Companies (Second Amendment) Act, 2002
[11 of
2003]
An Act further to amend the Companies Act,
1956
Be it enacted by Parliament in the Fifty-third
Year of the Republic of India as follows:—
1. (1) This Act may be called the Companies (Second Amendment) Act,
2002.
(2) It shall come into force on such date as the Central
Government may, by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this
Act and any reference in any such provision to the commencement of this Act
shall be construed as a reference to the commencement of that provision.
2. In section 2 of the
Companies Act, 1956 (1 of 1956) (hereinafter referred to as the principal
Act),—
(a) after
clause (1A), the following
clause shall be inserted, namely:—
‘(1B)“Appellate Tribunal” means the
National Company Law Appellate Tribunal constituted under sub-section (1) of
section 10FR;’;
(b) after
clause (19A), the following
clauses shall be inserted, namely:—
‘(19AA) “industrial company” means a
company which owns one or more industrial undertakings;
(19AB) “industrial undertaking” means any undertaking, pertaining
to any industry carried on in one or more factories or units by any company, as
defined in clause (aa) of
section 3 of the Industries (Development and Regulation) Act, 1951 (65 of 1951)
but does not include a small-scale industrial undertaking as defined in clause
(j) of that section;’;
(c) after
clause (29), the following
clause shall be inserted, namely:—
‘(29A) “net worth” means the sum total
of the paid-up capital and free reserves after deducting the provisions or
expenses as may be prescribed.
Explanation.—For
the purposes of this clause, “free reserves” means all reserves created out of
the profits and share premium account but does not include reserves created out
of revaluation of assets, write back of depreciation provisions and
amalgamation;’;
(d) after
clause (31A), the following
clause shall be inserted, namely:—
‘(31AA) “operating agency” means any
group of experts consisting of persons having special knowledge of business or
industry in which the sick industrial company is engaged and includes public financial
institution, State level institution, scheduled bank or any other person as may
be specified as the operating agency by the Tribunal;’;
(e) in
clause (33), for the words
“High Courts”, the words “the Tribunal” shall be substituted;
(f) after
clause (46A), the following
clauses shall be inserted, namely:—
‘(46AA) “sick industrial company” means
an industrial company which has—
(i) the accumulated losses in any financial
year equal to fifty per cent or more of its average net worth during four years
immediately preceding such financial year; or
(ii) failed to repay its debts within any three
consecutive quarters on demand made in writing for its repayment by a creditor
or creditors of such company;
(46AB) “State level
institution” means any of the following institutions, namely:—
(a) the State Financial Corporations
established under section 3 or section 3A and institutions notified under
section 46 of the State Financial Corporations Act, 1951 (63 of 1951);
(b) the State
Industrial Development Corporations registered under this Act;’;
(g) after
clause (49), the following
clause shall be inserted, namely:—
‘(49A) “Tribunal” means the National
Company Law Tribunal constituted under sub-section (1) of section 10FB;’.
3. In
section 10E of the principal Act, in sub-section (1A), for the words “conferred
on it”, at both the places where they occur, the words, brackets and figures
“conferred on it before the commencement of the Companies (Second Amendment)
Act, 2002” shall be substituted.
4. In section
10F of the principal Act, after the words “any decision or order of the Company
Law Board”, the words, brackets and figures “made before the commencement of
the Companies (Second Amendment) Act, 2002” shall be inserted.
Insertion of new section 10FA.
5. After section 10F of the principal Act, the
following section shall be inserted, namely :—
“10FA. Dissolution of Company Law Board.—(1)
On and from the commencement of the Companies (Second Amendment) Act, 2002, the
Board of Company Law Administration constituted under sub-section (1) of
section 10E shall stand dissolved.
