretary in practice or chartered accountants in practice or cost accountant in practice should have post qualification experience of five years. 320

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(4) The authorized representative except officer’(s) of Central Government or the Regional Director or the Registrar of Companies shall not be allowed to represent the party unless such power of attorney or Vakalatnama or memorandum of appearances as mentioned in rule 69 is filed before the Bench before commencement of the proceedings.

(5) During any proceedings before the Tribunal, it may for the purpose of its knowledge, may call upon the Registrar of Companies to submit information on the affairs of the company only on the basis of information available in the MCA 21 portal. Reasons for such directions shall be recorded in writing. 26. Oath to the witness: The Tribunal Officer or the Tribunal Commissioner as appointed by the Tribunal, as the case may be, shall administer the following oath to a witness:- “I do swear in the name of God that what I shall state shall be truth and nothing but the truth.” 321

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27. Action on Application for Applicant's Default:

(1) Where on the date fixed for hearing of the petition or application or on any other date to which such hearing may be adjourned, the applicant does not appear when the petition or the application is called for hearing, the Tribunal may, in its discretion, either dismiss the application for default or hear and decide it on merit. (2) Where the petition or application has been dismissed for default and the applicant files an application within thirty days from the date of dismissal and satisfies the Tribunal that there was sufficient cause for his non-appearance when the petition or the application was called for hearing, the Tribunal shall make an order setting aside the order dismissing the petition or the application and restore the same: Provided that where the case was disposed of on merits the decision shall not be re-opened except by way of review. 322

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(1) Where on the date fixed for hearing the petition or application or on any other date to which such hearing may be adjourned, the applicant appears and the respondent does not appear when the petition or the application is called for hearing, the Tribunal may, in its discretion adjourn the hearing or hear and decide the petition or the application

ex-parte in exercise of the powers conferred on it in clause (f) of sub-section 2 of section 424 of the Act. (2) Where a petition or an application has been heard ex-parte against a respondent or respondents, such respondent or respondents may apply to the Tribunal for an order to set it aside and if such respondent or respondents satisfy the Tribunal that the notice was duly served, or that he or they were prevented by any sufficient cause from appearing (when the petition or the application was called) for hearing, the Tribunal may make an order setting aside the ex-parte hearing as against him or them upon such terms as it thinks fit in exercise of powers conferred on it under clause (g) of sub-section (2) of section 424 of the Act, and shall appoint a day for proceeding with the petition or application : 28. Ex-parte Hearing and Disposal of petition or Application 323

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Provided that where the ex-parte hearing of the petition or application is of such nature that it cannot be set aside as against one respondent only, it may be set aside as against all or any of the other respondents also.

29. Procedure and Powers of Tribunal: (1) The Tribunal shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a Civil court under the Code of Civil Procedure, 1908, while trying suit, in terms of section 424 of the Act, in respect of the following matters, namely : (a) summoning and enforcing the attendance of any person and examining him on oath ; (b) requiring the discovery and production of document; (c) receiving evidence on affidavits; (d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act 1872, requisitioning any public record or document or copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; 324

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(g) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and

(h) any other matter which may be prescribed by the Central Government. (2). For the purposes of clause (h) of sub-section (2) of section 424 of the Act, the Tribunal shall for the purpose of discharging its functions under the Act exercise the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 in respect of the following matters:- (a) granting stay or order status quo; (b) ordering injunction or cease and desist; (c) appointing commissioner (s) for the purpose under the Act; (d) exercising limited power to review its decision to the extent of correcting clerical or arithmetical mistakes or any accidental slip or omission as provided in rule 189 of these rules; (e) passing such order or orders as it may deem fit and proper in the interest of justice. 325

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30. Power to Pass Order:

The Tribunal may, after giving the parties to any proceeding before it a reasonable opportunity of being heard pass such orders therein as it thinks fit as provided in section 424 of the Act. The Tribunal shall send a copy of every order passed to the parties concerned. 31. Power of Contempt: The Tribunal shall have the same jurisdiction, powers and authority in respect of contempt of themselves as a High Court has and may exercise, for the purpose, the powers under the provisions of the Contempt of Courts Act, 1971 which shall have the affect subject to the modifications as prescribed in section 425 of the Act. 32. Power to Regulate the Procedure: In exercise of the powers conferred on it under sub-section (1) of section 424 of the Act, the Tribunal may regulate its own procedure for the purpose of discharging its functions under the Act. 326

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33. Summoning of Witnesses and Method of Recording Evidence-

(1) If a petition or an application is presented by any party to the proceedings for summoning of witnesses, the Tribunal shall issue summons for the appearance of such witnesses unless it considers that their appearance is not necessary for the just decision of the case. (2) The Tribunal shall make a brief memorandum of the substance of the evidence of every witness as the examination of the witness proceeds and such memorandum shall form part of the record ; Provided that if the Tribunal is prevented from making such memorandum, it shall record the reasons of its inability to do so and shall cause such memorandum to be made in writing from its dictation and shall sign the same, and such memorandum shall form part of the record. 327

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(3) Where summons are issued by the Tribunal under sub-rule (1) to any witness to give evidence or to produce any document, the person so summoned shall be entitled to such travelling and daily allowance sufficient to defray the travelling and other expenses as may be determined by the Registrar.

34. Documents not to form part of records Unless duly permitted by the Tribunal, the following documents shall not form part of the records of the case- (a) written statement or reply filed after the expiry of time granted for the purpose; (b) rejoinder filed without leave of the Tribunal or after the expiry of time granted; (c) additional pleading filed in any manner whatsoever without leave of the Tribunal or filed after expiry of time granted; and (d) documents not submitted in time or not tendered into evidence. 328

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35. Power to Issue Commission:

Any Bench of the Tribunal may issue a commission for the examination or interrogatories or otherwise of any person who is unable to attend the Tribunal for any justifiable reason or for any other purpose as may be required for the disposal of the case. 36. Procedure in Connected Cases: (1) Where two or more petitions or applications pending before a Tribunal arise out of the same facts and any issue involved is common to two or more such petitions or applications, such petitions or applications may so far as the evidence bearing on such issue is concerned, be heard simultaneously and a common order may be passed. (2) Where action is taken under sub-rule (1), the evidence bearing on the common issue or issues shall be recorded on the record of one petition or application and the Tribunal shall certify under its hand on the records of any such other petition or application, the extent to which evidence so recorded applies to such other case and the fact that the parties to such other case had the opportunity of being present, and, if they were present for cross-examining the witnesses. 329

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37. Calendar of Transferred Cases:

Each Bench shall draw up a calendar for the hearing of transferred cases in such manner as the President may, by general or special order transfer such cases to its Benches with a direction to hear and decide the cases according to the calendar. 38. Substitution of Legal Representatives- (1) Where a party to a proceeding pending before a Bench dies or is adjudged insolvent or, in the case of a company, being wound up, the proceeding shall not abate and may be continued by or against the executor, administrator or other legal representative of the parties or by or against the assignee, receiver or liquidator, as the case may be. (2) In the case of death of a party during the pendency of the proceedings before Tribunal, the legal representative (s) of the deceased party may apply within ninety days of the date of such death for being brought on record. (3) Where no petition or application is received from the legal representatives within the period specified in sub-rule (2), the proceedings shall abate: 330

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Provided that for good and sufficient reasons shown, the Tribunal may allow substitution of the legal representatives of the deceased at any time before disposing the appeal on merits.

39. Assessors or Valuers- (1) In any enquiry into a claim, the Tribunal may call in the aid of assessors, not exceeding two in number, who possess any technical or special knowledge with respect to any matter before the Tribunal for the purpose of assisting the Tribunal. (2) An assessor or Valuer shall perform such functions as the Tribunal may direct. (3) The remuneration, if any, to be paid to an assessor or valuer shall in every case be determined by the Tribunal and be paid by it in the manner as may be specified by the Tribunal. 40. Pleadings before the Tribunal No pleadings, subsequent to the reply, shall be presented except by the leave of the Tribunal upon such terms as the Tribunal may think fit. 331

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41. Adjournment of Hearing:

If the Tribunal finds that a petition or an application cannot be taken up for hearing on a given date at the request of either of the parties or both or on its own, it shall record the reasons which necessitate the adjournment and also inform the parties present of the date of adjourned hearing in the open court: Provided that no such adjournment shall be granted more than three times to a party during the proceedings before the Tribunal except in circumstances which are beyond the control of the concerned party: Provided further that all the documents shall be filed by the parties along with pleadings and no adjournment shall be granted for filing documents at a later stage except in circumstances which are beyond the control of the concerned party, but before concluding the arguments. 42. Costs: The Tribunal may, in its discretion, pass such order (s) in respect of costs incidental to any proceedings before it, as it may deem fit. 332

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43. Decision of the Tribunal:

The Tribunal shall decide every petition or application as expeditiously as possible on perusal of documents, affidavits and other evidence, if any, and after hearing such oral arguments as may be advanced with reference to section 422 of the Act. 44. Order to be passed and signed- (1) The Tribunal, after hearing the applicant and respondent, shall make and pronounce an order either at once or, as soon as thereafter as may be practicable but not later than thirty days from the final hearing. (2) An order made by the Tribunal shall be executable by the Tribunal as a decree of a civil court and the provisions of the Code of Civil Procedure, 1908, so far as may be, shall apply as they apply in respect of decree of a civil court as provided in terms of sub-section (3) of section 424 of the Act. (3) Every order of the Tribunal shall be in writing and shall be signed and dated by the President or Member or Members constituting the Bench which heard the case and pronounced the order. 333

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(4) Orders shall be pronounced in the sitting of the Tribunal by the President or in case of the temporary absence of the President, the Member so authorized.

(5) The orders of the Tribunal, as are deemed fit for publication in any authoritative report or the press may be released for such publication on such terms and conditions as the President may lay down. (6) A certified copy of every order passed by the Tribunal shall be communicated to the parties. (7) The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. 8) Any order made by the Tribunal may be enforced by it 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 as per sub-section (3) of section 424 of the Act:- (a) In the case of an order against a company, the registered office of the company is situate; or 334

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(b) In the case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain.

(9) Notwithstanding anything stated in these rules, the Tribunal may transmit order made by it to any court for enforcement on application made by either of the parties to the order or suo motu subject to sub-rule 8 (a) and (b) above. (10) Every order or judgment or notice shall bear the seal of the Tribunal. 45. Application for Execution:For execution of order passed by the Tribunal, the holder of an order shall make an application to the Tribunal in Form No. 8 as provided in Annexure C.46. Issue of Process of Execution- (1) On receipt of an application under rule 44, the Tribunal shall issue a process for execution of its order in such Form as provided in the Code of Civil Procedure, 1908.335

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46. Issue of Process of Execution-

(1) On receipt of an application under rule 44, the Tribunal shall issue a process for execution of its order in such Form as provided in the Code of Civil Procedure, 1908. (2) The Tribunal shall consider objection, if any, raised by the respondent and make such order as it may deem fit and shall issue attachment or recovery warrant in such Form as provided in the Code of Civil Procedure, 1908, as the case may be. 47. Review of decision- (1) The Tribunal may at any time within 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 suo motu, or if the mistake is brought to its notice by the parties in terms of sub-section (2) of section 420: Provided that no such amendment shall be made in respect of any order against which an appeal has been preferred under the Act. 336

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(2) Any person considering himself aggrieved by any order of the Tribunal from which no appeal is allowed or from which appeal is allowed, but has not been preferred and who on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the order made against him, may apply in Form No. 9 of these rules for review of a final order not being an interlocutory order, to the Tribunal.

