NCLT & Company Law Matters
Company law disputes and applications before the National Company Law Tribunal, Bengaluru Bench, and the company jurisdiction of the High Court of Karnataka. This page is an informational overview of the matters accepted in this area.
The Tribunal and its jurisdiction
The National Company Law Tribunal was constituted under Section 408 of the Companies Act, 2013 and began functioning on 1 June 2016, taking over the company jurisdiction previously exercised by the Company Law Board, the Board for Industrial and Financial Reconstruction, and the High Courts. Companies whose registered office is situated in Karnataka fall within the territorial jurisdiction of the Bengaluru Bench.
The Tribunal is not bound by the Code of Civil Procedure, 1908. It is guided by the principles of natural justice and regulates its own procedure under Section 424, read with the National Company Law Tribunal Rules, 2016. Appeals from its orders lie to the National Company Law Appellate Tribunal at Chennai within forty-five days under Section 421, and from there to the Supreme Court on a question of law under Section 423.
Advocate Partha Sarkar accepts instructions in company law and tribunal matters of the kinds described below, alongside a general litigation practice conducted before the courts at Bangalore for more than twenty-five years.
Oppression & Mismanagement
Sections 241 and 242 of the Companies Act, 2013 allow a member to approach the Tribunal where the affairs of a company are being conducted in a manner prejudicial to the public interest, oppressive to any member, or prejudicial to the interests of the company itself. These are the provisions most often invoked in shareholder and promoter disputes in closely held companies.
Eligibility to petition is governed by Section 244. In a company having a share capital, the petition must be supported by at least one hundred members or one-tenth of the total number of members, whichever is less, or by members holding at least one-tenth of the issued share capital. The Tribunal retains a discretionary power to waive these requirements where the circumstances justify it.
Matters accepted in this area
Petitions under Sections 241 and 242
Waiver applications under Section 244
Shareholder and promoter disputes
Illegal allotment and share transfer disputes
Class action applications under Section 245
Interim relief and status quo applications
Director Disputes & Rectification of Register
Disputes over the composition of a board and over the entries in a company's register of members are among the most common tribunal filings. Section 59 of the Companies Act, 2013 permits an aggrieved person to apply for rectification of the register of members where a name has been entered or omitted without sufficient cause. Section 169 governs the removal of a director by ordinary resolution, subject to the director's right to be heard.
Rectification of register under Section 59
Challenges to removal of a director
Disputes over board and general meetings
Applications to call a meeting under Section 98
Disqualification of directors under Section 164
Forged or disputed share transfer entries
Restoration of Struck-Off Companies
Where the Registrar of Companies has struck a company off the register under Section 248 for not carrying on business or for continued default in filing, Section 252 provides the remedy. An aggrieved company, member, creditor or workman may appeal to the Tribunal within three years of the Registrar's order. The Registrar may himself apply within three years where the strike-off was procured on incorrect information.
The Tribunal may order restoration where it is satisfied that the company was in fact carrying on business at the time of strike-off, or that restoration is otherwise just. Restoration is commonly sought so that the company can complete pending litigation, deal with immovable property standing in its name, or regularise its filings.
Appeals for restoration under Section 252
Revival of dormant and defaulting companies
Compounding of offences under Section 441
Condonation of delay in statutory filings
Insolvency & Bankruptcy Code Applications
The Insolvency and Bankruptcy Code, 2016 makes the Tribunal the adjudicating authority for corporate insolvency. A financial creditor may apply under Section 7, an operational creditor under Section 9 after serving a demand notice under Section 8, and the corporate debtor itself under Section 10. The minimum default threshold was raised to one crore rupees by notification dated 24 March 2020.
Admission of an application triggers the moratorium under Section 14, which stays the institution and continuation of suits against the corporate debtor and prohibits the transfer of its assets. The resolution process is time-bound under Section 12.
Financial creditor applications (Section 7)
Operational creditor applications (Section 9)
Demand notices under Section 8
Defending admission of insolvency petitions
Filing and contesting claims before the RP
Voluntary liquidation under Section 59
Schemes, Amalgamation & Capital Reduction
Sections 230 to 232 of the Companies Act, 2013 govern compromises, arrangements and amalgamations, which require the sanction of the Tribunal after meetings of creditors and members have been convened as directed. Section 233 provides a simplified route for the merger of small companies and of a holding company with its wholly owned subsidiary. Section 66 governs reduction of share capital.
Schemes of arrangement (Sections 230–232)
Fast-track mergers under Section 233
Reduction of share capital under Section 66
Objections to proposed schemes
Applicable Laws: Companies Act 2013, Insolvency and Bankruptcy Code 2016, National Company Law Tribunal Rules 2016, Companies (Compromises, Arrangements and Amalgamations) Rules 2016, Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, Limited Liability Partnership Act 2008.
NCLT & Company Law — Frequently Asked
Which NCLT bench has jurisdiction over companies registered in Bangalore?
Companies with their registered office in Karnataka fall within the jurisdiction of the National Company Law Tribunal, Bengaluru Bench. Appeals from its orders lie to the National Company Law Appellate Tribunal (NCLAT), Chennai Bench, within forty-five days under Section 421 of the Companies Act, 2013, and thereafter to the Supreme Court on a question of law under Section 423.
Who is eligible to file an oppression and mismanagement petition?
Section 244 of the Companies Act, 2013 sets the threshold. In a company having share capital, the petition must be supported by not less than one hundred members or one-tenth of the total number of members, whichever is less, or by members holding not less than one-tenth of the issued share capital. In a company without share capital, not less than one-fifth of the total number of members is required. The Tribunal may waive these requirements in a fit case, so a member falling short of the threshold is not automatically without remedy.
Can a company struck off by the Registrar be restored?
Yes. Section 252 of the Companies Act, 2013 allows an appeal to the Tribunal against a strike-off order of the Registrar. An aggrieved company, member, creditor or workman may apply within three years of the order. The Tribunal may order restoration where it is satisfied that the company was carrying on business at the relevant time, or that restoration is otherwise just. Restoration is commonly sought to complete pending litigation or to deal with property standing in the company's name.
What is the minimum default amount for an insolvency application?
The minimum default threshold for initiating the corporate insolvency resolution process was raised from one lakh to one crore rupees by a notification dated 24 March 2020 issued under the proviso to Section 4 of the Insolvency and Bankruptcy Code, 2016. Applications may be filed by a financial creditor under Section 7, by an operational creditor under Section 9 after a demand notice under Section 8, or by the corporate debtor itself under Section 10.
Is the Tribunal bound by the Code of Civil Procedure?
No. Section 424 of the Companies Act, 2013 expressly provides that the Tribunal and the Appellate Tribunal are not bound by the procedure laid down in the Code of Civil Procedure, 1908. They are guided by the principles of natural justice and, subject to the Act, have the power to regulate their own procedure. They do, however, have the same powers as a civil court in respect of matters such as summoning witnesses, discovery and production of documents, and receiving evidence on affidavit.