The National Company Law Tribunal and Appellate Tribunal Bar Association (“NCLT & AT BA”) was founded by various professionals including Company Secretaries, Chartered Accountants, Cost Accountants and Advocates. The NCLT & AT BA currently has over 300 members which includes professionals from several spheres.
The NCLT & AT BA was formed with the vision to promote and protect the privileges, interests and prestige of the association and its members, and to promote the coordination of professionals of different streams.
The NCLT & AT BA is proud to announce the launch of its Hyderabad Chapter. The aim of establishing Hyderabad Chapter is to safeguard the rights and privileges of the professionals practicing in Hyderabad Bench of National Company Law Tribunal (“NCLT”) and National Company Law Appellate Tribunal (“NCLAT”).
India’s Legislature has given birth to two major corporate laws in less than four years. The issues arising with the enactment a Companies Act, 2013 and Insolvency and Bankruptcy Code, 2016 has given a handful of opportunities and fresh challenges to professionals.
The Constitution of NCLT & AT BA was prompted by the vision to build a strong team of professionals to discuss routine challenges and to bring out the best possible solution. The NCLT & AT BA is committed to its vision to “to promote and protect the privileges, interests and prestige of the association and its members, and to promote the coordination of professionals of different streams.”
To start with, NCLAT & AT BA on August 10, 2016 felicitated the newly appointed Hon’ble Mr. Justice S.J. Mukhopadhaya, Former Judge, Supreme Court of India and Chairperson, NCLAT, Hon’ble Mr. Justice M.M. Kumar, Chief Justice (Retd.), High Court of Jammu & Kashmir and President NCLT, Hon’ble Mr. Justice Permod Kohli, Chief Justice (Retd.), High Court of Sikkim and Chairman of Central Administrative Tribunal, along with Hon’ble Mr. Balvinder Singh, Member, NCLAT, Hon’ble Ms. Ina Malhotra, Member, NCLT, Hon’ble Mr. R. Varadharajan, Member, NCLT and Hon’ble Mr. S.K. Mohapatra, Member, NCLT. The NCLT & AT BA took this opportunity to release the Memorandum of Association of the Bar through the hands of respectable dignitaries. NCLT & AT BA introduced the dignitaries to over 600 professionals.
In furtherance of its objectives, NCLT & AT BA held various seminars to educate its members on the issues arising under Companies Act, 2013 and Insolvency and Bankruptcy Code, 2016. Some of recent seminars organized by NCLT & AT BA are stated as hereunder:
Going forward, the NCLT & AT BA welcomes the opportunity to acquaint its serve with professionals practicing in the NCLT, Hyderabad bench and further aims to extend its dimensions at every bench of NCLT for disseminations and structural innovation.
NCLAT & AT BA organized the symposium on Criminal Jurisprudence in collaboration with Phd Chamber of Commerce on August 4, 2017. The symposium has raised questions on the following issues:
Section 441 (6) of the Companies Act, 2013 (the “Act”) provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973 (“CrPC”), any offence which is punishable under this Act, with imprisonment or fine, or with both, shall be compoundable with the permission of the Special Court, in accordance with the procedure laid down in that Act for compounding of offences.
Section 320 of the CrPC also provides for compounding of certain offences. While, the administration of justice under criminal laws vests with the Criminal Courts established under the CrPC, the NCLT and NCLAT have been established under the Act and have formulated their own rules and procedures in terms of the Act.
Section 437 of the Act, provides that the High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX and XXX of the CrPC on a High Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court of session, trying cases within the local limits of the jurisdiction of the High Court.
Section 438 of the Act provides that the provisions of the CrPC shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor.
Under Section 621A of the Companies Act, 1956, the erstwhile Company Law Board could compound the offences punishable with fine only or offences punishable with fine, as an alternative to imprisonment. However, under the Act, the power to compound offences by the Tribunal is restricted to offences punishable with fine only.
There is likely to be a considerable overlap of the jurisdiction of NCLT/ NCLAT and the Criminal Courts to deal with the offences specified under the Companies Act, 2013.
A one day seminar on Insolvency and Bankruptcy Code, 2016 (the “Code”) was organised by NCLT & AT BA at India Habitat Centre, Lodhi Road New Delhi. The seminar was organised under the aegis of Mr. Virender Ganda, Senior Advocate, President NCLT & AT BA on measuring the technicalities faced by the practitioners from the newly evolved Code. The, seminar was focused to review and applicability of the provisions of the Code. The seminar was overwhelmingly attended by more than 200 delegates including Senior Advocates, Chartered Accountants, Cost Accountants, Company Secretaries and Advocates and NCLT & AT BA.
During the inaugural session of the seminar, Mr. Virender Ganda greeted Hon’ble Mr. Justice S.J. Mukhopadhaya, Chairperson, National Company Appellate Tribunal (“NCLAT”), Hon’ble Mr. Justice M.M. Kumar, President, National Company Law Tribunal (“NCLT”), Hon’ble Ms. Ina Malhotra, Member (Judicial) NCLT, New Delhi Bench, Hon’ble Mr. Balvinder Singh, Member (Technical) NCLAT, Hon’ble Mr. Ravikumar Duraisamy Member(Technical) NCLT, Hyderabad Bench, Hon’ble Mr. S. Balasubramanian, Former Chairman, Company Law Board, Patron, NCLT & AT BA, Dr. M.S. Sahoo, Chairperson, Insolvency and Bankruptcy Board of India, Mr. Sumant Batra, Managing Partner, Kesar Dass B & Associates.
In opening remarks Hon’ble Mr. S. Balasubramanian, eulogized the NCLT & AT BA for conducting a distinctive seminar and stated the significance of such interactive session. He also emphasised on the unresolved petitions before various benches of NCLT and the need to have more benches to adjudicate the pending cases timely.