(3) Where it appears to the Tribunal that there is not sufficient ground for a review, it shall reject the petition or application. (4) Where Tribunal is of the opinion that the petition or application for review should be granted, it shall grant the same: Provided that no such petition or application shall be granted without previous notice to the opposite party to enable him to appear and be heard in support of the order, a review of which is applied for. 48. Compliance of orders of the Bench. Every Bench shall have power to direct the parties concerned to file an affidavit of compliance of its order or such other documents in the manner specified in its order. 337

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49. Effect of non-compliance.

Failure to comply with any requirement of these rules shall not invalidate any proceeding, merely by reason of such failure, unless the Bench is of the view that such failure has resulted in miscarriage of justice. 50. Procedure for imposition of penalty under the Act. (1) Notwithstanding anything to the contrary contained in any rules or regulations framed under the Act, no order or direction imposing a penalty under the Act shall be made unless the person or the company or a party to the proceeding, during proceedings of the Bench, has been given a show cause notice and reasonable opportunity to represent his or her or its case before the Bench or any officer authorized in this behalf. (2) In case the Bench decides to issue show cause notice to any person or company or a party to the proceedings, as the case may be, under sub-rule (1), the Registrar/Registry shall issue a show cause notice giving not less than fifteen days 338

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asking for submission of the explanation in writing within the period stipulated in the notice.

(3) The Bench shall, on receipt of the explanation, and after oral hearing if granted, proceed to decide the matter of imposition of penalty on the facts and circumstances of the case. 51. Empanelment of special authorized representatives by the Tribunal. (1) The Tribunal may draw up a panel of legal practitioners or company secretaries in practice or chartered accountant in practice or cost accountant in practice to assist in proceedings before the Tribunal or Appellate Tribunal. (2) The President may call upon any of the persons from panel under sub-rule (1) for assistance in the proceedings before the Bench, if so required. (3) The remuneration payable and other allowances and compensation admissible to such persons shall be specified in consultation with the Tribunal. 339

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52. Publication of orders-

Any order of the Tribunal deemed by it to be fit for publication in any authoritative report either in physical or electronic form or both or other media may be released for such publication on such terms and conditions as the President or Member concerned may specify by general or special order. 53. Certified copy of the order and inspection of documents or records- (1) If the applicant or the respondent to any proceeding requires a copy of any order passed by the Tribunal, the same shall be supplied to him on payment of fees as specified in Annexure -B within four working days from the petition or application for the said purpose and on urgent basis within two working days from the receipt of the petition or application for the said purpose. (2) The parties to any case or their authorized representative may be allowed to inspect the record of the case on making a petition or an application in writing to the Registrar and on payment of fee as specified in Annexure -B. the date of the receipt of340

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(3) For the purpose of inspection of any physical documents or records or getting clarification of any query relevant thereto from the Registry, by the parties to the proceedings or their respective authorized representatives or such other person shall be allowed on payment of fee as may be specified in Annexure-B during the working hours of the Registry as may be decided by the President

. 54. Orders or directions by the Tribunal and inherent powers of Tribunal- The Tribunal may pass such orders or give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of Justice. Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Tribunal. 341

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55. Registration of Authorized Representative’s clerks-

(1) No clerk employed by an authorised representative shall act as such before the Tribunal or be permitted to have access to the records and obtain copies of the orders of a Bench of the Tribunal in which the Authorised Representative ordinarily appears, unless his name is entered in the Register of Clerks maintained by the said Bench. Such clerk shall be known as a "Registered Clerk". (2) An authorised representative desirous of registering his clerk shall make a petition or an application to the Registrar in Form 10. On such application being allowed by the Registrar, his name shall be entered in the Register of clerks. (3) An identity card shall be issued to a Registered Clerk of the Authorised Representative on payment of fee as specified under Annexure –B by way of Indian postal order or demand draft drawn in favour of the Registrar. 56. Working Hours of the Tribunal: Except on Saturdays, Sundays and other public holidays, the office of the Tribunal shall, subject to any order made by the President, remain open from 9-30 a.m. to 6-00 p.m. 342

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57. Sitting hours of the Tribunal:

The sitting hours of the Tribunal shall ordinarily be from 10-30 a.m. to 1-15 p.m. and 2-15 p.m. to 4-30 p.m. subject to any general or special order made by the President or Members or any Member concerned with the prior approval of the President. 58. Seal and emblem: The official seal and the emblem of the Tribunal shall be such as the Central Government may specify. 59. Sittings of the Tribunal outside the Headquarters: The Tribunal and any of the Benches may hold its sittings at its Headquarters or at any other place as it may find convenient for better transaction or conduct of the business as may be decided by the Tribunal. 60. Headquarters of the Tribunal: The Tribunal shall have its Headquarters at New Delhi. 343

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61. Preservation of Record:

All necessary documents and records relating to petitions or applications dealt with by the Tribunal shall be stored or maintained as provided in these rules and other physical records kept in a record room shall be preserved for a period of three years after the passing of the final order. 62. Inherent powers of the Tribunal: Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. 63. Monthly progress report of Tribunal: The Tribunal shall furnish every month to the Central Government the information with regard to institution, disposal and pendency of applications or petitions and other information relating to the functioning of the Tribunal and its Benches. 344

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64. Maintenance of Order Sheets:

The Registrar shall attach to every petition or application an order sheet in the e-form or in physical mode as may be prepared to suit to the proceedings of the Tribunal. 65. Maintenance of Tribunal Diary: The Tribunal Officer shall maintain a Tribunal diary in format specified by the Registry for recording the proceedings of the Tribunal for each working day with respect to all petitions or applications listed in the daily cause list either manually or electronically as provided hereto. 66. Preparation and publication of daily cause list: The Tribunal Officer shall on each working day prepare for the next working day, the cause list in the prescribed format as prepared by the Registry and such format should uniformly be followed by the respective registries of the Benches and such cause list shall also be displayed at conspicuous place in the premises of the Tribunal either by affixing a copy of the same on the Notice Board of the Tribunal and by making publication in the website of the Tribunal forthwith. 345

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67. Retention, Preservation and Destruction of Records:

(1) The Record Keeper or any other officer so designated shall be responsible for the records consigned to the Record Room. He shall scrutinize the records received by him within three days and prepare an index. (2) On the expiry of the period for preservation of the records specified under rule 61, the Registrar shall weed out the record. 68. Dress for President and Members and for the Authorised Representatives and for the parties in person: (1). For President and Members: The dress of the President shall be white or striped or black pant with black coat over white shirt and band or buttoned- up black coat and band. The dress for the other members of the Tribunal shall be white or striped or black trousers with black coat over white shirt and black tie or buttoned coat. In the case of a female President or a Member, the dress shall be black coat over a white saree.346

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(2). For Authorized Representatives: Every authorized representative as provided in section 432 of the Act, other than a relative or regular employee of the party shall appear before the Tribunal in his professional dress if any, and if there is no such dress, a male, in a suit or buttoned–up coat over a pant or national dress that is a long buttoned-up coat on dhoti or

churidar pyjama, and a female, in a coat over white or any other sober coloured saree or in any other sober dress. (3) For Parties in Person : Parties appearing in person before the Tribunal shall be properly dressed. 69. Memorandum of Appearance: The Authorized Representatives shall make an appearance through the filing of Memorandum of Appearance or a power of attorney in Form No. 12 representing the respective parties to the proceedings. In case of legal practitioner/ advocate, he may make appearance by filing Vakalatnama. 347

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70. Applicability of General Procedure under this Part:

The above rules under General Procedure shall be in addition to the rules provided specifically under Parts herein in respect of the various categories of matters arising before the Tribunal 71. Registers of petitions and applications. (1) There shall be kept in the office of the Bench two separate registers, one for the petitions and other for the applications filed before the Bench. (2) In every register, referred to in sub-rule (1), there shall be entered the following particulars, namely - (a) the serial number of the petition or application and in addition, in the case of an application, the serial number of the petition to which it relates; (b) the date of presentation or receipt of the petition or application; (c) the name of the company to which the matter relates; (d) the name and address of the petitioner or applicant; (e) the names and addresses of the other parties to the petition or application and the names and addresses of the authorised representatives of the parties, if any 348

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(f) the provision of law under which the petition or application is made;

(g) the nature of the relief (s) which have been sought; (h) the date of disposal of the petition or application; (i) the nature of the order made by the Bench; (j) the date when the formal order is drawn up and communicated to the parties; (k) remarks, if any. (3) Separate registers shall be opened for each year and each register of petitions shall be preserved permanently and each register of application shall be preserved for a period of eight years. 72. Fees. (1) In respect of the several matters mentioned in Annexure D, there shall be paid fees as prescribed in Annexure B of these rules: Provided that no fee shall be payable or shall be liable to be collected on a petition or application filed or reference etc made by the Registrar of Companies, Regional Director or by any officer on behalf of the Central Government: 349

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(2) In respect of every interlocutory application there shall be paid fees as prescribed in Annexure B of these rules:

Provided that no fee shall be payable or shall be liable to be collected on an application filed by the Registrar of Companies, Regional Director or by an officer on behalf of the Central Government. (3) In respect of a petition or application filed or references made etc before the Principal Bench or the Bench of the Tribunal, fees payable under these rules shall be paid by means of a bank draft drawn in favour of the Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi/Kolkata/Chennai /Mumbai as the case may be or by electronic mode. PART-III 73. Purpose These rules govern the electronic filing and service of Tribunal documents, by any method other than fax filing and they are made in consonance with the provisions 350

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provided in the Act regarding electronic filing so as to supplement thereto to enable the filer to upload documents electronically through the Electronic filing service providers as may be notified by the Central Government.

74. Effect on Existing Acts and Rules Notwithstanding anything contained in any other Act for the time being in force concerning the filing of electronic documents, these rules shall be in addition to the provisions of the Act, and Information Technology Act, 2000 and such other analogous rules made there under but not in derogation thereto. In case of any conflict or contrast with any other provisions of the Act or other Acts or respective rules as prescribed for electronic filing, then these rules shall prevail.75. Electronic Filing Wholly Compulsory or Mandatory unless Ordered by Tribunal (a) Except as provided by sub-rule (b) below, the electronic filing and serving of Tribunal documents is mandatory and compulsory. 351

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(b) Upon the motion of a party and for cause shown, the Tribunal may order the parties in a particular case to manually file and serve Tribunal documents, which are otherwise permitted to be electronically filed in a manner as may be directed by the Tribunal.

(c) The rules made under this Part for electronic filing shall come into force on the date as may be notified by the Central Government in the Official Gazette. 76. Power to Exempt from Electronic Filing of Documents: (1) Notwithstanding anything contained in these rules, the Central Government may grant exemption from filing documents electronically either wholly or partly or put on hold the implementation of the rules of this Part completely and such other related provisions in these rules until a period or thereafter until such extended period as may be specified by way of notification in the Official Gazette. 352

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(2) Save as otherwise provided in these rules, in case such exemption has been granted, the documents required to be filed electronically shall manually be filed and wherever appearing, the relevant rules stipulating electronic or e-filing in these rules may be understood for manual filing only.

