NCLT Versus High Court
National Company Law Tribunal(NCLT) & National Company Law Appellate Tribunal (NCLT) have been constituted finally on 01.06.2016 .
It has been vested with various powers to deal with those matters which were previously dealt with by Company Law Board (CLB).It must be known that CLB was dissolved consequentially .
The evolution of NCLAT & NCLAT was paved finally by the Supreme Court of India, wherein the validity of Constutional Validity of of Chapters 1B and 1C of the Companies Act, 1956(‘Act’ for short) inserted by Companies (Second Amendment) Act 2002 (‘Amendment Act’ for short) providing for the constitution of National Company Law Tribunal (‘NCLT’ or ‘Tribunal’) and National Company Law Appellate Tribunal (‘NCLAT’ or ‘Appellate Tribunal’) was challenged in Union of India v. R. Gandhi, President, Madras Bar Association,Civil Appeal No. 3067 of 2004 & decided on May 11, 2010.
The verdict of SC was a milestone towards attesting the validity of changes.With this amendment, the power of High Court, for Company Act matters, is to be subsumed under NCLT and NCLAT .
It is to be noted that the Draft Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 was published on 28th January 2016. But, it is yet to be notified .
The aforesaid draft rules has a provision under proposed Rule 66 for transfer of matters from Distict or High Courts to the Tribunal as below :
66.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, from the date notified by the Central Government and the Tribunal may proceed to deal with such proceedings from the stage before their transfer.
(ii) Tribunal may as soon as possible list the pending matters on priority basis and in accordance with the sequence maintained before transfer of the cases to it.
However, till the date no such notification has been published towards the following matters for being handled by NCLT /NCLAT
(i) compromises and arrangements(merger/demerger)
(ii) revival and rehabilitation of sick companies; and
(iii) winding up of companies etc
We hope that gradually and in phased manner the shifting will start and ultimately NCLT/NCLAT will get the company jurisdiction of the respective High Courts.
By such time, the respective High Courts will entertain very urgent matters only since they are well aware of the fact that sooner or later all the company law issues have to be handled by NCLT & NCLAT only.