(2) On the dissolution of the
Company Law Board, the persons appointed as Chairman, Vice-Chairman and members
and officers and other employees of that Board and holding office as such
immediately before such commencement shall vacate their respective offices and
no such Chairman, Vice-Chairman and member and officer and other employee shall
be entitled to claim any compensation for the premature termination of the term
of his office or of any contract of service:
Provided
that every officer or other employee, who has been, immediately before the
dissolution of the Company Law Board, appointed on deputation basis to that
Board, shall, on such dissolution, stand reverted to his parent cadre, Ministry
or Department, as the case may be:
Provided
further that every officer and other employee of the Company Law Board
employed on regular basis by that Board, shall become, on and from the
dissolution of the board, the officer and employee, respectively, of the
Central Government with the same rights and privileges as to pension, gratuity
and other like benefits as would have been admissible to him if the rights in
relation to that Board had not been transferred to, and vested in, the Central
Government and shall continue to do so unless and until his employment in the
Central Government is duly terminated or until his remuneration, terms and
conditions of employment are duly altered by that Government:
Provided
also that notwithstanding anything contained in the Industrial Disputes Act,
1947 (14 of 1947), or in any other law for the time being in force, the
transfer of the services of any officer or other employee employed in the
Company Law Board, to the Central Government shall not entitle such officer or
other employee to any compensation under this Act or under any other law for
the time being in force and no such claim shall be entertained by any court, tribunal
(including the Tribunal under this Act) or other authority:
Provided
also that where the Company Law Board has established a provident fund,
superannuation fund, welfare fund or other fund for the benefit of the officers
and other employees employed in that Board, the monies relatable to the
officers and other employees whose services have been transferred by or under
this Act to the Central Government shall, out of the monies standing, on the
dissolution of the Company Law Board to the credit of such provident fund,
superannuation fund, welfare fund or other fund, stand transferred to, and vest
in, the Central Government and such monies which stand so transferred shall be
dealt with by that Government in such manner as may be prescribed.
(3) All matters or proceedings or
cases pending before the Company Law Board on or before the constitution of the
Tribunal under section 10FB, shall, on such constitution, stand transferred to
the National Company Law Tribunal and the said Tribunal shall dispose of such
cases in accordance with the provisions of this Act.”.
Insertion of new Parts IB and
IC.
6. After Part IA of the
principal Act, the following Parts shall be inserted, namely:—
10FB. Constitution of National Company Law Tribunal.—The Central
Government shall, by notification in the Official Gazette, constitute a
Tribunal to be known as the National Company Law Tribunal to exercise and
discharge such powers and functions as are, or may be, conferred on it by or
under this Act or any other law for the time being in force.
10FC. Composition of Tribunal.—The Tribunal shall consist of a
President and such number of Judicial and Technical Members not exceeding
sixty-two, as the Central Government deems fit, to be appointed by that
Government, by notification in the Official Gazette.
10FD. Qualifications for appointment of President and Members.—(1) The
Central Government shall appoint a person who has been, or is qualified to be,
a Judge of a High Court as the President of the Tribunal.
(2) A person shall not be
qualified for appointment as Judicial Member unless he—
(a) has,
for at least fifteen years, held a judicial office in the territory of India;
or
(b) has, for at least ten years been an
advocate of a High Court, or has partly held judicial office and has been
partly in practice as an advocate for a total period of fifteen years; or
(c) has held for at least fifteen years a
Group ‘A’ post or an equivalent post under the Central Government or a State
Government [including at least three years of service as a Member of the Indian
Company Law Service (Legal Branch) in Senior Administrative Grade in that
service]; or
(d) has held for at least fifteen years a
Group ‘A’ post or an equivalent post under the Central Government (including at
least three years of service as a Member of the Indian Legal Service in Grade I
of that service).