77. Registry: This part of these rules applies only to the filing of documents with the Registry. This part of these rules do not apply to the filing of documents directly with a Member or Members of the Tribunal if the respective persons or entity has been directed to file any document before the Bench directly.78. Documents Containing Signatures (a) A document that is required to be verified, notarized, acknowledged, sworn to, or made under oath shall be electronically filed only as a scanned image. (b) Where a filer has electronically filed a scanned image under this rule, the Tribunal may require the filer to properly file the document in a physical form with the Registry. The Registry may allow such documents for the inspection.353

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79. “DEDICATED PORTAL ONLINE”

(a) “Dedicated Portal Online” is a Portal as defined in sub-rule (16) of rule 2 through which all the parties or Central or State Government agencies and local government’s bodies may electronically send and receive documents to or from the Tribunal and make required payments. (b) To electronically file documents, filers must follow registration and such procedures as outlined by “Dedicated Portal” or otherwise as prescribed by the Central Government. (c) Filers do not electronically file documents directly with the Registry. Rather, filers indirectly file a document with the Registry by electronically transmitting the document to “Dedicated Portal Online” which then electronically transmits the document to the Registry. A filer filing or serving a document must have a valid account with Dedicated Portal Online. 354

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(d) Consistent with standards promulgated by the Central Government in coordination with such other authority or committee on Information Technology, the Dedicated Portal Online, will specify the permissible formats for documents that will be electronically filed and electronically served.

(e) Filers who electronically file documents will pay the filing fees to the Registry indirectly through the “Dedicated Portal Online” by a method set forth by “Dedicated Portal Online.” 80. Signatures (a) Upon completion of the initial registration procedures, each filer will be issued a confidential and unique electronic identifier. Each filer must use his or her identifier in order to electronically file documents. Use of the identifier to electronically file documents constitutes a “digital signature” on the particular document. 355

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(b) The attachment of a digital signature on an electronically filed document is deemed to constitute a signature on the document for purposes of signature requirements imposed by relevant provisions of the Act, or any other law. The person whose name appears first in the signature block of an initial pleading is deemed to be the attorney in charge for the purposes of fulfilling all the requirements provided under the Act, or “Dedicated Portal” online or such other Machine Mode Project as designed, developed and maintained by the Ministry of Corporate Affairs or the Central Government for the purpose under these rules or Information Technology Act, 2000 or such other amended Acts or relevant rules as provided from time to time, unless otherwise designated. The digital signature on any document filed is deemed to be the signature of the Attorney or the Authorised Representative, whose name appears first in the signature block of the document for the said purpose .

(c) A digital signature on an electronically-filed document is deemed to constitute a signature by the filer for the purpose of authorizing the payment of document filing fees. 356

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81. Time Document Filing

(a) A filer may electronically transmit a document to “Dedicated Portal Online” 24 hours in a day and every day of the year, except during brief periods of Central Government approved scheduled maintenance which will occur on any fixed day as informed at the respective website. (b) Upon sending an electronically filed document with the Registry by a filer, the filer is deemed to have delivered the document to the Registry and, subject to sub rule (e), the document is deemed to be filed. (c) As soon as possible but not later than three working days after receiving a document from “Dedicated Portal Online”, the Registry shall examine the document for acceptance or if not, to decide otherwise. (d) If the document is accepted for filing, the Registry shall note the date and time of filing which, with the exception of sub-rule (e) below, shall be the date and time that the filer transmitted the document. The Registry shall inform through “Dedicated Portal Online” its action within 3 working days. 357

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(e) Except in cases of injunction, attachment, garnishment, sequestration, or distress proceedings, documents that serve to commence the proceedings will not be deemed to have been filed on any holiday when the document is electronically transmitted to the “Dedicated Portal Online” or the Registry on holiday. Such documents will be deemed to have been filed on the succeeding working day of the Tribunal.

82. Filing Deadlines Not Altered The electronic filing of a document does not alter any filing deadlines. 83. Multiple Documents (a) Except as provided by sub-rule (b) below, a filer may include only one document in an electronic transmission to Dedicated Portal Online. (b) A filer may electronically transmit a document to Dedicated Portal Online that includes another document as an attachment (e.g., a motion or a proceeding to which is attached a brief in support thereto) 358

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84. Official Document

(a) The Registry’s file for a particular case may contain a combination of electronically-filed documents and physically filed documents. (b) The Registry may maintain and make available electronically-filed documents in any manner allowed by law. 85. E-mail Address Required In addition to the information required in a pleading by the Act, or rules, a filer must provide a valid e-mail address on any electronically filed document. 86. Document Format (a) Electronic Format or Electronically-filed documents must be computer-formatted document prepared in accordance with the EDGAR Filer Manual as specified by the Tribunal. Electronically-filed documents must also be formatted for printing on 8 ½-inch by 11-inch paper or in such manner as may be specified by the Tribunal. 359

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(b) In addition to compliance with para (a), an electronically-filed pleading shall comply with band width etc as may be specified by Central Government from time to time for filing through the Dedicated Portal Online.

87. Electronic Service of Documents Permissible (a) In addition to the methods of serving documents (other than the citation to be served upon the filing of a cause of action) set forth in the Act as well as in these rules, a filer may serve documents upon another party in the case by electronically transmitting the document to that party at the party's provided email address. Service in such a manner is known as ‘Electronic service,” and is permissible in the circumstances unless the Tribunal has ordered the parties to serve the documents otherwise. (b) By virtue of electronically filing a document or serving a document or by agreeing to accept service, a filer additionally agrees to provide information regarding any change in his or her e-mail address to Dedicated Portal Online, the Registry, and all parties in the case. 360

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(c) A party who electronically files a document may not be necessarily required to electronically serve documents upon other parties unless the Tribunal has ordered the parties to electronically serve documents.

(d) A filer may electronically serve a document in instances where the document is physically filed as well as in instances where the document is electronically filed. 88. Completion of Service and Date of Service (a) Electronic service shall be complete upon transmission of the document by the filer to the party at the party’s e-mail address. (b) Except as provided by sub-rule (c) below, the date of service shall be the date on which the electronic service is complete. (c) When electronic service is complete after office hours (recipient’s time), then the date of service shall be deemed to be the next day which is not a public holiday. 361

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89. Time for Action after service

Whenever a party has the right or is required to do some act within a prescribed period of time after service of a document upon the party and that document is electronically served, then three days shall be added to the prescribed period of time unless the Tribunal orders otherwise. 90. Certification of Service (a) Documents to be electronically served upon another party shall be served before the time or at the same time that the document is filed. (b) A filer who electronically serves a document upon another party shall make a written certification of such service that shall accompany the document when that document is filed. The written certification shall include, in addition to any other requirements imposed by the Act, or in these rules, the following: (i) the filer’s e-mail address or telecopier (facsimile machine) number; (ii) the recipient’s e-mail address; (iii) the date and time of electronic service; and (iv) a statement that the document was electronically served and that the electronic transmission was reported as complete. 362

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91. Tribunals Authorized to Make Electronic Orders

(a) The President or a member or members or any Presiding Officer, as the case may be in an instance, may electronically sign an order by applying his or her digitized signature to the order. (b) Upon electronically signing an order as stated in para (a) above, the President or a member or one of the members or any Presiding Officer who has or have heard the case and passed the order, shall electronically forward the order to the Registry who shall treat the electronic order as the official copy of the order. The Registry shall print the electronic order and treat the printed order as the official copy of the order. (c) The Registry may electronically scan a physical form of the Tribunal order. The scanned Tribunal order may then serve as the official copy of the Tribunal order. The Registry is not required to electronically scan physical copies of the orders of the Tribunal in order to create official electronic Tribunal orders. Electronic scanning of physical copies of the Tribunal orders is at the option of the Registry. 363

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92. Viewing of Electronically-filed Documents

(a) The Registry shall ensure that all the records of the Tribunal, except those made confidential or privileged by law or statute, may be viewed in same format by all persons free of cost or for such fee as may be specified by the Tribunal. (b) Independent of the Dedicated Portal Online system and the requirement of viewing access described in sub-rule (a), the Registry may choose to provide for both filers and the general public to electronically view documents or Tribunal orders that have been electronically filed or scanned. Where such provision has been made, persons may electronically view documents or Tribunal orders that have been electronically filed or scanned subject to such fee as may be prescribed by the Central Government and such collection of fee. (c) Nothing in this rule allows for the viewing of documents or Tribunal orders, in any form, that are legally confidential or otherwise restricted by relevant Act or order. 364

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PART IV

President and Members’ salaries & Allowances and other Terms and Conditions of Service 93. Salary, Allowances, and other Terms and Conditions of Service of President and Members: The Salary, Allowances, and other Terms and Conditions of Service of President and Members shall be in the manner as may be prescribed by the Central Government in exercise of the powers provided under section 414 of the Act 94. Powers of the President: In addition to the General Powers provided in the Act, and in these rules elsewhere, the President shall exercise the following powers: a. Preside over the consideration of cases by the Tribunal; b. Direct the Registry of the Tribunal in the performance of its functions; 365

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d. Perform the functions entrusted to the President under these Rules; and

e. Such other powers as may be relevant to carry out his duties as Head of the Tribunal while exercising the general superintendence and control over the administrative functions of the Members , Registrar, Secretary and other staff of the Tribunal; f. Transfer case(s) from one Bench to other Bench of the Tribunal when the circumstances so warrant. PART V Procedure relating to issuance of orders and disposal of cases 95. Matters relating to the Judgments or Orders of the Tribunal: 1. Once the final text of the judgment has been approved and adopted, the judgment shall be signed and dated by the President or the concerned members or member and the Registrar and shall contain the names of the members who have taken part in decision; 366

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2. Any member differing as to the grounds upon which the judgment was based or some of its conclusions, or dissenting from the judgment, may append a separate or dissenting opinion. In case the members who have heard the case are equally divided in passing the order or judgment, then the President shall constitute a Bench as referred in sub-section (5) of section 419 of the Act.

96. Amicus Curiae The Tribunal may, at its discretion, permit any person or persons, including the professionals and professional bodies to render or to communicate views to the Tribunal as Amicus Curiae on any point or points or legal issues as the case may be as assigned to such Amicus Curiae. The Tribunal may permit an Amicus Curiae to have access to the pleadings of the parties. The Tribunal shall enable the parties to submit timely observations on an amicus brief. The Tribunal shall be at liberty to direct either of the parties or both the parties to the proceedings involving a point on which the opinion of the Amicus Curiae has been sought, to bear such expenses or fee as may be ordered by the Tribunal. The judgment and any appended opinions shall be transmitted to the parties and to Amicus Curiae. 367

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97. Recusal

1. For the purpose of maintaining the high standards and integrity of the Tribunal, the President or a Member of the Tribunal shall recuse himself :a. In cases involving persons with whom the President or the Member has a personal, familial or professional relationship; b. In cases concerning which the President or the Member has previously been called upon in another capacity, including as advisor, representative, expert or witness ; or c. If there exist other circumstances such as to make the President or the Member’s participation seem inappropriate. 2. Any member recusing himself shall immediately inform the President of the Tribunal or in the case of the President, the next senior member thereto. 368

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PART-VI

Functions of the Registry, Secretary and General Procedures 98. Appointment of Staff to the Registry: In exercise of the powers provided in section 418 of the Act, the Central Government in consultation with the Tribunal shall provide the Tribunal the staff including the Registrar, Secretary and such other officers for the purpose of exercising the powers and discharging the functions of the Tribunal as the case may be.99. Powers, Functions and Duties of the Registrar: (1) In addition to the functions and duties as assigned to the Registry in Part II and elsewhere in these rules, the Registrar at the Principal Bench, and at other Benches, the officer so designated to function as Registrar shall have all the powers, functions and duties of the Registrar and the Registrar or such officer as designated as Registrar at the Benches shall be head of the Registry and the staff working in the Registry shall work under his general superintendence and control of the Registrar or such other officiating Registrar at the Benches. 369

