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National Company Law Tribunal and Appellate Tribunal

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National Company Law Tribunal and Appellate Tribunal

Scanner of Past Exam Questions

#From May 2019 exam, Marks are covered only for descriptive part of paper as MCQ paper was not issued in public domain by ICAI.

Order of Tribunal (Sec. 420)

Q.1 In the capacity of an Adjudicating officer, the, Registrar passed an order against IDLE Limited, a listed company, for not following some provisions of the Companies Act, 2013. Being aggrieved of the order of the Adjudicating officer, IDLE Li mited proceeded to the Tribunal. The Tribunal after giving both the parties an opportunity of being heard upheld the order of the Adjudicating authority in a modified manner. After lapse of a period of one year and five days, the Tribunal with a view to rectify

National Company Law Tribunal and Appellate Tribunal Chapter 11

a mistake apparent from the record, amended the order passed by him earlier, when the mistake was brought to his notice by the Adjudicating officer. IDLE Limited approached you and contended that the stipulated period of 3 months within which the ord er should be passed by the Tribunal is already over, even the delay period has exceeded the maximum allowed condonation period of 90 days and therefore the order passed by the Tribunal cann ot be revised. Referring to and analyzing the relevant provisions of the Companies Act, 2013, advise IDLE Limited whether its contention is tenable. Will your answer differ if IDLE Limited has already preferred an appeal against the original order of the Tribunal before the amendment was made by the Tribunal?

[Jan. 21 – New Syllabus (4 Marks)]

Ans.: Rectification of Tribunal Order:

Sec. 420 of the Companies Act, 2013 deals with the provisions relating to Orders of Tribunal. Accordingly,

The Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit.

The Tribunal may, at any time within 2 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, if the mistake is brought to its notice by the parties:

Provided that no such amendment shall be made in respect of any order against which an appeal has been preferred under this Act.

Conclusion: In the given case, though mistake was bought to the notice of the Tribunal by Registrar, but the time period for rectifying any mistake apparent from the record was within the prescribed period of 2 years from the date of order, so contention of IDLE Ltd. stating that the order passed by the Tribunal cannot be revised, is not correct.

Where if, IDLE Limited has already preferred an appeal against the original order of the Tribunal before the amendment was made by the Tribunal, no such amendment shall be made in respect of such order.

Appeal from Orders of Tribunal (Sec. 421)

Q.2 Aggrieved by an Order of NCLT dated 05.05.2022, passed without the consent of the parties, Madhruk Ltd. decided to file an appeal before NCLAT. Meanwhile, the employees and officers o f the company went on a strike from 10.05.2022 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 15.06.2019. Thereafter, the appeal was filed on 25.06.2 022 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)]

Ans.: 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,

(1) Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal.

(2)No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.

National Company Law Tribunal and Appellate Tribunal

(3)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 b ehalf to function as a Bench consisting of a single Judicial Member and exercise the powers of the T ribunal 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 t he 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 quest ion 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.

Q.3 Aggrieved by an order of Hon’ble NCLT, dated 3rd Ap ril, 2021, 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, 2021. The employees and officers went on a strike for a period of 10 days from 22nd May, 2022 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, 2022 before the Hon’ble NCLAT and the company prayed for con donation of delay. Referring to and analysi ng 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)]

Ans.: 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,

(1)Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal.

(2)No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.

National

Company Law Tribunal and Appellate Tribunal Chapter 11

(3)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 4th April 2022 and the appeal was to be filed by 19 May 2022, i.e. within 45 days from the date of receipt of appeal. Employees go on strike from 22nd May 2022. 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.

Q.4 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 2.2.2022. The order was received by the company on 4.2.2022 . 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)]

Ans.: 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,

(1)Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tri bunal.

(2)No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.

(3) 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:

(i) Appeal can be filed within a period of 45 days.

(ii)No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties.

Chapter 11

National Company Law Tribunal and Appellate Tribunal

Expeditious disposal by Tribunal and Appellate Tribunal (Sec. 422)

Q.5 A petitioner presented an application before the tribunal in July, 2021 and order was passed and made available to parties in September, 2021. Aggrieved party filed an appeal before NCLAT in November, 2021. 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]

Ans.: 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 may be, 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:

(i) 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.

(ii)Appeal should be disposed off by May 2022.

Appeal to Supreme Court (Sec. 423)

Q.6 JSK, a shareholder of CRI (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 pe tition was transferred to NCLT on its constitution. The NCLT passed an order on 5th October, 2018 without the consent of the parties. Aggrieved by the order, the shareholder 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, 2018. Examine whether the appeal is admissible with reference to time limitation?

Identify the provisions governing furt her appeal on the orde rs of NCLAT under section 423 of the Companies Act, 2013. [May 18 – New Syllabus (8 Marks)]

National Company Law Tribunal and Appellate Tribunal Chapter

Ans.: Appeal from Orders of Tribunal:

11

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 prev ented 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 entert ain 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.