(3) A person shall not be
qualified for appointment as Technical Member unless he—
(a) has held for at least fifteen years a
Group ‘A’ post or an equivalent post under the Central Government or a State
Government [including at least three years of service as a Member of the Indian
Company Law Service (Accounts Branch) in Senior Administrative Grade in that
Service]; or
(b) is, or has been, a Joint Secretary to
the Government of India under the Central Staffing Scheme, or any other post
under the Central Government or a State Government carrying a scale of pay which
is not less than that of a Joint Secretary to the Government of India for at
least five years and has adequate knowledge of, and experience in, dealing with
problems relating to company law; or
(c) is, or has been, for at least fifteen
years in practice as a chartered accountant under the Chartered Accountants
Act, 1949 (38 of 1949); or
(d) is, or has been, for at least fifteen
years in practice as a cost accountant under the Costs and Works Accountants
Act, 1959 (23 of 1959); or
(e) is, or has been, for at least fifteen
years working experience as a Secretary in whole-time practice as defined in
clause (45A) of section 2 of
this Act and is a member of the Institute of the Companies Secretaries of India
constituted under the Company Secretaries Act, 1980 (56 of 1980); or
(f) is a person of ability, integrity and
standing having special know-ledge of, and professional experience of not less
than twenty years in, science, technology, economics, banking, industry, law,
matters relating to industrial finance, industrial management, industrial
reconstruction, administration, investment, accountancy, marketing or any other
matter, the special knowledge of, or professional experience in, which would be
in the opinion of the Central Government useful to the Tribunal; or
(g) is, or has been, a Presiding Officer of
a Labour Court, Tribunal or National Tribunal constituted under the Industrial
Disputes Act, 1947 (14 of 1947); or
(h) is a person having special knowledge of,
and experience of not less than fifteen years in, the matters relating to
labour.
Explanation.—For
the purposes of this Part,—
(i) “Judicial Member” means a Member of the
Tribunal appointed as such under sub-section (2) of section 10FD and includes
the President of the Tribunal;
(ii) “Technical Member” means a Member of the
Tribunal appointed as such under sub-section (3) of section 10FD.
10FE. Term of office of President and Members.—The
President and every other Member of the Tribunal shall hold office as such for
a term of three years from the date on which he enters upon his office but
shall be eligible for re-appointment :
Provided that no President or other
Member shall hold office as such after he has attained,—
(a) in
the case of the President, the age of sixty-seven years;
(b) in the case of any
other Member, the age of sixty-five years :
Provided
further that the President or other Member may retain his lien with his
parent cadre or Ministry or Department, as the case may be, while holding
office as such.
10FF. Financial and administrative powers of Member Administration.—The
Central Government shall designate any Judicial Member or Technical Member as
Member Administration who shall exercise such financial and administrative
powers as may be vested in him under the rules which may be made by the Central
Government :
Provided
that the Member Administration shall have authority to delegate such of his
financial and administrative powers as he may think fit to any other officer of
the Tribunal subject to the condition that such officer shall, while exercising
such delegated powers continue to act under the direction, superintendence and
control of the Member Administration.
10FG. Salary, allowances and other terms and conditions of service of
President and other Members.—The salary and allowances and other terms
and conditions of service of the President and other Members of the Tribunal
shall be such as may be prescribed :
Provided
that neither the salary and allowances nor the other terms and conditions of
service of the President and other Members shall be varied to their advantage
after their appointment.
10FH. Vacancy in Tribunal.—(1) In the event of the occurrence of any
vacancy in the office of the President of the Tribunal by reason of his death,
resignation or otherwise, the seniormost Member shall act as the President of
the Tribunal until the date on which a new President, appointed in accordance
with the provisions of this Act to fill such vacancy, enters upon his office.
(2) When the President is
unable to discharge his functions owing to absence, illness or any other cause,
the senior most Member or, as the case may be, such one of the Members of the
Tribunal, as the Central Government, may, by notification, authorise in this
behalf, shall discharge the functions of the President until the date on which
the President resumes his duties.
(3) If, for reason other than temporary
absence, any vacancy occurs in the office of the President or a Member, the
Central Government shall appoint another person in accordance with the
provisions of this Act to fill the vacancy and the proceedings may be continued
before the Tribunal from the stage at which the vacancy is filled.
10FI. Resignation of President and Member.—The President or a Member
of the Tribunal may, by notice in writing under his hand addressed to the
Central Government, resign his office :
Provided
that the President or a Member shall, unless he is permitted by the Central
Government to relinquish his office sooner, continue to hold office until the
expiry of three months from the date of receipt of such notice or until a
person duly appointed as his successor enters upon his office or until the
expiry of the term of office, whichever is the earliest.