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The Registrar shall work under the general superintendence and control of the President at the Principal Bench whereas the officiating Registrar at other benches shall work under the senior most member of the respective Benches of the Tribunal. Under the authority of the President, the Registrar of the Tribunal shall:

a. Receive and register petitions, appeals, applications, interlocutory and all other miscellaneous applications relating to such petitions appeals or applications, institution proceedings and related documentation of the case; b. Be responsible for transmitting all documents and making all notifications required in connection with cases before the Tribunal and represent the matters pertaining to this Tribunal before any other forum as may be decided by the President; c. Make for each case a dossier which shall record all actions taken in connection with the case, the dates thereof, and the dates on which any document or notification forming part of the procedure is received or dispatched from his office; 370

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d. Attend hearings, meetings and deliberations of the Tribunal;

e. Keep the minutes of these hearings and meetings of the members as instructed by the President; f. Upon the transmittal of a petition or an application to the Tribunal, unless the President decides otherwise, circulate within the Tribunal a notice summarizing the issues raised in the petition or application, without disclosing the name of the applicant, in order to inform the Members of the Tribunal of proceedings pending before the Tribunal; in respect of category matters as the President so instructs the Registrar; g. Expeditiously perform the functions entrusted to him by the rules of procedure and carry out tasks as assigned by the President; and h. Have the custody of the records of the Tribunal and shall perform such other functions as are assigned to him under these rules or from time to time by the President or the Member: Provided that no record or document filed in any case or matter shall be allowed to be taken out of the custody of the Tribunal without the leave of the Tribunal. 371

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(2) Without prejudice to the foregoing sub-rule (1), the Registrar shall have the following powers and duties, subject to the general or special order of the President or Member, namely:

(i) subject to the direction of the respective Benches, to fix the date of hearings and to issue notices therefore; (ii) to direct any formal amendment of records; (iii) to order to grant or transmit the documents to the parties of the proceedings; (iv) to grant leave to inspect or view the records of the Tribunal;(v) to dispose of all matters relating to the service of notices or other processes, applications for the issue of fresh notices and for extending the time for filing such applications and to grant time not exceeding 30 days for filing reply or rejoinder, if any, and to place the matter before the Bench for appropriate orders after the expiry of the aforesaid period; (vi) to requisition for transfer of any records of such suit, claim or other legal proceeding as are transferred to the Tribunal from any Court, Board for Industrial and Financial Reconstruction or Appellate Authority for Industrial and Financial Reconstruction or Company Law Board or any other court or authority; 372

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(vii) to receive and dispose of applications for substitution, except where the substitution would involve setting aside an order of abatement;

(viii) to receive and dispose of applications by parties for return of documents. (ix) to supply to the Central Government the information in the prescribed Form; (x) to dismiss the petition or application for default in case the applicant or his authorized representative does not appear before him on the date fixed for hearing of the case regarding the defects raised by the Registry; (xi) to dismiss the petition or application in case the applicant fails to serve the opposite party with the notice; and (xii) to restore the petition or application, if he is satisfied that there are sufficient reasons for non-appearance or for not serving the opposite party. (3) The official seal shall be kept in the custody of the Registrar. 373

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(4) Subject to any general or special direction by the President, the seal of the Tribunal shall not be affixed to any order, decree or judgment or summons or other process save under the authority in writing of the Registrar in case of physical form or in case of e-form as prescribed in Part III of these rules.

(5) The seal of the Tribunal shall not be affixed to any certified copy issued by the Tribunal save under the authority in writing of the Registrar. (6) The Registrar of each Bench shall make out, every month a brief summary of the important decisions given by that bench during the previous month and send it to the Registrar of the Principal Bench who shall after suitable editing, circulate it to all the Benches of the Tribunal in the country and the Central Government for their information. 374

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100. Presentation and scrutiny of petitions or applications:

In case of the scrutiny of the petitions or applications as provided in the rules in Part II and elsewhere in these rules, if any person is aggrieved with the decision of the Registrar or such other officer officiating as the Registrar of the Benches, an appeal against the order of the Registrar shall be made within 15 days of the making of such order to the President of the Principal Bench and at other places to the designated member of the Bench whose decision thereon shall b e final. 101. Duties, Functions and Powers of the Secretary:The post of the Secretary shall be at the Principal Bench, New Delhi. He shall discharge his duties, function and exercise his powers under the general superintendence and control of the President of the Tribunal. His main function is to co-ordinate with the Principal Bench and the Benches and act as a liaison officer between the Tribunal and the concerned Ministry having administrative jurisdiction over the Tribunal. He shall in addition to the work assigned to him by the President from time to time, have the following functions, duties and powers:375

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i. In charge of the long term projects and initiatives of the Tribunal;

ii. Supervise the Human Resources; iii. Budgetary allocations and Financial Management; iv. Tribunal operations; v. Tribunal facilities and Administrative Services; vi. Supervise the Public Grievances Mechanism; vii. Coordinate with the Authorised Representatives and other Professionals; viii. Information and Communication Technology (ICT) facilities; ix. Communication services; x. Public affairs and Public safety provisions in the Tribunal Premises; xi. Supervision of Library and Research; xii. Administrative Matters pertaining to the Benches and liaisoning between the President and the other Benches as well as providing support to the other benches under the directions of the President; 376

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xiii. Attend and execute such directions given by the President and discharge such other functions and duties as may be assigned to him.

xiv. Attend the petitions or applications received for empanelment of the professionals including mediators/conciliators. Part VII 102. Matters earlier dealt by the Company Law Board (i) Notwithstanding any other provision of law or rule of Court or Tribunal to the contrary, an original civil action or case arising out of the Act, or any other corresponding provision of the Companies Act, 1956 or Reserve Bank of India Act, 1934 is filed or pending before the Company Law Board on the date on which the Tribunal is constituted, and the relevant provisions of the Act, dealing with the Tribunal have been given effect, or the Company Law Board has been abolished in pursuance of the provisions of the Act 377

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then all the cases on such date pending with the Company Law Board or such Benches shall stand transferred to the respective benches of the Tribunal exercising respective territorial jurisdiction as if the case had been originally filed in the Tribunal or its Bench to which it is transferred on the date upon which it was actually filed in the Company Law Board or its Bench from which it was transferred:

Provided that the Tribunal shall consider any action taken under the said rules be deemed to have been taken or done under the corresponding provisions of these rules and the provisions of the Act, and shall thereupon continue the proceedings , except in a case where the order is reserved by the Company Law Board or its Bench. In such a case, the Tribunal shall reopen the matter and rehear the case as if the hearing had not taken place: Provided further that the Tribunal is at liberty to call upon the parties in a case to produce further evidence or such other information or document or paper or adduce or record further depositions or evidence as may deem fit and proper in the interest of justice. 378

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(ii) It shall be lawful for the President or such member (s) to whom the powers are so delegated, to provide that matters falling under all other sections of the Act, shall be dealt with by such benches consisting one or more members as may be constituted in exercising of such power as enshrined in the Act , Provided that matters pending before the Principal Bench and Additional Principal Bench of the Company Law Board as on the date of constitution of Tribunal as stated

supra shall continue and be disposed of by a bench consisting of not less than two members of the Tribunal having territorial jurisdiction (iii) It shall be lawful for the Tribunal to dispose of any case transferred to it wherever the Tribunal decides that further continuance of such application or petition transferred before the Tribunal shall be a redundant exercise or an unnecessary proceeding on account of changes which have taken place in the Act either upon an application filed by either of the parties to the proceedings or suo motu. 379

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(iv) A fresh petition or an application may also be filed in the prescribed form as provided in the Annexure-C corresponding to those provisions of the sections of Act, if both the parties thereto so consent unanimously with the approval of the Tribunal while withdrawing the proceedings as already continued before the Company Law Board and serve a copy of the petition on the parties thereto including the Ministry of Corporate Affairs, Regional Director, Registrar of Companies, Official Liquidator or Serious Fraud Investigation Office, as the case may be, as provided in the Act, in the manner as provided under Part II. Upon an application to the Tribunal if the permission is granted to file a petition or an application in physical form, then the same shall be filed accompanied with the documents or papers to be attached thereto as required to prove the case subject to the provisions of the Act, and rules hereto. The same procedure shall also apply to other parties to application or petition for filing reply or counter thereto.

(v) Notwithstanding the above and subject to section 434 of the Act, the Tribunal may prescribe the rules relating to numbering of cases and other procedures to be followed in the case of transfer of such matters, proceedings or cases. 380

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103. Matters earlier dealt by the District Court or High Court

(i) All proceedings under the Companies Act, 1956, 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. (ii) Subject to section 434 of the Act, Tribunal may prescribe the rules relating to numbering of cases and other procedures to be followed in the case of transfer of such matters, proceedings or cases. 104. Matter earlier dealt by BIFR 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 Financial381

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Reconstruction or the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985 immediately before the commencement of this Act shall stand abated:

Provided that a company in respect of which such appeal or reference or inquiry stands abated under this clause may make a reference to the Tribunal under this Act within one hundred and eighty days from the commencement of this Act in accordance with the provisions of this Act: Provided further that no fees shall be payable for making such reference under this Act by a company whose appeal or reference or inquiry stands abated under this clause. 105. Petition or Application under sub-section (2) of section 45QA of the Reserve Bank of India Act, 1934 (2 of 1934): (i) Provisions of these rules shall apply, mutatis mutandis, to the application or petition made under sub-section (2) of section 45QA of the Reserve Bank of India Act, 1934 (2 of 1934) or under such other analogous provision of the other Act(s). Similarly, these rules shall extend to the petitions or applications filed under various provisions of the existing Acts before the Company Law Board. 382

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Explanation:- For the purpose of the said provisions, wherever the words “Company Law Board” or “Board”, are mentioned, the same shall be treated as if such provision or word is addressing or referring to “Tribunal”.

