National Company Law Tribunal and Appellate Tribunal – CA Final Law Study Material is designed strictly as per the latest syllabus and exam pattern.
National Company Law Tribunal and Appellate Tribunal – CA Final Law Study Material
Question 1.
Aggrieved by an Order of NCLT dated 05.05.2020, passed without the consent of the parties, Madhruk Ltd. decided to file an appeal before NCLAT. Meanwhile, the employees and officers of the company went on a strike from 10.05.2020 demanding higher pay and allowances and as a result of which, the operational and management activities were badly affected. The strike was called-off on 15.06.2020.
Thereafter, the appeal was filed on 25.06.2020 before NCLAT with a prayer for condoning the delay in filing the appeal. A single judicial member of NCLT started the hearing. With reference to the provisions of the Companies Act, 2013. Examine the following:
(i) Whether the appeal is admissible?
(ii) Maximum period allowed for condonation,
(iii) Is the appeal transferable to a Bench consisting of two members? [Nov. 18-New Syllabus (8 Marks)]
Answer:
Provisions as to appeal from Orders of NCLT:
(i) Admissibility of Appeal: Section 421 of the Companies Act, 2013 deals with the provisions relating to appeal against the orders of Tribunal. Accordingly,
- Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal.
- No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.
- Every appeal shall be filed within a period of 45 days from the date on 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 45 days from the date aforesaid, but within a further period not exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.
Conclusion: Appeal is admissible as it appears from the facts of the case that the appellant was prevented by sufficient cause from filing the appeal within 45 days.
(ii) Maximum period allowed for condonation:
Appellate Tribunal may entertain an appeal after the expiry of the stipulated period of 45 days, but within a further period not exceeding 45 days.
(iii) Transfer of Appeal:
Section 419(3) of the Companies Act, 2013 provides that the powers of the Tribunal shall be exercisable by Benches consisting of 2 Members out of whom one shall be a Judicial Member and the other shall be a Technical Member:
Provided that it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench consisting of a single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify:
Provided further that if at any stage of the hearing of any such case or matter, it appears to the Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the President, or, as the case may be, referred to him for transfer, to such Bench as the President may deem fit.
Conclusion: Hearing may be transferred to a bench consisting of two members.
Note: Questions does not seem to be framed appropriately as question states that hearing of appeal is started by a single judicial member of NCLT and requirement of question was whether the appeal is transferable.
Appeal is to be heard by NCLAT not by NCLT and there is no provision in the law as to the transfer of appeal.
Question 2.
Aggrieved by an order of Hon’ble NCLT, dated 3rd April, 2020, passed without the consent of parties, Solan Minerals Limited decided to file an appeal before, Hon’ble NCLAT. The order was received by the company on 4th April, 2020. The employees and officers went on a strike for a period of 10 days from 22nd May, 2020 demanding higher bonus and pay.
In view of this, the management of the company was forced to a grinding halt during the strike period. Thereafter, the appeal was filed on 6th June, 2020 before the Hon’ble NCLAT and the company prayed for condonation of delay. Referring to and analysing the applicable provisions of the Companies Act, 2013, decide the following:
(i) Whether the proposed appeal would be admitted by the Hon’ble NCLAT.
(ii) What is the maximum period allowed by the NCLAT for condonation of delay? [May 19 – Old Syllabus (4 Marks)]
Answer:
Provisions as to appeal from Orders of NCLT:
Section 421 of the Companies Act, 2013 deals with the provisions relating to appeal against the orders of Tribunal. Accordingly,
- Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal.
- No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.
- Every appeal shall be filed within a period of 45 days from the date on 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 45 days from the date aforesaid, but within a further period not exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.
In the present case, Order was received by the company on 04th April 2020 and the appeal was to be filed by 19 May 2020, i.e. within 45 days, from the date of receipt of appeal. Employees go on strike from 22nd May 2020. As the strike starts after expiry of last date of filing appeal, there does not appear any reason that appellant was prevented by sufficient cause from filing the appeal within 45 days.
Conclusion: Based on the provisions as stated above, following conclusions may be drawn:
(i) Proposed appeal would not be admitted by the Hon’ble NCLAT.
(ii) Appellate Tribunal may entertain an appeal after the expiry of the stipulated period of 45 days, but within a further period not exceeding 45 days.
Note: Alternate answer possible with different assumption.
Question 3.
Royal Productions Limited filed an application before the National Company Law Tribunal and the application was dismissed for want of evidence and documents by the Tribunal on 2.2.2021. The order was received by the company on 4,2.2021. Aggrieved by the order, the company wants to file an appeal to NCLAT. It seeks the procedure to file the appeal and the time limit for filing the appeal under the following circumstances:
(i) The Tribunal has passed the order without giving a reasonable opportunity of being heard and the impugned order is passed ex-parte.
(ii) The order has been passed with the consent of both the parties before the Tribunal. [Nov. 20 – Old Syllabus (4 Marks)]
Answer:
Appeal against order of Tribunal:
Section 421 of the Companies Act, 2013 deals with the provisions relating to appeal against the orders of Tribunal. Accordingly,
- Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal.
- No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.
- Every appeal shall be filed within a period of 45 days from the date on 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 45 days from the date aforesaid, but within a further period not exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.
Conclusion: Considering the provisions of Sec. 421 as stated above, following conclusions may be drawn:
- Appeal can be filed within a period of 45 days.
- No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.
Question 4.
A petitioner presented an application before the tribunal in July, 2020 and order was passed and made available to parties in September, 2020. Aggrieved party filed an appeal before NCLAT in November, 2020. The appeal was pending before NCLAT for 6 months.
Examine in the light of the Companies Act, 2013, the following issues-
(i) Whether the filling of an appeal before the NCLAT is in order.