10FJ. Removal and suspension of President or Member.—(1) The Central
Government may, in consultation with the Chief Justice of India, remove from
office the President or any Member of the Tribunal, who—
(a) has been adjudged
an insolvent; or
(b) has been convicted of an offence which, in
the opinion of the Central Government, involves moral turpitude; or
(c) has become
physically or mentally incapable of acting as such President or Member of the
Tribunal; or
(d) has acquired such financial or other
interest as is likely to affect prejudicially his functions as such President
or Member of the Tribunal; or
(e) has so abused his
position as to render his continuance in office prejudicial to the public
interest :
Provided that
no such President or a Member shall be removed on any of the grounds specified
in clauses (b) to (e) without giving him reasonable
opportunity of being heard in respect of those charges.
(2) The President or a Member
of the Tribunal shall not be removed from his office except by an order made by
the Central Government on the ground of proved misbehaviour or incapacity after
an inquiry made by a Judge of the Supreme Court in which such President or a
Member had been informed of the charges against him and given a reasonable opportunity
of being heard in respect of those charges.
(3) The Central Government
may suspend from office the President or Member of the Tribunal in respect of
whom a reference has been made to the Judge of the Supreme Court under
sub-section (2) until the Central Government has passed orders on receipt of
the report of the Judge of the Supreme Court on such reference.
(4) The Central Government
may, by rules, regulate the procedure for the investigation of misbehaviour or
incapacity of the President or a Member referred to in sub-section (2).
10FK. Officers and employees of Tribunal.—(1) The Central Government
shall provide the Tribunal with such officers and other employees as it may
deem fit.
(2) The officers and other
employees of the Tribunal shall discharge their functions under the general
superintendence of the Member Administration.
(3) The salaries and
allowances and other terms and conditions of service of the officers and other
employees of the Tribunal shall be such as may be prescribed.
10FL. Benches of Tribunal.—(1) Subject to the provisions of this
section, the powers of the Tribunal may be exercised by Benches, constituted by
the President of the Tribunal, out of which one shall be a Judicial Member and
another shall be a Technical Member referred to in clauses (a) to (f) of sub-section (3) of section 10FD:
Provided
that it shall be competent for the Members authorised in this behalf to
function as a Bench consisting of a single Member and exercise the
jurisdiction, powers and authority of the Tribunal in respect of such class of
cases or such matters pertaining to such class of cases, as the President of
the Tribunal may, by general or special order, specify:
Provided
further that if at any stage of the hearing of any such case or matter, it
appears to the Member of the Tribunal that the case or matter is of such a
nature that it ought to be heard by a Bench consisting of two Members, the case
or matter may be transferred by the President of the Tribunal or, as the case
may be, referred to him for transfer to such Bench as the President may deem
fit.
(2) The President of the
Tribunal shall, for the disposal of any case relating to rehabilitation,
restructuring or winding up of the companies, constitute one or more Special
Benches consisting of three or more Members, each of whom shall necessarily be
a Judicial Member, a Technical Member appointed under any of the clauses (a) to (f) of sub-section (3) of section 10FD, and a Member appointed
under clause (g) or clause (h) of sub-section (3) of section 10FD
:
Provided
that in case a Special Bench passes an order in respect of a company to be
wound up, the winding up proceedings of such company may be conducted by a
Bench consisting of a single Member.
(3) If the Members of a Bench
differ in opinion on any point or points, it shall be decided according to the
majority, if there is a majority, but if the Members are equally divided, they
shall state the point or points on which they differ, and the case shall be
referred by the President of the Tribunal for hearing on such point or points
by one or more of the other Members of the Tribunal and such point or points
shall be decided according to the opinion of the majority of Members of the
Tribunal who have heard the case, including those who first heard it.
(4) There shall be
constituted such number of Benches, as may be notified by the Central
Government.
(5) In addition to the other
Benches, there shall be a Principal Bench at New Delhi presided over by the
President of the Tribunal.
(6) The Principal Bench of
the Tribunal shall have powers of transfer of proceedings from any Bench to
another Bench of the Tribunal in the event of inability of any Bench from
hearing any such proceedings for any reason:
Provided
that no transfer of any proceedings shall be made under this sub-section except
after recording the reasons for so doing in writing.
10FM. Order of Tribunal.—(1) The Tribunal may, after giving the
parties to any proceeding before it, an opportunity of being heard, pass such
orders thereon as it thinks fit.