106. Reference to the Tribunal: Any reference to the Tribunal by the Registrar of Companies under second proviso to sub-section (1) of section 252, section 441 of the Act, or any reference to the Tribunal by the Central Government under proviso to sub-section (5) of section 140, 221, sub-section (2) of section 224, sub-section (5) of section 224, sub-section (5) of section 233, sub-section (2) of section 241 of the Act, or any reference by a company under clause (c) of sub-section (4) of section 22A of the Securities Contracts (Regulations) Act, 1956 shall be made by way of a petition or application in Form No. 9 in Annexure C and shall be accompanied by documents mentioned in Annexure-D. 383

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PART VIII

SPECIAL PROVISIONS RELATING TO CERTAIN SPECIFIC MATTERS 107. Application under sub- section (7) of section 7. 1. Application under sub-section (7 ) shall be filed to the tribunal filed in form 1 and shall be accompanied such documents as are mentioned in Annexure –D. 2. Every application filed under sub rule (1) shall also set out the following particulars. a. Name of the company and other details including date of incorporation, name and address of the subscribers, promoters and first directors. b. The details of false or incorrect information or representation or material facts or information suppressed. c. details of such documents in or declaration filed or made for incorporating such company, d. involvement of promoters, subscribers and first directors in committing fraud during the course of incorporation; 3. Tribunal may pass such orders, as it may think fit in accordance384

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with clauses (a), (b), (c), (d) and (e) of sub-section (7) of section 7.4. Before making any such order under sub-section(7) of section 7 Tribunal shall give reasonable opportunity to the company of being heard in the matter, and shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability. 108. Petition under section 14. (1) A petition under second provision to sub-section (1) of section 14 for the conversion of a public company into a private company, shall, not less than three months from the date of passing of special resolution, be filed to the Tribunal in Form No. 1 and shall be accompanied with such documents as are mentioned in Annexure D. (2) Every petition filed under sub-rule (1) shall set out the following particulars: (a) the date of the Board meeting at which the proposal for alteration of memorandum was approved; (b) the date of the general meeting at which the proposed alteration was approved; 385

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(c) state at which the registered office of the company was situated;

(d) State number of members in the company, number of members attended the meeting and number of members of voted for and against. (e) reason for conversion into a private company effect of such conversion on shareholders, creditors, debenture holders and other related parties. (f) state listed or unlisted public company. (g) state the nature of the company that is a company limited by shares, a company limited by guarantee( having share capital or not having share capital) and unlimited company (h) state whether a company registered under section 8 of the Act. (3) There shall be attached to the application, 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: 386

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(a) the names and address of every creditor and debenture holder of the company;

(b) the nature and respective amounts due to them in respect of debts, claims or liabilities; (c) in respect of any contingent or unascertained debt or any such claim admissible to proof in winding up of the company, the value, so far as can be justly estimated of such debt or claim: Provided that the petitioner company shall file an affidavit, signed by the company secretary of the company, if any and not less than two directors of the company, one of whom shall be a managing director, where there is one, to the effect that they have made a full enquiry into the affairs of the company and, having done so, have formed an opinion that the list of creditors is correct, and that the estimated value as given in the list of the debts or claims payable on a contingency or not ascertained are proper estimates of the values of such debts and claims and that there are no other debts of , or claims against, the company to their knowledge. (4) A duly authenticated copy of such list of creditors shall be kept at the registered office of the company and any person desirous of387

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inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the same on payment of the sum of rupees ten per page to the company.

(5) The company shall at least 14 days before the date of hearing (a) advertise the petition in accordance with rule 11; (b) serve, by registered post with acknowledgement due, individual notice(s) , in Form No. 3 B to the effect set out in sub-rule (a) above on each debenture-holder and creditor of the company; and (c) serve, by registered post with acknowledgement due, a notice together with the copy of the petition to the Central Government, Registrar of companies and to the Securities and Exchange Board, in the case of listed companies and to the regulatory body, if the company is regulated under any Special Act: (6) Where any objection of any person whose interest is likely to be affected by the proposed petition has been received by the petitioner, it shall serve a copy thereof to the Registrar of companies on or before the date of hearing: 388

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(7) While passing an order, the Tribunal may, if it is satisfied, having regard to all the circumstances of the case, that the conversion would not be in the interest of the company or is being made with a view to contravene or to avoid complying with the provisions of the Act, disallow the conversion.

109. Application to Cancel Variation of Rights under sub-section (2) of Section 48. (1) Where an application to cancel a variation of the rights attaching to any class of shares is made on behalf of the shareholders of that class entitled to apply for cancellation under sub-section (2) of section 48 by the letter of authority signed by the shareholders so entitled, authorizing the applicant or applicants to present the application on their behalf, shall be annexed to the application, and the names and addresses of all the said shareholders, the number of shares held by each of them, aggregate number of such shares held and percentage of the issue shares of that class shall be set out in the schedule to the application(2) The application in Form No. 1 shall be accompanied by documents mentioned in Annexure D and shall set out;389

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(a) the particulars of registration

(b) the capital structure , the different classes of shares into which the share capital of the company is divided and the rights attached to each class of shares (c) the provisions of the memorandum or articles authorizing the variation of the rights attached to the various classes of shares (d) the total number of shares of the class whose rights have been varied. (e) the nature of the variation made, and so far as may have been ascertained by the applicants, the number of shareholders of the class who gave their consent to the variation or voted in favor of the resolution for variation and the number of shares held by them, (f) the number of shareholders who did not consent to the variation or who voted against the resolution, and the number of shares held by them, (g) the date or dates on which the consent was given or the resolution was passed, 390

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(3) The applicant shall at least 14 days before the date of the filing of the petition advertise the application in accordance with rule 11.

(4) Where any objection of any person whose interest is likely to be affected by the proposed application has been received by the applicant, it shall serve a copy thereof to the Registrar of companies and Regional Director on or before the date of hearing: (5) On any such application, the Tribunal, after hearing the applicant and any other person as appears to it to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation, and shall if not so satisfied, confirm the variation: Provided that the Tribunal may, at its discretion, make such orders as to cost as it thinks fit. (6) The decision of the Tribunal on any such application shall be final. 391

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110. Petition under sub-section (3) of section 55

(1) The petition in Form No. 1 shall be accompanied by documents mentioned in Annexure D and shall set out: (a) the particulars of registration (b) the capital structure, the different classes of shares into which the share capital of the company is divided; (c) the provisions of the memorandum or articles authorizing the issue of preference shares; (d) the total number of preference shares issued; (e) Details of such preference shares which are not redeemed or unable to pay dividend. (f) Terms and conditions of issue of such existing preference shares. (g) The total number of such preference shares (unredeemed) and number of holders consented for with value of such preference s(h) The date or dates on which the consent was given or the resolution was passed. hares and percentage of holders who have consented for. 392

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(2) On any such petition, the Tribunal, after hearing the petitioner and any other person as appears to it to be interested in the petition, may, if it is satisfied, having regard to all the circumstances of the case may approve for issue of further redeemable preference shares equal to the amount due, including the dividend thereon, in respect of unredeemable preference shares.

Provided that the Tribunal shall, while giving approval, order the redemption forthwith of preference shares held by such persons who have not consented to the issue of further redeemable preference shares; Provided further that the Tribunal may, at its discretion, make such orders as to cost as it thinks fit. (3) The decision of the Tribunal on any such petition shall be final.111. Form of application or petition for reduction of share capital under section 66 and Notice of Admission for directions: (1) An application to confirm a reduction of the share capital of a393

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company shall be in Form No. 13, and shall be accompanied by a notice of admission for directions in Form No.14. Such application shall be accompanied by documents mentioned in Annexure D.

(2) The application filed under sub-rule (1) shall set out the following particulars: (a) existing capital structure of the company; (b) proposed capital structure after the reduction; (c) terms and conditions of the reduction of share capital indicating clearly whether the reduction of share capital involves diminution of any liability in respect or unpaid share capital or the payment to any shareholder of any paid-up share capital and whether the company has creditors or any class of them entitled to object; (d) provisions of the articles of association of the company authorizing such reduction of capital;(e) date of passing of special resolution by the members in the general meeting of the company; (f) the number of members present and voting at such meeting and number of shares/ voting power held by them;394

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(g) the number of members who voted in favour of the resolution for reduction of capital and the number of shares/ voting power held by them;

(h) the number of members who voted against the resolution and the number of shares/ voting power held by them; (i) reasons for such reduction of share capital.112. Procedure on hearing of Notice of Admission: Upon the hearing of the notice of admission and after giving notice to the Central Government, Registrar of companies and to the Securities and Exchange Board, in the case of listed companies, or in the case of non banking financial companies to the Reserve Bank of India and the creditors of the company, if the Tribunal is satisfied that the proposed reduction does not involve either diminution of liability in respect of unpaid share capital or payment to any shareholder of any paid-up share capital and does not think fit to direct that the procedure prescribed in section 66 shall apply, it shall fix a date for hearing of the application and give such directions as it may think fit as to the advertisement of the application. The application shall be posted for hearing on the date fixed, and upon the hearing thereof, 395

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the Tribunal may confirm the reduction on such terms and conditions as he may think fit.

113. Directions at the hearing of Notice of Admission: Where the proposed reduction involves either diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital and, in any other case, if the Tribunal thinks fit to direct that the procedure prescribed in section 66 of the Act shall apply, the Tribunal may, upon the hearing of the notice of admission or upon any adjourned hearing thereof, or upon the hearing of any subsequent application, give such directions as it may think fit as to the proceedings to be taken, and more particularly with respect to the following matters, that is to say: (a) the proceedings to be taken for settling the list of creditors entitled to object, including the dispensing with the observance of the provisions of said section 66 as regards any class or classes of creditors ;(b) fixing the date with reference to which the list of such creditors is to be made out,396

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(c) the publications of notices ; and

(d) generally fixing the time for and giving directions as to all other necessary or proper steps in the matter. The order made upon the notice of admission under this rule shall be in Form No. 15 with such variations as the circumstances may require 114. List of Creditors: The company shall, within the time allowed by the Tribunal, file a list in Form No. 16 made out by an officer of the company competent to make the same, containing the names and addresses of the creditors of the company to whom the enquiry extends as on the date fixed by the Tribunal under the last preceding rule, and the respective amounts due to them in respect of debts, claims or liabilities to which the enquiry extends or in case of any such debt payable on a contingency or not ascertained, or any such claim admissible to proof in a winding-up of the company, the value, so far as can be justly estimated, of such debt, or claim. 397

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115. Affidavit verifying list of Creditors:

Such list shall be verified by an affidavit made by an officer of the company competent to make the same, who, in such affidavit, shall state his belief that the list verified by such affidavit is correct, that the estimated values, as given in the list, of the debts payable on a contingency or not ascertained, or of any claims admissible to proof in a winding-up, are just and proper estimates of the values of such debts and claims respectively, and that there was not, at the date fixed by the Tribunal under rule 134, any debt, claim or liability which if that date were commencement of the winding-up of the company, would be admissible in proof against the company, except the debts, claims and liabilities set forth in such list as filed under rule 136 and any debts, claims or liabilities to which the enquiry does not extend, and shall state the source of his knowledge or information and the grounds of his belief regarding the matters deposed to in such affidavit. Such affidavit shall be in Form No. 17, with such variations as the circumstances of the case may require. 398

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116. Inspection of list of creditors:

Copies of such list shall be kept at the registered office of the company and at the office of the authorised representative of the company, and any person desirous of inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the same on payment of the sum of rupees fifty for inspection and for taking extracts on payment of the sum of rupees ten per page to the company. 117. Notice to Creditors: (i) The company shall, within seven days after the filing of the list of creditors referred to in rule 136 or such further or other time as the Tribunal may allow, send to each creditor whose name is entered in the said list, a notice of presentation of the application and of the said list, stating the amount of the proposed reduction of capital and the amount or estimated value of the debt or the contingent debt or claim or both for which such creditor's name is entered in the said list, and the time, as fixed by the Tribunal, within which if he claims to be entitled to be entered on such list as a creditor for a larger amount, he must send in his name and address, and the particulars of his debt or claim, and the name399

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and address of his

authorised representative if any, to the authorised (ii) Such notice shall be in Form No. 18 and shall, unless the Tribunal in the manner as prescribed under Part II of these rules or otherwise directs in the manner to each creditor at his last known address or place of abode: representative of the company. Provided that where his address is not known to the company, the Tribunal may direct notice to be given to such creditor in such manner as the Tribunal may think fit. 118. Advertisement of the petition or application and list of creditors: (i) Notice of the presentation of the application and of the list of creditors under rule 114 read with rule 115, shall, within seven days after the filing of the said list or such further or other times as the Tribunal may allow, be advertised by the company in such manner as the Tribunal shall direct. (ii) Such notice shall state the amount of the proposed reduction of share capital, and the places, where the aforesaid list of creditors may be inspected, and the time as fixed by the Tribunal within which creditors of the company who are not entered but claim to be entitled to be entered on the said list, must send in their names400

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and addresses and the particulars of the debts or claims and the names and addresses of their

authorised representatives, if any, to the authorised representative of the company. Such notice shall be in Form No.19. 119. Affidavit for Proof of Service: The company shall, as soon as may be, file an affidavit proving the dispatch and publication of the notices referred to in rules 138 and 139. Such affidavit shall be in Form No. 20. 120. Statement by company as to the result of rules 117 and 118: (i) The company shall within the time fixed by the Tribunal, file a statement signed and verified by the authorised representative of the company stating the result of the notices mentioned in rules 117 and 118 respectively and verifying a list containing the names and addresses of the persons, if any, who shall have sent in the particulars of their debts or claims in pursuance of such notices respectively and the amounts of such debts or claims. (ii) Such statement shall be accompanied by an affidavit made by a competent officer or officers of the company who shall, in such list, 401

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distinguish which (if any) of such debts and claims are wholly, or as to any and what part thereof, admitted by the company, and which (if any) of such debts and claims are wholly or as to any and what part thereof, disputed by the company, and which (if any) of such debts and claims are alleged by the company to be wholly, or as to any and what part thereof not included in the enquiry.

