The soon to be notified rules dealing with the procedures for functioning of the newly constituted National Company Law Tribunal are expected to clarify status of cases where order has been reserved by the Company Law Board (CLB).

Experts are divided over whether such pending CLB cases – where the order was reserved – should be reopened and reheard afresh by the Tribunal.

The Corporate Affairs Ministry (MCA) will soon come out with the final rules, which are expected to largely mirror the draft rules put out on this matter in February.

With the dissolution of CLB, proceedings pending with it would be transferred to the Tribunal as per Section 434 of the Companies Act, 2013. However, there is uncertainty over the status of those CLB cases where the matter was heard and the order reserved.

Many company law experts point out that the draft rules covered situations where the order was reserved by the CLB and not pronounced. There is a specific proviso in the draft NCLT rules which states that the Tribunal would reopen the matter and rehear the case as if the hearing had not taken place, a practicing company Secretary said. Nesar Ahmad, Past President of the Company Secretaries’ Institute, said that the final rules are most likely to retain this position of the draft rules..

“For matter which has been argued and order is reserved… in those cases, the NCLT will open the matter and rehear the same and pass an order. The Tribunal may not start from scratch while rehearing the matter, but the bench will take cognisance of pleadings completed and submissions made before CLB”, Ahmad told BusinessLine .

Lalit Kumar, Partner, J Sagar Associates, a law firm, had a slightly different view on this issue. He said that Section 434 of the Companies Act, 2013 provides that all matters, proceedings or cases pending before the CLB shall stand transferred to the NCLT and that NCLT shall dispose of such matters, proceedings or cases in accordance with the provisions of this Act.

“Therefore, based on this provision of the Companies Act, even those matters pending before CLB for which the orders were reserved by CLB Bench will also be transferred to NCLT and for such matters the hearings should not be started again in NCLT,” he said.

The Ministry had on June 1 notified the constitution of NCLT and National Company Law Appellate Tribunal (NCLAT). There would be 11 benches of the NCLT, with the Principal Bench of NCLT being in New Delhi.

Along with the notification of these Tribunals, the MCA has brought into effect 29 provisions of the Companies Act 2013, which had remained dormant pending the constitution of NCLT.

These largely pertained to the powers exercisable by the Company Law Board, which also stands dissolved consequent to the constitution of NCLT. The matters where NCLT will exercise jurisdiction are conversion of public company into private company; newly introduced provisions for class action suits; oppression and mismanagement.

However, provisions relating to compromises and amalgamations by companies and winding up of companies have not yet been notified. Accordingly, these matters would continue to be governed by the provisions of the erstwhile Companies Act, 1956.

The relevant High Courts would continue to have jurisdictions on these matters till such time as MCA issues specific directions as to the transfer of such matters to NCLT.

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