(2) The Tribunal may, at any
time within two years from the date of the order, with a view to rectifying any
mistake apparent from the record, amend any order passed by it under
sub-section (1), and shall make such amendment if the mistake is brought to its
notice by the parties.
(3) The Tribunal shall send a
copy of every order passed under this section to all the parties concerned.
10FN. Power to review.—The Tribunal shall
have power to review its own orders.
10FO. Delegation of powers.—The Tribunal may, by general or special
order, delegate, subject to such conditions and limitations, if any, as may be
specified in the order, to any Member or officer or other employee of the
Tribunal or other person authorised by the Tribunal to manage any industrial
company or industrial undertaking or any operating agency, such powers and
duties under this Act as it may deem necessary.
10FP. Power to seek assistance of Chief Metropolitan Magistrate and District
Magistrate.—(1) The Tribunal or any operating agency, on being directed
by the Tribunal may, in order to take into custody or under its control all
property, effects and actionable claims to which a sick industrial company is
or appears to be entitled, request, in writing, the Chief Metropolitan
Magistrate or the District Magistrate within whose jurisdiction any property,
books of account or any other document of such sick industrial company, be
situate or be found, to take possession thereof, and the Chief Metropolitan
Magistrate or the District Magistrate, as the case may be, shall, on such
request being made to him,—
(a) take possession of
such property, books of account or other documents; and
(b) cause the same to
be entrusted to the Tribunal or the operating agency.
(2) For the purpose of
securing compliance with the provisions of sub-section (1), the Chief
Metropolitan Magistrate or the District Magistrate may take or cause to be
taken such steps and use or cause to be used such force as may, in his opinion,
be necessary.
(3) No act of the Chief
Metropolitan Magistrate or the District Magistrate done in pursuance of this
section shall be called in question in any court or before any authority on any
ground whatsoever.
Appellate
Tribunal
10FQ. Appeal from order of Tribunal.—(1) Any person aggrieved by an
order or decision of the Tribunal may prefer an appeal to the Appellate
Tribunal.
(2) No appeal shall lie to
the Appellate Tribunal from an order or decision made by the Tribunal with the
consent of parties.
(3) Every appeal under
sub-section (1) shall be filed within a period of forty-five days from the date
on which a copy of the order or decision made by the Tribunal is received by
the appellant and it shall be in such form and accompanied by such fee as may
be prescribed:
Provided
that the Appellate Tribunal may entertain an appeal after the expiry of the
said period of forty-five days from the date aforesaid if it is satisfied that
the appellant was prevented by sufficient cause from not filing the appeal in
time.
(4) On receipt of an appeal
preferred under sub-section (1), the Appellate Tribunal shall, after giving
parties to the appeal, an opportunity of being heard, pass such orders thereon
as it thinks fit, confirming, modifying or setting aside the order appealed
against.
(5) The Appellate Tribunal
shall send a copy of every order made by it to the Tribunal and parties to the
appeal.
(6) The appeal filed before
the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously
as possible and endeavour shall be made by it to dispose of the appeal finally
within six months from the date of the receipt of the appeal.
10FR. Constitution of Appellate Tribunal.—(1) The Central Government
shall, by notification in the Official Gazette, constitute with effect from
such date as may be specified therein, an Appellate Tribunal to be called the
“National Company Law Appellate Tribunal” consisting of a Chairperson and not
more than two Members, to be appointed by that Government, for hearing appeals
against the orders of the Tribunal under this Act.
(2) The Chairperson of the
Appellate Tribunal shall be a person who has been, a Judge of the Supreme Court
or the Chief Justice of a High Court.
(3) A Member of the Appellate
Tribunal shall be a person of ability, integrity and standing having special
knowledge of, and professional experience of not less than twenty-five years
in, science, technology, economics, banking, industry, law, matters relating to
labour, industrial finance, industrial management, industrial reconstruction,
administration, investment, accountancy, marketing or any other matter, the
special knowledge of, or professional experience in which, would be in the
opinion of the Central Government useful to the Appellate Tribunal.