(iii) Such affidavit shall also state which of the persons, who are entered in the list as creditors and which of the persons, who have sent in particulars of their debts or claims in pursuance of such notices as aforesaid, have been paid or have consented to the proposed reduction. Such statement shall be in Form No.21. 121. Procedure where claim is not admitted, and proof of debt: (i) If the company contends that a person is not entitled to be entered in the list of creditors in respect of any debts or claim, whether admitted or not, or if any debt or claim, the particulars of which are so sent in, shall not be admitted by the company at its full amount, then, and in every such case, unless the company is willing to set apart and appropriate in such manner as the402

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Tribunal shall direct, the full amount of such debt or claim, the company shall, if the Tribunal thinks fit so to direct, sent to the creditor a notice in Form No.22 that he is required to come in and establish his title to be entered on the list, or as the case may be, to come in and prove such debts or claim or such part thereof as is not admitted by the company on the day fixed by the Tribunal.

(ii) Such notice shall be served not less than four clear days before the date fixed by the Tribunal.(iii) A proof of debt by a creditor shall be in Form No. 23. Where the creditor is for good reason personally unable to make the affidavit, his authorised agent may make the same.122. Costs of Proof: The costs of proof of a debt or claim or any enquiry under the preceding rules shall be at the discretion of the Tribunal.123. Certificate by the Tribunal as to Creditors: The result of the settlement of the list of creditors shall be stated in a certificate which shall be prepared by the authorised representative of the company and signed by the Tribunal. Such certificate shall -403

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(1) specify the debts or claims (if any) which have been disallowed ;

(2) distinguish (a) the debts or claims, the full amount of which the company is willing to set apart and appropriate ; (b) the debts or claims (if any) the amount of which has been fixed by enquiry and adjudication in the manner provided by section 66 and these rules ; and (c) the debts or claims (if any) the full amount of which the company does not admit or is not willing to set apart and appropriate or the amount of which has not been fixed by enquiry and adjudication as aforesaid ; and (3) show (a) which of the creditors have consented to the proposed reduction, and the total amount of the debts due to them ; and (b) the total amount of the debts or claim the payment of which has been secured in the manner provided by section 66 and the persons to or by whom the same are due or claimed. The said certificate shall also state which creditors have under rule 119 come in and sought to establish their title to be entered on the list and whether such claims have been allowed or not, but it shall not be necessary to make in such certificate any further or other reference to any creditors who are not entitled to be entered in the list or to any debts or claims to which the enquiry does not extend or to show therein 404

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the several amounts of the debts or claims of any persons who have consented to the proposed reduction or the payment of whose debts or claims has been secured as aforesaid.

124. Hearing of the petition or application: After the expiry of not less than fourteen days from the filing of the certificate mentioned in the preceding rule, the application shall be set down for hearing. Notice of the date fixed for the hearing of the application shall be advertised within such time and in such newspaper or newspapers as the Tribunal may direct and shall be in Form No. 24. 125. Who may Appear and Oppose: Any creditor included in the certificate whose debt or claim has not, before the hearing of the application, been discharged or determined or been secured in the manner provided in section 66 and who has not before the hearing consented in writing to the proposed reduction of share capital may, if he thinks fit, upon giving two clear days' notice to the authorised representative for the company of his intention to do so, appear at the hearing of the application and oppose it. The costs of his appearance shall be in the discretion of the Tribunal. 405

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126. Directions at Hearing:

(1) At the hearing of the application the Tribunal may, if he thinks fit, give such directions as may seem proper with reference to securing in the manner mentioned in section 66, the debts or claims of any creditors who do not consent to the proposed reduction, and the further hearing of the application may be adjourned to enable the company to comply with such directions. (2) Upon the hearing of the petition or application, if the Tribunal is satisfied that the proposed reduction does not involve either diminution or liability in respect of unpaid share capital or payment to any shareholder of any paid up share capital, it shall (a) fix a date for hearing of the application; and (b) give such directions as to the advertisement of the application, as it may think fit. (3) Upon the hearing of the petition or application or upon any adjourned hearing thereof or upon the hearing of any subsequent application, if the Tribunal is satisfied that the proposed reduction involves either the diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, then 406

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(a) the Tribunal shall require the company to file, within such time as allowed by the Tribunal, a list of creditors and debenture holders, drawn up to the latest practicable date preceding the date of filing of application by not more than two months, setting forth the following details:

(i) the names and address of every creditor and debenture holder of the company; (ii) the nature and respective amounts due to them in respect of debts, claims or liabilities; (iii) in respect of any contingent or unascertained debt or any such claim admissible to proof in a winding up of the company, the value, so far as can be justly estimated of such debt or claim: Provided that the applicant company shall file an affidavit, signed by the Company Secretary of the company, if any and not less than two directors of the company, one of whom shall be a managing director, where there is one, to the effect that they have made a full enquiry into the affairs of the company and, having done so, have formed an opinion that the list of creditors is correct, and that the estimated value as given in the list of the debts or claims payable on a contingency or not ascertained are proper407

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estimates of the values of such debts and claims and that there are no other debts of , or claims against, the company to their knowledge.

(b) A duly authenticated copy of such list of creditors shall be kept at the registered office of the company and any person desirous of inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the same on payment of the sum of rupees ten per page to the company. (c) Any person claiming that his name shall be entered in the list of creditors or objects to the amount of debt payable to him according to such list, shall deliver or cause to be delivered by registered post, the objections supported by an affidavit, to the Registrar and shall also serve a copy of the objections on the applicant-company at its registered office. (d) If the applicant-company contends that: (i) the person filing any objection is not entitled to be entered in the list of creditors in respect of any debts or claim, whether admitted or not, or (ii) any debt or claim, the particulars of which are so sent in, shall not be admitted by it, either in full or in part, 408

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then, and in every such case, unless the company is willing to set apart and appropriate in such manner as the Tribunal directs, the Tribunal may direct such person to come in and establish his title to be entered on the list, or as the case may be, to come in and prove such debts or claims or such part thereof as is not admitted by the company on the day fixed by the Tribunal (e) The Tribunal may give such directions as he may think fit as to the proceedings to be taken, and more particularly with respect to the following matters, that is to say:

(i) the proceedings to be taken for settling the list of creditors entitled to object; (ii) the publications of notices; and (iii) generally fixing the time for and giving directions as to all other necessary or proper steps in the matter. 127. Order on the application: Where the Tribunal makes an order confirming a reduction, such order shall include directions – (a) as to the manner in which, the times at which and the newspaper or newspapers in which, notice of the registration of the order and of minute as approved by the Tribunal shall be published, 409

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(

b) as to the period commencing on or after the date of the order, during which the words 'and reduced' shall be added to the name of the company as the last words thereof, in case the Court thinks fit to direct under section 66 that the words shall be so added, and (c) as to the publication, if the Tribunal so directs, of the reasons for reduction or the causes that led to it or such other information in relation thereto as the Tribunal may require to be published under section 66.128. Minutes: Unless the form of the minute has been approved by the Tribunal at the time of making the order confirming the reduction, the company shall, within seven days from the date of the said order, file for the approval of the Tribunal a draft of the minute containing the particulars required by section 66, and shall take an appointment for approval of the same. The authorised representative for the company shall attend when the minutes comes up before the Tribunal for approval. The order confirming the reduction of capital and approving the minute shall be in Form No.25 with such variations as may be necessary. 410

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129. Advertisement of Reasons for Reduction of Share Capital:

Where the Tribunal makes an order directing the company to publish the reasons for the reduction or such other information in regard thereto as the Tribunal may direct, unless the form of the statement to be published has been approved by the Tribunal at the time of making the order, the company shall, within seven days of the order, file, for the approval of Tribunal, a draft of the statement and shall take an appointment for approval of the same. The authorised representative of the company shall attend when the statement comes up for approval before the Tribunal. The statement as approved shall be published in the same newspapers in which notice of the registration of the order and the minute has been directed to be published.130. Form of Minute and Notice of Registration: The Minute may be in Form No.26 and the Notice of Registration of the order and the minute shall be in Form No. 27.411

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131. Petition under sections 58 & 59.

(1) The petition against the refusal for registration of transfer or transmission of securities under section 58 or for rectification of Register of members under section 59 shall be made to the Tribunal by way of a petition in Form No. 1 and shall be accompanied by such documents as are mentioned in Annexure D: Provided that a copy of such petition shall be served on the concerned company at its registered office immediately after filing of the petition with the Tribunal. (2) The petitioner shall at least 14 days before the date of hearing advertise the petition in accordance with rule 11. (3) Where any objection of any person whose interest is likely to be affected by the proposed petition has been received by the petitioner, it shall serve a copy thereof to the Registrar of Companies and Regional Director on or before the date of hearing: 4) The Tribunal may, while dealing with a petition under section 58 or 59, at its discretion, make-412

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(

a) order or any interim order, including any orders as to injunction or stay, as it may deem fit and just; (b) such orders as to costs as it thinks fit; and (c) incidental or consequential orders regarding payment of dividend or the allotment of bonus or rights shares(5) On any petition under section 59, the Tribunal may- (a) decide any question relating to the title of any person who is a party to the petition to have his name entered in, or omitted from, the register; (b) generally decide any question which is necessary or expedient to decide in connection with the application for rectification. (6) The decision of the tribunal on any such petition shall be final.132. Application under proviso to clause (b) of sub-section (1) of section 61. (1) An application for obtaining the approval of the Tribunal for the consolidation and division of all or any of its share capital into shares of a larger amount than its existing shares which results in changes in the voting percentage of shareholders shall413

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be filed in

Form No. 1 and shall be accompanied with such documents as are mentioned in Annexure D. (2) The application shall, inter alia, set forth the following: (a) provision of articles authorizing such consolidation or division; (b) existing capital structure of the company; (c) new capital structure of the company after the consolidation or division; (d) class of shares being consolidated or divided; (e) face value of shares pre and post consolidation or division; (f) justification for such consolidation or division. (3) The company shall at least 14 days before the date of hearing (a) advertise the petition in accordance with rule 11; and (b) serve, by registered post with acknowledgement due, a notice together with the copy of the application to the Central Government, Registrar of Companies and to the Securities and Exchange Board, in the case of listed companies and to the regulatory body, if the company is regulated under any Special Act:414

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(4) Where any objection of any person whose interest is likely to be affected by the proposed application has been received by the applicant, it shall serve a copy thereof to the Central government Registrar of Companies and Securities Exchange Board of India, in the case of listed companies and to regulated body, if the company is regulated under any Special Act on or before the date of hearing:

(5) Upon hearing the application or any adjourned hearing thereof, the Tribunal may pass such order, subject to such terms and conditions, as thinks fit. 133. Application under sections 71 (10), section 73(4) or section 76(2) read with section 73(4), section 74(2), section 76(2) read with section 74(2) (1) Where a company fails to redeem the debentures or repay the deposits or any part thereof or any interest thereon, an application under sub-section (10) of section 71 or under sub-section (4) of section 73 of the Act or section 45QA of the Reserve Bank of India Act, 1934 (2 of 1934), shall be filed to the Tribunal, in Form No. 11 in duplicate and shall be accompanied by such documents as are mentioned in Annexure D, by-415

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(a) in case of debentures, all or any of the debenture holders(s)

concerned, or debenture trustee; or (b) in case of deposits, all or any of the depositor(s) concerned, or where the deposits are secured, by the deposit trustee. (2) There shall be attached to the application, a list of depositors or debenture holders, as the case may be, setting forth the following details in respect of every such depositor or debenture holder:(a) Full name, age, father’s/ mother’s/ spouse’s name, occupation and full residential address (b) Fixed deposit receipt number or debenture certificate number, as the case may be. (c) Date of maturity; (d) Amount due to such person by the company; (e) Amount already paid by the company, if any; (f) Total amount due as on the date on the application: Provided that where the company is the applicant, it shall file an affidavit stating the list of depositor(s) or debenture holder (s),416

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as the case may be, is correct, and that the estimated value as given in the list of the amount payable to such depositors or debenture holders are proper estimates of the values of such debts and claims.

