Indicative Summary of Emerging Scope of Work

before NCLT & NCLAT

  1. To follow different Financial year Section 2(41) : The Act has fixed the financial year in a company to be from 1st April to 31st March in a year. However, NCLT may on an application made by a company or body corporate, which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, and allow any period as its financial year, whether or not that period is a year.
  1. Incorporation by False or incorrect information [Section 7(7)] : 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 declarationfiled 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,—

(a)pass such orders, as it may think fit, for regulation of the management of the company including changes 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.

  1. Section 14 : Any alteration of articles of association of the Company having the effect of conversion of a public company into a private company shall not take effect except with the approval of NCLT which shall make such order as it may deem fit.
  1. Section 48 : Where the holders of not less than ten percent 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 NCLT 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 NCLT. Such application 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. The decision of NCLT on any application shall be binding on the shareholders.
  1. Section 55 : 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 NCLT 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 redeemed. NCLT while giving approval shall order the redemption forthwith of preference shares held by such persons who have not consented to the issue of further redeemable preference shares.
  1. Section 58 : If a private company refuses the registration of securities the transferee may appeal to NCLT 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. 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 NCLT.

On appeal made under Section 58(3) or Section58(4), NCLT. may, after hearing the parties, either dismiss the appeal, or by order—

(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.

  1. Section 59 : 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 therefrom, 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 to NCLTin prescribed form or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debentures holders residing- outside India, for rectification of the register. NCLT may, after hearing the parties to the appeal 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.
  1. Section 61 : If any consolidation and division of the share capital of a limited company results in changes in the voting percentage of shareholders, it shall not take effect unless it is approved by NCLT on an application made in the prescribed manner.
  1. Section 62 : Where any debentures have been issued, or loan has been obtained from any Government by a company, and if the 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. 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 NCLT which shall after hearing the company and the Government pass such order as it deems fit.
  1. Section 66 : A company limited by shares or limited by guarantee and having a share capital may, by a special resolution which shall be subject to confirmation by NCLT on an application by the company, reduce the share capital (unless 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) in any manner and in particular, 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, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

  1. Section 71(9) : In case 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 NCLT and the NCLT 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 it may consider necessary in the interests of the debenture-holders.
  1. Section 71(10) :Where a company fails to redeem the debentures on the date of their maturity or fails to pay interest on the debentureswhen it is due, NCLT 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.
  1. Section 73(4) : Where a company fails to repay the deposit or part thereof or any interest thereon under Section 73(3) of the Act, the depositor concerned may apply to NCLT 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 orders as it may deem fit.
  1. Section 74(2) : NCLT 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.
  1. Section 97(1) : If any default is made in holding the annual general meeting of a company under Section 96 of the Act, NCLT 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 it thinks expedient. 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.
  1. 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 the Act or the articles of the company, NCLT may, either suomotu 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 it thinks fit; and

(a)give such ancillary or consequential directions as it 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.

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.

  1. Section 119(4) : If inspection of minute-book of general meeting of company as stated in Section 119(1) of the Act is refused or if any copy thereof as stated in Section 119(2) of the Act is not furnished within the time specified, then NCLT may, without prejudice to any action (penalty) being taken under Section 119(3) of the Act, pass an order directing an immediate inspection of the minutebooks or direct that the copy required shall forthwith be sent to the person requiring it.
  1. 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 of India (SEBI), any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or NCLT 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:Provided that the Court or NCLT, as the case may be, shall give notice to the Central Government, the Income-tax authorities, the SEBI 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, SEBI or the body or authority concerned before passing any order under this section.

  1. Section 131(1) : If it appears to the directors of a company that the financial statement of the company or 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 of the Board in respect of any of the three preceding financial years after obtaining approval of NCLT on an application made by the company in such form and manner as may be prescribed and a copy of such order shall also be filed with the Registrar.
  1. Section 140(4) : If NCLT is satisfied on application by the company or of any other aggrieved person that the rights conferredon the Auditor under Section 140(4)(iii) of the Act (with respect to making a representation on receipt of special notice for appointing an auditor other than the retiring auditor) are being misused, then NCLT may order that the copy of the representation may not be sent and that it need not be read out at the meeting.
  2. Section 140(5) : NCLT may either suomotu 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. If the application is made by the Central Government and NCLT 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.
  1. Section 164(1)(e) : A person shall not be eligible for appointment as a director of a company, if an order disqualifying him for appointment as a director has been passed by a Court or NCLT and the order is in force.
  1. Section 167(1)(e) : The office of a director shall become vacant if the director becomes disqualified by an order of a Court or NCLT.
  2. Section 169(4) : Where notice has been given for removal of a director under Section 169 of the Act, the copy of the representation made by the Director need not be sent out and read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, NCLT is satisfied that the rights conferred with respect to the above are being abused to secure needless publicity for defamatory matter and NCLT may further order the company’s costs on such application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
  1. Section 210(2) : Where an order is passed by a court or NCLT in any proceedings that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company.
  1. Section 213 : NCLT 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;

(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; or

(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.

  1. 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, 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 NCLT of the action proposed against the employee and if NCLT 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.

  1. Section 218(1) : If the company, other body corporate or person concerned is dissatisfied with the objection raised by NCLT as above, it may, within a period of thirty days of the receipt of the notice of the objection, prefer an appeal to the National Company Law Appellate Tribunal (NCLAT) in such manner and on payment of such fees as may be prescribed. The decision of NCLAT on such appeal shall be final and binding on NCLT and on the company, other body corporate or person concerned.
  1. Section 221(1) :Where it appears to NCLT 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 Chapter XIV of the Act or on any complaint made by such number of members as specified under Section 244(1) of the Act or a creditor having Rupees One Lakh 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, NCLT 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 it may deem fit.
  1. Section 222(1) : Where it appears to NCLT in connection with any investigation under Section 216 of the Act 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 companyand NCLT is of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit, are imposed, NCLT 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.
  1. Compromise Arrangement Merger Amalgamation [Section 230] :Where a compromise or arrangement is proposed—

(a)between a company and its creditors or any class of them; or