10FS. Vacancy in Appellate Tribunal, etc.—(1) In the event of the
occurrence of any vacancy in the office of the Chairperson of the Appellate
Tribunal by reason of his death, resignation or otherwise, the seniormost
Member of the Appellate Tribunal shall act as the Chairperson of the Appellate
Tribunal until the date on which a new Chairperson appointed in accordance with
the provisions of this Act to fill such vacancy enters upon his office.
(2) When the Chairperson of
the Appellate Tribunal is unable to discharge his functions owing to absence,
illness or any other cause, the seniormost Member or, as the case may be, such
one of the Members of the Appellate Tribunal, as the Central Government may, by
notification, authorise in this behalf, shall discharge the functions of the
Chairperson until the date on which the Chairperson resumes his duties.
(3) If, for reason other than
temporary absence, any vacancy occurs in the office of the Chairperson or a
Member, the Central Government shall appoint another person in accordance with
the provisions of this Act to fill the vacancy and the proceedings may be
continued before the Appellate Tribunal from the stage at which the vacancy is
filled.
10FT. Term of office of Chairperson and Members.—The Chairperson or a
Member of the Appellate Tribunal shall hold office as such for a term of three
years from the date on which he enters upon his office, but shall be eligible
for re-appointment for another term of three years:
Provided that no Chairperson or other member shall hold office as
such after he has attained,—
(a) in the case of the
Chairperson, the age of seventy years;
(b) in the case of any
other Member, the age of sixty-seven years.
10FU. Resignation of Chairperson and Members.—The Chairperson or a Member
of the Appellate Tribunal may, by notice in writing under his hand addressed to
the Central Government, resign his office:
Provided
that the Chairperson or a Member of the Appellate Tribunal shall, unless he is
permitted by the Central Government to relinquish his office sooner, continue
to hold office until the expiry of three months from the date of receipt of
such notice or until a person duly appointed as his successor enters upon his
office or until the expiry of his term of office, whichever is the earliest.
10FV. Removal and suspension of Chairperson and Members of Appellate
Tribunal.—(1) The Central Government may, in consultation with the Chief
Justice of India, remove from office the Chairperson or any member of the
Appellate Tribunal, who—
(a) has been adjudged
an insolvent; or
(b) has been convicted of an offence which, in
the opinion of the Central Government, involves moral turpitude; or
(c) has become physically or mentally incapable
of acting as such Chairperson or Member of the Appellate Tribunal; or
(d) has acquired such financial or other
interest as is likely to affect prejudicially his functions as such Chairperson
or Member of the Appellate Tribunal; or
(e) has so abused his
position as to render his continuance in office prejudicial to the public
interest.
(2) The Chairperson or a
Member of the Appellate Tribunal shall not be removed from his office except by
an order made by the Central Government on the ground of proved misbehaviour or
incapacity after an inquiry made by a Judge of the Supreme Court in which such
Chairperson or Member had been informed of the charges against him and given a
reasonable opportunity of being heard in respect of those charges.
(3) The Central Government
may suspend from office the Chairperson or a Member of the Appellate Tribunal
in respect of whom a reference has been made to the Judge of the Supreme Court
under sub-section (2) until the Central Government has passed orders on receipt
of the report of the Judge of the Supreme Court on such reference.
(4) The Central Government
may, by rules, regulate the procedure for the investigation of misbehaviour or
incapacity of the Chairperson or a Member referred to in sub-section (2).
10FW. Salary, allowances and other terms and conditions of service of
Chairperson and Members.—(1) The salary and allowances and other terms
and conditions of service of the Chairperson and other Members of the Appellate
Tribunal shall be such as may be prescribed.
(2) The salary, allowances
and other terms and conditions of service of the Chairperson and other Members
of the Appellate Tribunal shall not be varied to their disadvantage after
appointment.
10FX. Selection Committee.—(1) The Chairperson and Members of the
Appellate Tribunal and President and Members of the Tribunal shall be appointed
by the Central Government on the recommendations of a Selection Committee
consisting of—
|
|
(a) |
Chief
Justice of India or his nominee |
Chairperson; |
|
|
(b) |
Secretary
in the Ministry of Finance and Company Affairs |
Member; |
|
|
(c) |
Secretary
in the Ministry of Labour |
Member; |
|
|
(d) |
Secretary
in the Ministry of Law and Justice (Department of Legal Affairs or
Legislative Department) |
Member; |
|
|
(e) |
Secretary
in the Ministry of Finance and Company Affairs (Department of Company
Affairs) |
Member. |
(2) The Joint Secretary in
the Ministry or Department of the Central Government dealing with this Act shall
be the Convenor of the Selection Committee.
