06 January 2017

Companies (Transfer of Pending Proceedings) Rules, 2016 notified

The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal were established in June 2016 to adjudicate upon company law matters in India. The Central Government by Notification No. S.O.1936 (E) dated 1st June, 2016, appointed 1st June, 2016 as the date on which all proceedings pending before the Company Law Board would stand transferred to the NCLT. Now, the Ministry of Corporate Affairs has notified the Rules on 7th December, 2016, by Notification No. G.S.R 1119(E), to provide for transfer of matters pending before the Company Law Board to the NCLT.
The Rules divide pending proceedings into two broad categories: (i) Proceedings relating to cases other than winding up and (ii) cases relating to winding up. Proceedings, other than winding up, such as arbitration, compromise, arrangements and reconstruction, shall stand transferred to the Benches of National Company Law Tribunal in accordance with their territorial jurisdiction. However, proceedings in which orders have been reserved shall not be transferred.
Petitions relating to winding up due to inability to pay debts, pending before a High Court, which have not been served to the concerned respondent, shall be transferred to the Benches of the NCLT in accordance with their territorial jurisdiction. However, the concerned petitioner shall be required to submit the requisite information, including details of the proposed insolvency professional, within 60 days of the Notification, failing which, the petition would abate. For winding up cases where opinions were forwarded by the Board for Industrial and Financial Reconstruction to a High Court, and where no appeal is pending, proceedings which have been initiated in accordance with the Sick Industrial Companies (Special Provisions) Act, 1985, shall also continue to be adjudicated by the High Court. Further, according to the new Rules, no fees shall be payable for proceedings transferred.


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