(ii) Time period latest by which the NCLAT should dispose off the said appeal. [MTP-Aug.18]
Answer:
Filling of Appeal before the NCLAT:
As per Sec. 421 of the Companies Act, 2013, any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal within a period of 45 days from the date on which a copy of the order of the Tribunal is made available to the person.
However, the Appellate Tribunal may entertain an appeal after the expiry of the said period of 45 days from the date aforesaid, but within a further period not exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.
As per Sec. 422 of the Companies Act, 2013, every application or petition presented before the Tribunal and every appeal filed before the Appellate Tribunal shall be dealt with and disposed of by it as expeditiously as possible and every endeavour shall be made by the Tribunal or the Appellate Tribunal, as the case may be, for the disposal of such application or petition or appeal within 3 months from the date of its presentation before the Tribunal or the filing of the appeal before the Appellate Tribunal.
Where any application or petition or appeal is not disposed of within the period specified above, the Tribunal or, as the case may be, the Appellate Tribunal, shall record the reasons for not disposing of the application or petition or the appeal, as the case may be, within the period so specified; and the President or the Chairperson, as the case maybe, may, after taking into account the reasons so recorded, extend the period referred to above, by such period not exceeding 90 days as he may consider necessary.
Conclusion: Based on the provisions of Secs. 421 & 422 as discussed above, following conclusions may be drawn:
- Appeal is in order if made within 45 days from the date on which a copy of the order is made available to the person.
- Appeal should be disposed off by May 2021.
Question 5.
JSK, a shareholder of CKI (Private) Ltd. filed an application before erstwhile Company Law Board, alleging various acts of oppression and-mis-management in the affairs of the company and sought certain relief measures. The petition was transferred to NCLT on its constitution. The NCLT passed an order on 5th October, 2020 without the consent of the parties.
Aggrieved by the order, the share-holder decided to prefer an appeal. Nevertheless the shareholder was suffering from low blood pressure. He was medically advised not to move and he did not move. Therefore, he preferred the appeal with NCLAT on 5th December, 2020. Examine whether the appeal is admissible with reference to time limitation?
Identify the provisions governing further appeal on the orders of NCLAT under section 423 of the Companies Act, 2013. [May 18 – New Syllabus (8 Marks)]
Answer:
Appeal from Orders of Tribunal:
Section 421 of Companies Act, 2013 provides that every appeal against the order of Tribunal shall be filed within a period of 45 days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved. However, Appellate Tribunal may entertain an appeal after the expiry of the said period of 45 days from the date aforesaid, but within a further period not exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.
In the’present case, it appears that appellant was prevented by sufficient cause from filing the appeal within 45 days of the date of the order.
Conclusion: Appellate Tribunal may entertain the appeal as appellant was prevented by sufficient
cause and appeal if filed within the specified extended period.
Provisions relating to appeal on order of NCLAT:
Sec. 423 of Companies Act, 2013 provides that any person aggrieved by any order of the Appellate Tribunal may file an appeal to the Supreme Court within 60 days from the date of receipt of the order of the Appellate Tribunal to him on any question of law arising out of such order.
However, Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding 60 days.
Question 6.
On an application filed from shareholder of Company, Tribunal (NCLT) passed an order on 20th December, 2020 without the consent of parties. Mr. Rama whose family’s condition was not good so didn’t take much interest in order of tribunal but after few days due to aggrieved by an order, he filled an appeal before Appellate Tribunal (NCLAT) on 15th March, 2021 showing sufficient cause of delay for not filling appeal up to 45 days from the date of order. Even after receiving order from Appellate Tribunal dated 30th April, 2021, Mr. Rama was not satisfied and desires to make application to Supreme Court on 30th October, 2021.
Considering the given situation, examine whether Appeal to be filed before the Supreme Court will be admissible? [RTP-Nov. 20]
Answer:
Provisions relating to appeal on order of NCLAT:
Sec. 423 of Companies Act, 2013 provides that any person aggrieved by any order of the Appellate Tribunal may file an appeal to the Supreme Court within 60 days from the date of receipt of the order of the Appellate Tribunal to him on any question of law arising out of such order.
However, Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding 60 days.
In present case, since Mr. Rama even aggrieved by an order of Appellate Tribunal desires to file an application before Supreme Court on 30th October 2020. But as Supreme Court can entertain appeal only upto 60 days + 60 Days (Extension if sufficient cause).
Conclusion: Appeal to be filed before the Supreme Court will not be admissible as it is to be filed with 120 days (60 + 60) of 30.04.2021.
Question 7.
NCLAT was constituted by the Central Government consisting of a Chairperson along with the Judicial and Technical Members for hearing appeals against the orders of the Tribunal. Later it was discovered that chairperson is a judge of a high court. Aggrieved parties to a case, challenged the sanctity of the order of the respective case and said that it is invalid. Examine in the light of the given situations the validity of the act or proceedings conducted by the NCLAT. [MTP-March 18]
Answer:
Qualifications of Chairperson of NCLAT:
As per section 411 of the Companies Act, 2013 the chairperson of NCLAT shall be a person who is or has been a judge of the Supreme Court or the Chief Justice of a High Court.
In the instant case, chairperson is a judge and not a chief justice of a High Court, so his appoint-ment is invalid.
Section 431 of the Companies Act, 2013 provides that no act or proceeding of the Tribunal or the Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence of any vacancy or defect in the constitution of the Tribunal or the Appellate Tribunal, as the case may be.
Accordingly, the act or proceeding of the Appellate Tribunal (NCLAT) shall not be invalid on the basis of defect in the constitution of the Appellate Tribunal.
Conclusion: Though appointment is invalid, but the act or proceedings remains valid.