(3) The Central Government
shall, within one month from the date of occurrence of any vacancy by reason of
death, resignation or removal of the Chairperson and Members of the Appellate
Tribunal and President and Members of the Tribunal and six months before the
superannuation or end of tenure of the Chairperson and Members of the Appellate
Tribunal and President and Members of the Tribunal, make a reference to the
Selection Committee for filling up of the vacancy.
(4) The Selection Committee
shall recommend within one month a panel of three names for every vacancy
referred to it.
(5) Before recommending any
person for appointment as the Chairperson and Members of the Appellate Tribunal
and President and Members of the Tribunal, the Selection Committee shall
satisfy itself that such person does not have financial or other interest which
is likely to affect prejudicially his functions as such Chairperson or member
of the Appellate Tribunal or President or Member of the Tribunal, as the case
may be.
(6) No appointment of the
Chairperson and Members of the Appellate Tribunal and President and Members of
the Tribunal shall be invalidated merely by reason of any vacancy or any defect
in the constitution of the Selection Committee.
10FY. Chairperson, etc., to be public servants.—The Chairperson,
Members, officers and other employees of the Appellate Tribunal and the
President, Members, officers and other employees of the Tribunal shall be deemed
to be public servants within the meaning of section 21 of the Indian Penal Code
(45 of 1860).
10FZ. Protection of action taken in good faith.—No suit, prosecution
or other legal proceedings shall lie against the Appellate Tribunal or its
Chairperson, Member, officer or other employee or against the Tribunal, its
President, Member, officer or other employee or operating agency or liquidator
or any other person authorised by the Appellate Tribunal or the Tribunal in the
discharge of any function under this Act for any loss or damage caused or
likely to be caused by any act which is in good faith done or intended to be
done in pursuance of this Act.
10FZA.Procedure and powers of
Tribunal and Appellate Tribunal.—(1) The Tribunal and the Appellate
Tribunal shall not be bound by the procedure laid down in the Code of Civil
Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural
justice and, subject to the other provisions of this Act and of any rules made
by the Central Government, the Tribunal and the Appellate Tribunal shall have
power to regulate their own procedure.
(2) The Tribunal and the
Appellate Tribunal shall have, for the purposes of discharging its functions under
this Act, the same powers as are vested in a civil court under the Code of
Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the
following matters, namely:—
(a) summoning
and enforcing the attendance of any person and examining him on oath;
(b) requiring
the discovery and production of documents;
(c) receiving
evidence on affidavits;
(d) subject to the provisions of sections
123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any
public record or document or copy of such record or document from any office;
(e) issuing
commissions for the examination of witnesses or documents;
(f) reviewing
its decisions;
(g) dismissing
a representation for default or deciding it ex parte;
(h) setting aside any order of dismissal of
any representation for default or any order passed by it ex parte; and
(i) any
other matter which may be prescribed by the Central Government.
(3) Any order made by the
Tribunal or the Appellate Tribunal may be enforced by that Tribunal in the same
manner as if it were a decree made by a court in a suit pending therein, and it
shall be lawful for the Tribunal or the Appellate Tribunal to send in case of
its inability to execute such order, to the court within the local limits of
whose jurisdiction,—
(a) in
the case of an order against a company, the registered office of the company is
situate; or
(b) in the case of an order against any other
person, the person concerned voluntarily resides or carries on business or
personally works for gain.
(4) All proceedings before
the Tribunal or the Appellate Tribunal shall be deemed to be judicial
proceedings within the meaning of sections 193 and 228, and for the purposes of
section 196, of the Indian Penal Code (45 of 1860) and the Tribunal and the Appellate
Tribunal shall be deemed to be a civil court for the purposes of section 195
and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).