In the special address, Mr. Sumant Batra described a philosophical aspect of the Code and categorized the insolvency law into four broad areas which are stated herein as under: -
Dr. M.S. Sahoo, in the key note address that the objectives of the Code can be achieved only if the insolvency resolution and other transactions under the Code are accomplished in a time bound manner. The ‘time bound’ feature of the Code distinguishes it from the erstwhile legislations. The Code permits 180 days for completion of corporate insolvency resolution process (“CIRP”). It permits one extension up to 90 days by the NCLT in deserving cases. However, insolvency resolution of all corporate persons may not entail the same level of complexity and some could be resolved earlier. The timeline for CIRP needs to be seen from three perspectives. First, there is enough incentive for adherence to time line. Second, there are facilitators for quick CIRP. Third, as number of CIRPs goes through, the process would get streamlined, and standardized and often automated.
Hon’ble Mr. Justice M.M. Kumar, expressed his satisfaction with the initiative of the NCLT & AT BA to conduct a seminar on the Code at most opt time, when it is most needed. That corporate sector is going through a radical transformation, whereas, if the amount is stuck for the years then it defeats the purpose of the recovery. He added that the Code shall go a long way to channelize the ideal assets into main stream and thus, help boosting the economy.
Hon’ble Mr. Justice M.M. Kumar also emphasised that the genesis of the Code is rooted in the long-term vision of providing an effective legal framework for timely resolution of Insolvent/Bankrupt corporates and therefore the timeline framed in the Code must be adhered to. Apart from the timeline there are other factors too, which play a crucial role in meeting the objectives of the Code. Hon’ble Mr. Justice M.M. Kumar highlighted that the challenge of timeline will depend upon each stakeholder involved and to maintain the statutory timeline, members of NCLT are working day and night.
Hon’ble Mr. Justice S.J. Mukhopadhaya addressed the seminar by stating that procedure laid in the Code must be followed by members of NCLT and NCLT AT. Whereas, nature of the provisions contained in Sub-Section (5) of Section 7 or Sub-Section (5) of Section 9 and Sub-Section (4) of Section 10 of the Code like Order 7 Rule 1 of Code of Civil Procedure, 1908 being procedural in nature cannot be treated to be a mandate of law and a Court can never become Functus Officio. However, the 7 days period for the rectification as stipulated under proviso the relevant provisions as noticed above is required to be complied with by the corporate debtor whose application, otherwise, bieng incomplete is fit to be rejected.
Hon’ble Mr. Justice S.J. Mukhopadhaya elaborated that the provisions related to the initiation of corporate insolvency resolution process by financial creditor (section 7), Application for initiation of corporate insolvency resolution process by operational creditor (section 9) and Intiation of corporate insolvency resolution process by corporate applicant (section 10) must be read together. Hon’ble Mr. Justice S.J. Mukhopadhaya raised his concerns, that as on date information utilities as specified under Section 7(3) of the Code and are yet to be established.
Thereafter, Mr. Rakesh Kumar, Advocate, Secretary, NCLT & AT BA, gave vote of thanks to the dignitaries and delegates present in the seminar and concluded the inaugural session.
The technical session of the seminar was chaired by the Hon’ble Ms. Ina Malhotra. Whereas, Mr. Krishna Kumar, Advocate, Vice-President NCLT & AT BA introduced the technical session. Thereafter, Hon’ble Ms. Ina Malhotra addressed the complexities related to the financial creditor, operational creditor, redeemable preference shareholders and related party as described in the Code.
Mr. Ashwin Bishnoi, Partner, Khaitan & Co. articulated the concept of Financial Creditor and the issues faced by the redeemable preference shareholders, unsecured creditors and off shore lenders during the process of insolvency resolution. Upon a perusal of the grounds (either for admission or rejection) Under Section 9 of the Code, it is evident that the Code does not envisage any discretion upon NCLT to ascertain the variety of dispute (i.e., whether the dispute raised is genuine or not), since the Code has given a clear and unambiguous meaning to the term ‘dispute’, thereby rendering the interpretation extremely objective and contextual.
Mr. Arvind Kumar Gupta, Advocate, during his presentation shared the role of Operational Creditor and elaborated the three modes under which Corporate Insolvency Proceedings under the Code can be initiated, which are stated herein as under: -
Mr. Gupta pointed out that a limited operation to clause relating to pendency of proceedings to justify a dispute appears to be unreasonable. He further pointed out that how would a corporate debtor initiate the legal proceedings, when, the payment itself is disputed by it. The onus would thus lie on creditors to initiate the legal proceedings for the recovery and not on a corporate debtor who is disputing the liability.
Mr. Divyanshu Pandey, Partner, J. Sagar Associates, addressed on corporate bebtor. Corporate debtor includes all legal entities but does not include bank service provider. Mr. Pandey further stated that powers of corporate debtor are suspended as soon application for insolvency is filed.
Dr. Navrang Saini, Whole-time Member, Insolvency and Bankruptcy Board of India, addressed the seminar on role of Insolvency Professionals under the Code. Whereas, Insolvency Professionals plays an important role in balancing the needs of creditors and debtors. Dr. Saini, further emphasised on capacity building for Insolvency Professionals in handling the big and complexed structured corporate entities.
The presentations by the guest speakers was followed by an interactives Questions-Answers session. Hon’ble Mr. Balvinder Singh Member (Technical) NCLAT along with technical session chairperson Hon’ble Ms. Ina Malhotra, Member (Judicial) NCLT, New Delhi Bench and other guest speaker actively participated and responded to various questions raised by delegates.