(3) The Tribunal shall pass an appropriate order within a period of sixty days from the date of receipt of application under sub-rule (1): Provided that the Tribunal shall, before making any order under this rule, give a reasonable opportunity of being heard to the company and the other persons interested in the matter. (4) The Tribunal may, if it is satisfied, on the application filed under sub-rule (1), that it is necessary so to do, to safeguard the interests of the company, the debenture holder(s) or the depositor(s), as the case may be, or in the public interest, direct, by order, the company to make repayment of such deposit or debenture or part thereof forthwith or within such time and subject to such conditions as may be specified in the order: Provided that while passing such an order, the Tribunal shall consider the financial condition of the company, the amount or deposit or debenture or part thereof and the interest payable thereon. 417

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(5) Where a company failed to repay the deposits under section 76 or part there of or any interest there on in accordance with sub-section (3) or sub-section(4) of sub-section 73 or sub-section (2) of section 74 and in accordance with the above rules the provisions of section 75 shall be applicable.

(6) (a) the application under section 74(2) and 76(2) read with section 74(2) shall be in Form 1 and shall accompanied with the documents as per Annexure D. (b) A copy of the application made under : (i) section 74(2) shall be served on the Regional Director and the Registrar of Companies before the date of hearing; (ii) section 76(2) read with section 74(2) shall be served on the Regional Director and the Registrar of Companies before the date of hearing. (c) The Registrar of Companies in consultation with Regional Director shall submit before the Tribunal, the report on the affairs of the company within thirty days from the date of the receipt of the application and Tribunal may consider such observations made by the Registrar of Companies before passing an order. 418

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134. Application under section 97 for calling or obtaining a direction to call annual general meeting.

(1) An application under section 97 for calling or obtaining a direction to call the annual general meeting of the company shall be made by any member of the company. Such application shall be made in Form No. 1 and shall be accompanied by the documents specified in Annexure D. (2) A copy of the application shall be served on the Registrar of Companies on or before the date of hearing. 135. Application for obtaining an order for calling of general meeting (other than Annual General Meeting) under section 98 (1)An application under section 98 for obtaining an order for calling of a general meeting (other than Annual General Meeting) shall be made by any director or member of the company who would be entitled to vote at the meeting. Such application shall be made in Form No. 1 and shall be accompanied by the documents specified in Annexure D. (2) A copy of the application shall be served on the Registrar of Companies on or before the date of hearing. 419

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136. Petition or application under section 130.

(1) A petition or application under sub-section (1) of section 130 for obtaining an order of re-opening of books of account and recasting of financial statement of a company shall be filed to the Tribunal in Form No. 1 and shall be accompanied by such documents as are mentioned in Annexure D. (2) The petition or application shall, inter alia, set forth the following particulars: (a) financial year or period to which such accounts relates; (b) the name and contact details of the officer of the company responsible for making and maintaining such books of accounts and financial statement; (c) where such accounts are audited, the name and contact details of the auditor who audited such accounts; (d) brief particulars of the fraud or mismanagement casting a doubt on the reliability of financial statement; e) circumstances that made the company to derive to the conclusion that the accounts were prepared in a fraudulent420

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manner or the affairs of the company were mis-managed during the relevant period; (f) financial impact of such fraud or mis-management. (3) The company shall at least 14 days before the date of hearing: (a) advertise the petition in accordance with rule 11; (b) serve, by registered post with acknowledgement due, individual notice(s) , in Form No. 3 B to the effect set out in sub-rule (a) above on each debenture-holder and creditor of the company; and (c) serve, by registered post with acknowledgement due, a notice together with the copy of the petition to the Central Government, Registrar of Companies, the Income-tax authorities and to the Securities and Exchange Board, in the case of listed companies and to the regulatory body, if the company is regulated under any Special Act: 421

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(4) Where any objection of any person whose interest is likely to be affected by the proposed petition has been received by the petitioner, it shall serve a copy thereof to the Registrar of Companies, Central Government, the Income- tax authorities and to the Securities and Exchange Board, in the case of listed companies and to the regulatory body, if the company is regulated under any Special Act on or before the date of hearing:

(5) Where no objection has been received from any of the parties, who have been duly served, the Registrar of Tribunal or Bench as the case may be may put up the petition for orders without hearing. (6) Upon the hearing the petition or any adjourned hearing thereof, the Tribunal may pass such an order, subject to such terms and conditions, as it thinks fit: 137. Petition or application under section 252. (1) A petition or application under sub-section (1) of section 252, filed to the Tribunal in Form No. 9 to restore the name of a company in the register of companies shall be served on the422

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Registrar and on such other persons as the Tribunal may direct, not less than 14 days before the date fixed for hearing of the petition.

(2) The petitioner or applicant shall at least 14 days before the date of hearing advertise the petition in accordance with rule 11.(3) Upon hearing the petition or any adjourned hearing thereof, the Tribunal may pass such an order, subject to such terms and conditions, as it thinks fit. (3) Upon hearing the petition or any adjourned hearing thereof, the Tribunal may pass such an order, subject to such terms and conditions, as it thinks fit. (4) Where the Tribunal makes an order restoring the name of such company to the register of companies, the order shall direct that (a) the petitioner to deliver to the Registrar of Companies a certified copy thereof within 30 days from the date of the order; (b) on such delivery, the Registrar of Companies do, in his official name, advertise the order in the Official Gazette; and (c) the petitioners do pay to the of Registrar of Companies his costs of, and occasioned by, the petition, unless for any special reasons the Tribunal orders otherwise. 423

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(5) If the Registrar of Companies is satisfied that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its directors, which requires restoration in the register of companies, he may within a period of three years from the date of passing of the order dissolving the company under section 248, file a petition or an application before the Tribunal under second proviso to sub-section (1) of section 252 seeking restoration of name of such company. The petition or application hereto shall be near to Form No. 9. Upon hearing the petition or any adjourned hearing thereof, the Tribunal may pass such an order, subject to such terms and conditions, as it thinks fit.

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PART IX

MISCELLANEOUS 138. Enlargement of Time: Where any period is fixed by or under these rules, or granted by Tribunal for the doing of any act, or filing of any document or representation, the Tribunal may, in its discretion from time to time, enlarge such period, even though the period fixed by or under these rules or granted by the Tribunal may have expired. 139. Saving of Inherent Powers of the Tribunal: Nothing in these rules or otherwise affect the inherent powers of the Tribunal to make such order or pass such direction as may be necessary for the ends of justice or to prevent abuse of the process of the Tribunal 425

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140. Amendment of Order:

Any clerical or arithmetical mistakes in any order of the Tribunal or error therein arising from any accidental slip or omission may, at any time, be corrected by the Tribunal on its own motion or on application of any party by way of review. 141. General Power to Amend: The Tribunal may, at any time, and on such terms as to costs or otherwise, as it may think fit, amend any defect or error in any proceeding before it; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on such proceeding. 142. Tribunal to be deemed to be a Court for Certain Purposes: The Tribunal shall be deemed to be a court for all purposes including for the purpose of prosecution or punishment of a person who willfully disobeys any direction or order of the Tribunal. 426

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143. Preparation of paper book.

The (Registrar/Registry), if it so deemed fit, may call upon the parties to prepare a paper book after completion of the pleadings. 144. Power to Dispense with the Requirements of the Rules: Every Bench of the Tribunal shall have power for reasons to be recorded in writing, to dispense with the requirements of any of these rules, subject to such terms and conditions as may be specified. 145. Punishment (a) Saved as other provided in the Act, if any person intentionally gives false evidence upon an examination on oath of Solomon affirmation he shall be punishable with imprisonment for a term which shall not be less than three years but which may extent to seven years and with fine which may extent to ten lakhs of rupees in accordance with section 449 of the Act. 427

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(b) If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made

thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person, notwithstanding any other liability or action, shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues in accordance with section 450 of the Act. 428

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DRAFT RULES UNDER COMPANIES ACT, 2013 CHAPTER XXVII

NATIONAL COMPANY LAW appellate TRIBUNAL RULES, 2013 429

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1. Short title and commencement. – (1) These rules may be called the National Company Law Appellate Tribunal Rules, 2013. (2) They shall come into force on the date of their publication in the Official Gazette. (3) These rules shall also be applicable for the proceedings before the Appellate Tribunal in case of limited liability partnerships under LLP Act, 2008 or rules made thereunder and in case of any inconsistency between rules made under the LLP Act, 2008 and these rules, these rules shall apply. 2. Definitions – (1) In these rules, unless the context otherwise requires, (a) ‘Act’ means the Companies Act, 2013 (18 of 2013); (b) ‘Appeal’ means an appeal preferred under sub-section (1) of section 421 of the Act; 430

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(c) ‘Appellate Tribunal’ means the National Company Law Appellate Tribunal constituted under section 410 of the Act;

(d)”‘Appendix” means Appendix to these rules. (e)”Authorized Representative" means a person authorized in writing by a party to present his case before the Appellate Tribunal as provided under section 432 of the Act; (f) ‘Chairperson’ means the Chairperson of the Appellate Tribunal appointed under section 410 of the Act; (g) ‘Form’ means the form specified in the Appendix ‘A’ to these Rules; (h) ‘Member’ means the Member, whether Judicial or Technical of the Appellate Tribunal appointed under section 410 of the Act; (i) ‘Party’ means a person who prefers an appeal before the Appellate Tribunal and includes respondent(s) and any person interested in the appeal; (j) ‘Registrar’ means the Registrar of the Appellate Tribunal and includes an officer of such Appellate Tribunal who is authorized by the Chairperson to function as Registrar; 431

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(k) ‘Registry’ means the Registry of the Appellate Tribunal;

(l) ‘Tribunal’ means the National Company Law Tribunal constituted under section 408 of the Act and includes its Benches; (2) All other words and expressions used but not defined in these rules but defined in the Companies Act, 2013 (18 of 2013) shall have the same meaning assigned to them in that Act. 3. Limitation for filing appeal – (1) Every appeal shall be filed within a period of forty-five days from the date for which a copy of the order of the Tribunal is made available to the person aggrieved. Provided that 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. 4. Procedure of filing Appeal – (1) A memorandum of appeal shall be presented in the Registry or shall be sent by registered post addressed to Registrar of the Appellate Tribunal within whose jurisdiction his case falls in the432

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Form prescribed in Appendix ‘A’ to these rules.