Q.7 On an application filed from shareholder of Comp any, Tribunal (NCLT) passed an order on 20th December, 2021 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, 202 2 showing sufficient cause of delay for not filling app eal up to 45 days from the date of order. Even after receiving order from Appellate Tribunal dated 30th Apri l, 2022, Mr. Rama was not satisfied and desires to make application to Supreme Court on 30th October, 202 2.

Considering the given situation, examin e whether Appeal to be filed before the Supreme Court will be admissible?

Ans.: Provisions relating to appeal on order of NCLAT :

[RTP-Nov. 20]

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 2022. 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 30.04.2022.

Q.8 ABC Limited aggrieved by the order of Appellate Tribunal on the question of inadmissibility of the evidences placed before it and ignoring the doctrine of res judicata on certain matter intends to file an appeal before the Supreme Court. The order of Appellate Tribunal dated 15.12.2021 was delivered to ABC Limited on 01.01.202 2. Examine under the provisions of the Companies Act, 2013 whether ABC Limited is entitled to prefer an appeal and if yes what is the time limit to f ile an appeal before the Supreme Court against the order of the Appellate Tribunal.

[Jan. 21 – Old Syllabus (3 Marks)]

Chapter 11

Ans.: Appeal to Supreme Court:

National Company Law Tribunal and Appellate Tribunal

As per Sec. 423 of the Companies Act, 2013, 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, the 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.

Conclusion: ABC Limited may, file an appeal not on the question of admissibility of evidences placed before it, being question of facts, but on the question of ignoring the doctrine of res judicata , being a question of law.

ABC Limited received the order of Appellate Tribunal on 1.1.2022 and hence, can file an appeal to the Supreme Court within 60 days i.e. by 1st March, 2022. However, if it is satisfied that the Appellant was prevented by sufficient cause from filing the appeal within first 60 days, it may file and appeal within a further period of 60 days.

Q.9 Dissatisfied with the decision of the NCLT, Rana had filed an appeal before the Appellate Tribunal, which was also turned down. Advise him on further course of action to be taken.

[July 21 – Old Syllabus (4 Marks)]

Ans.: Appeal to Supreme Court

As per Sec. 423 of the Companies Act, 2013, 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.

The 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.

It is to be noted that it is solely at the discretion of the Supreme Court whether to provide an extension or not by such number of days which shall however not exceed 60 days. Hence, Rana can follow the above procedure when his appeal has turned down by Appellate Tribunal.

Miscellaneous Provisions (Secs. 425 – 434)

Q.10 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]

Ans.: 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 appointment 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.

National Company Law Tribunal and Appellate Tribunal Chapter 11

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.

Q.11 IM Limited is undergoing Corporate Insolvency Resolution Process ("CIRP”) under the jurisdiction of National Company Law Tribunal (NCLT), Delhi. During the CIRP process, the Resolution Professional needs the assistance of the District Collector due to non -cooperation from the directors of TIM Limited to take control of all the property, books of account or other documents and has approached NCLT, Delhi, regarding this matter. In the meanwhile, TIM Limited applied with High Court objecting the assistance from the District Collector. Referring to the provisions of the Companies Act, 2013, examine whether the District Collector can deny the request of NCLT, Delhi and further comment whether the High Court has the power to question the act of the District Collector. [Dec. 21 – New Syl labus (4 Marks)]

Ans.: Power to seek assistance of Chief Metropolitan Magistrate:

Sec. 429 of the Companies Act, 2013 deals with the provisions relating to powers of Tribunal as to seeking assistance of Chief Metropolitan Magistrate, etc. Accordingly,

(1)The Tribunal may, in any proceedings for winding up of a company under this Act or in any proceedings under the IBC, 2016, in order to take into custody or under its control all property, books of account or other documents, request, in writing, the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector within whose jurisdiction any such property, books of account or other documents of such company are situated or found, to take possession thereof.

(2)Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector, as the case may be, shall, on such request being made to him:

(a)take possession of such property, books of account or other documents; and

(b)cause the same to be entrusted to the Tribunal or other persons authorised by it.

(3)For the purpose of securing compliance with the above stated provisions, the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector may take or cause to be taken such steps and use or cause to be used such force as may, in his opinion, be necessary.

(4)No act of the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector done in pursuance of this section shall be called in question in any court or before any authority on any ground whatsoever.

Conclusion: based on the above stated provisions, following conclusions may be drawn:

(a)District Collector cannot deny the request of NCLT, Delhi.

(b)High Court has no power to question the act of the District Collector.

Corporate & Economic Laws (Law) | CRACKER

AUTHOR : PANKAJ GARG

PUBLISHER : TAXMANN

DATE OF PUBLICATION : DECEMBER 2022

EDITION : 10th Edition

ISBN NO : 9789356224742

NO. OF PAGES : 458

Description:

This book is prepared exclusively for the Final Level of Chartered Accountancy Examination requirement. It covers the questions & detailed answers strictly as per the new syllabus of ICAI.

The Present Publication is the 10th Edition & updated till 31st October 2022 for CA-Final | New Syllabus | May/Nov. 2023 Exams. This book is authored by Pankaj Garg, with the following noteworthy features:

Strictly as per the New Syllabus of ICAI [600+ Question/Case Studies] with detailed answers are provided for self-practice

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