(2) A memorandum of appeal sent by post shall be deemed to have been presented on the day it was received in the registry. (3) Every Memorandum of Appeal shall be in three sets in a paper book and shall be accompanied with the certified copy of the order against which the appeal is preferred. In the event, the order appealed against is not filed, the Memorandum of Appeal shall be contain the reasons therefor. (4) Where a party is represented by an authorized representative, authorization to act as the authorized representative and the written consent thereto by such authorized representative in original, shall be appended to memorandum of the appeal.(5) Every memorandum of appeal presented to the Appellate Tribunal shall be in English or in Hindi and shall be legibly type written, or printed in double spacing on one side of standard petition paper with an inner margin of about four centimeters width on top and with a right margin of 2.5 cm, and left margin of 5 cm, duly paginated, indexed and stitched together in paper book form. 433

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(6) No Appeal, reference, application, representation, document or other matters contained in any language other than English or Hindi shall be accepted by the Registry, unless the same is accompanied by a true coy of translation thereof in English or Hindi.

5. Language of Appellate Tribunal – (1) Proceedings of the Appellate Tribunal shall be conducted in English or Hindi. (2) All orders and judgments of Appellate Tribunal may be either in English or Hindi.6. Presentation and Scrutiny of Memorandum of Appeal – (1)The Registrar, or the officer authorized by him, shall endorse on every appeal, the date on which it is presented or received through post under Rule 4 and shall sign the endorsement. (2) If, on scrutiny, the appeal is found to be in order, it shall be duly registered and given a serial number;(3) If the appeal, on scrutiny, is found to be defective, the Registrar may return the appeal for removal of defects within 7 days from the date of receipt of intimation;434

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(4) If the appellant fails to rectify the defect within the time allowed under sub-rule (3), the Registrar may, by order and for reasons to be recorded in writing, decline to register the appeal and inform the appellant accordingly within seven days thereof.

(5) An appeal against the order passed under sub-rule (4) may be preferred by the person aggrieved within fifteen days from the date of such order to the Chairperson or any Member to whom the power is vested and such appeal shall be dealt with and disposed of in Chamber by the Chairperson or such Member whose decision thereon shall be final. 7. Registrar to Place Appeal before Appellate Tribunal for Hearing The Registrar shall place the appeal before the Appellate Tribunal, as soon as it is registered, for hearing. 8. Summary dismissal of Appeal: The Appellate Tribunal, after considering the appeal, may summarily dismiss the same, for reasons to be recorded, if the Appellate Tribunal is of opinion that there are not sufficient grounds for proceeding therewith. 435

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9. Filing of Process Fee

Upon direction of the Appellate Tribunal to issue notice, the party shall file Process Fee for service of notice of Appeal or Application, as the case may be. 10. Endorsing copy of appeal to the respondents A copy of the memorandum of appeal and the paper book shall be served on each of the respondents, as directed by the Appellate Tribunal, by the Registrar by registered post. 11. Filing of reply to the appeal and other documents by the respondents 1) The respondent may file three complete sets containing the reply, if so directed by the Appellate Tribunal. to the appeal along with documents in a paper book form with the registry within one month of the service of the notice on him. 2) The respondent shall also serve one copy of the reply to the appeal along with documents as mentioned in sub-rule (1) to the appellant and shall file proof of service in the Registry. 436

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3) The Appellate Tribunal may, in its discretion on application by the respondent, allow the filing of reply referred to in sub-rule (1), after the expiry of the period referred to therein.

12. Order to be signed and dated 1) Every order of the Appellate Tribunal shall be in writing and shall be signed and dated by the Chairperson and Member (s) of the Appellate Tribunal. 2) The order shall be pronounced in open court. 13. Publication of orders The orders of the Appellate Tribunal as are deemed fit for publication in any authoritative report or the press may be released for such publication on such terms and conditions as the Appellate Tribunal may lay down. 14. Communication of orders: Every order passed on an appeal shall be made available to the appellant and to the respondent and to the Tribunal concerned either in person or by registered post free of cost. 437

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15. Power to Regulate the Procedure:

In exercise of the powers conferred on it in sub section (1) of Section 424 of the Act, the Appellate Tribunal may regulate its own procedure for the purpose of discharging its functions under the Act. 16. Costs: The Appellate Tribunal may, in its discretion, pass such order (s) in respect of costs incidental to any proceedings before it, as it may deem fit or impose such costs on either of the parties for the proceedings on frivolous appeals or if any opinion of Appellate Tribunal, any party to the proceedings is delaying or has delayed, without sufficient cause, the proceedings of the Appellate Tribunal. 17. Certified copy of the order and inspection of record- (1) If the Appellant or the respondent to any proceeding requires a copy of any order passed by the Appellate Tribunal, the same shall be supplied to him on payment of fees as specified in Appendix –B within four working days from the receipt of application for the said purpose and on urgent basis within two working days from438

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the receipt of application for the said purpose on payment of further fee as specified in Appendix-B.

(2) The parties to the case or their authorized representative may be allowed to inspect the record of the case on making application as prescribed by the Appellate Tribunal in writing to the Registrar and on payment of fee as specified in Appendix –B between 10.30 AM to 3 PM. 18. Working Hours of the Appellant Tribunal: Except on Saturdays, Sundays and other public holidays, the office of the Appellate Tribunal shall, subject to any order made by the Chairperson, remain open from 09-30 a.m. to 6-00 p.m. 19. Sitting hours of the Appellate Tribunal: The sitting hours of the Appellate Tribunal shall ordinarily be from 10-30 a.m. to 1-15 p.m. and 2-15 p.m. to 4-30 p.m. or if otherwise subject to any general or special order made by the Chairperson. 439

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20. Inherent powers of the Tribunal:

Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal. 21. Dress for Chairperson and Members and for the Authorised Representatives and for the parties in person: (1). For Chairperson and Members: The dress of the Chairperson and members shall be white or striped or black trouser with black coat over white shirt and band or buttoned- up black coat and band. In the case of a female Chairperson or a Member, the dress shall be black coat over a sober colored saree or any other sober dress and band. (2). For Authorized Representatives: Every authorized representative as provided in Section 432 of the Act, of the party shall appear before the Appellate Tribunal in his professional dress if any, and if there is no such dress, a male, in a suit or buttoned–up coat over a trouser or a long buttoned-up coat on dhoti or churidar pyjama, and a female, in a coat over white or any other sober coloured saree or in any other sober dress. 440

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(3 ) For Parties in Person :-

Parties appearing in person before the Appellate Tribunal shall be properly dressed. 22. Memorandum of Appearance: (1)The Authorized Representatives other than the representative of Central Government or the Regional Director or the Registrar of Companies or the Official Liquidator . shall make an appearance through the filing of Memorandum of Appearance in representing the respective parties to the proceedings. In case of legal practitioner/ advocate, he may make appearance by filing Vakaltanama.(2) The Central Government or the Regional Director or the Registrar of Companies or the Official Liquidator may be represented by an officer not below the rank of the officer of the senior time scale. The Chartered Accountant in practice or Company Secretary in practice or Cost Accountant in practice shall have post qualification experience of five years. (3) The Company Liquidator or Administrator shall make his appearance before the Appellate Tribunal in person.441

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23. Amendment of Order:

Any clerical or arithmetical mistakes in any order of the Appellate Tribunal or error therein arising from any accidental slip or omission may, at any time,be corrected by the Appellate Tribunal on its own motion or on application of any party. 24. Powers to relax. – The Appellate Tribunal shall have power to relax any provision of these rules with respect to any class or category of cases. 25. Salary, Allowances, and other Terms and Conditions of Service of Chairperson and Members: The Salary, Allowances, and other Terms and Conditions of Service of Chairperson and Members shall be in the manner as may be prescribed by the Central Government in exercise of the powers provided under section 414 of the Act.442

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26. Powers and functions of the Registrar

(1)The Registrar shall have the custody of the records of the Appellate Tribunal and shall exercise such other functions as are assigned to him under these rules or by the Chairperson by a separate order in writing.(2) The official seal shall be kept in the custody of the Registrar. (3) Subject to any general or special direction by the Chairperson, the seal of the Appellate Tribunal shall not be affixed to any order, summons or other process have under the authority in writing from the Registrar. (4) The seal of the Appellate Tribunal shall not be affixed to any certified copy issued by the Tribunal save under the authority in writing of the Registrar. 27. Additional powers and duties of Registrar In addition to the powers conferred elsewhere in these rules, the Registrar shall have the following powers and duties subject to any general or special orders of the Chairperson, namely,- 443

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(1) to receive all appeals and other documents;

(2) to decide all questions arising out of the scrutiny of the appeals before they are registered; (3) to require any appeal presented to the Appellate Tribunal to be amended in accordance with the rules; (4) subject to the directions of the Chairperson to fix date of hearing of the appeals or other proceeding and issue notices thereof; (5) direct any formal amendment of records; (6) to order grant of copies of documents to parties to proceedings; (7) to grant leave to inspect the record of Appellate Tribunal (8) dispose of all matters relating to the service of notices or other processes, application for the issue of fresh notice or for extending the time for or ordering a particular method of service on a respondent including a substituted service by publication of the notice by way of advertisements in the newspapers; (9) to requisition records from the custody of any court or other authority.444

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28. Powers, Functions and duties of the Secretary of the Appellate Tribunal:

The post of the Secretary shall be at the Appellate Tribunal, New Delhi. He shall discharge his duties, function and exercise his powers under the general superintendence and control of the Chairperson of the Appellate Tribunal. His main function is to co-ordinate with the Tribunal and to act as a liaison officer between the Appellate Tribunal and the concerned Ministry having administrative jurisdiction only over the Appellate Tribunal. He shall in addition to the work assigned to him by the Chairperson from time to time, have the following functions, duties and powers: In charge of the long term projects and initiatives of the Appellate Tribunal; Supervise the divisions and sections of the Human Resources; Budgetary allocations and Financial Management; Court operations;Court facilities and Administrative Services; Supervise the Public Grievances Mechanism;445

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Coordinate with the Authorized Representatives and other Professionals;

ICT and Technology facilities; Communication services; Public affairs and Public safety provisions in the Appellate Tribunal Premises; Supervision of Library and Court Research; Attend and execute such directions given by the Chairperson and discharge such other functions and duties as may be assigned to him. 29. Seal and emblem- The official seal and the emblem of the Tribunal shall be such as the Central Government may specify.30. Fee. – (1) Every memorandum of appeal shall be accompanied with a fee as specified in Appendix-B and such fee may be remitted in the446

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form of demand draft drawn in favour of Pay and Accounts Officer, Ministry of Corporate Affairs, payable at New Delhi

(2) The Tribunal may, to advance the cause of justice and in suitable cases, waive payment of fee or portion thereof, taking into consideration the economic condition or indigent circumstances of the petitioner or appellant or applicant or such other reason, as the case may be, by an order for reasons to be recorded. (3) The Central Government may review the fee after every three years and the fee may be amended by a notification.31. Application of National Company Law Tribunal Rule 2013 in certain cases:- Save as otherwise provided in these rules, the Appellate Tribunal may follow the rules of National Company Law Tribunal Rule 2013 in the circumstances447

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THANK YOU

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