10G. Power to punish for contempt.—The Appellate Tribunal shall have
the same jurisdiction, powers and authority in respect of contempt of itself as
the High Court has and may exercise, for this purpose under the provisions of
the Contempt of Courts Act, 1971 (70 of 1971), shall have the effect subject to
modifications that—
(a) the reference therein to a High Court
shall be construed as including a reference to the Appellate Tribunal;
(b) the reference to Advocate-General in
section 15 of the said Act shall be construed as a reference to such law
officers as the Central Government may specify in this behalf.
10GA. Staff of Appellate Tribunal.—(1) The Central Government shall
provide the Appellate Tribunal with such officers and other employees as it may
think fit.
(2) The officers and other employees
of the Appellate Tribunal shall discharge their functions under the general
superintendence of the Chairperson of the Appellate Tribunal.
(3) The salaries and
allowances and other conditions of service of the officers and other employees
of the Appellate Tribunal shall be such as may be prescribed.
10GB. Civil court not to have jurisdiction.—(1) No civil court shall
have jurisdiction to entertain any suit or proceeding in respect of any matter
which the Tribunal or the Appellate Tribunal is empowered to determine by or
under this Act or any other law for the time being in force and no injunction
shall be granted by any court or other authority in respect of any action taken
or to be taken in pursuance of any power conferred by or under this Act or any
other law for the time being in force.
10GC. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or
proceedings.—No act or proceeding of the Tribunal or the Appellate
Tribunal shall be questioned or shall be invalid merely on the ground of
existence of any vacancy or defect in the establishment of the Tribunal or the
Appellate Tribunal, as the case may be.
10GD. Right to legal representation.—The applicant or the appellant
may either appear in person or authorise one or more chartered accountants or
company secretaries or cost accountants or legal practitioners or any officer
to present his or its case before the Tribunal or the Appellate Tribunal, as
the case may be.
Explanation.—For the
purposes of this section,—
(a) “chartered accountant” means a chartered
accountant as defined in clause (b)
of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of
1949) and who has obtained a certificate of practice under sub-section (1) of
section 6 of that Act;
(b) “company secretary” means a company
secretary as defined in clause (c)
of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of
1980) and who has obtained a certificate of practice under sub-section (1) of
section 6 of that Act;
(c) “cost accountant” means a cost accountant
as defined in clause (b) of
sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of
1959) and who has obtained a certificate of practice under sub-section (1) of
section 6 of that Act;
(d) “legal practitioner” means an advocate, a
vakil or any attorney of any High Court, and includes a pleader in practice.
10GE. Limitation.—The provisions of the Limitation Act, 1963 (36 of
1963) shall, as far as may be, apply to an appeal made to the Appellate
Tribunal.
10GF. Appeal to Supreme Court.—Any person aggrieved by any decision or
order of the Appellate Tribunal may file an appeal to the Supreme Court within
sixty days from the date of communication of the decision or order of the
Appellate Tribunal to him on any question of law arising out of such decision
or order:
Provided
that the Supreme Court may, if it is satisfied that the appellant was prevented
by sufficient cause from filing the appeal within the said period, allow it to
be filed within a further period not exceeding sixty days.’.
Substitution of new section for
section 17.
7. For section 17 of the
principal Act, the following section shall be substituted, namely:—
“17. Special resolution and confirmation by
Central Government required for alteration of memorandum.—(1) A company
may, by special resolution, alter the provisions of its memorandum so as to
change the place of its registered office from one State to another, or with
respect to the objects of the company so far as may be required to enable it—
(a) to carry on its
business more economically or more efficiently; or
(b) to attain its main
purpose by new or improved means; or
(c) to enlarge or
change the local area of its operation; or
(d) to carry on some business which under existing
circumstances may conveniently or advantageously be combined with the business
of the company; or
(e) to restrict or
abandon any of the objects specified in the memorandum; or
(f) to sell or dispose of the whole or any
part of the undertaking, or of any of the undertakings, of the company; or
(g) to amalgamate with
any other company or body of persons.
(2) The alteration of the
provisions of memorandum relating to the change of the place of its registered
office from one State to another shall not take effect unless it is confirmed
by the Central Government on petition.
(3) Before confirming the
alteration, the Central Government must be satisfied—
(a) that sufficient notice has been given to
every holder of the debentures of the company, and to every other person or
class of persons whose interests will, in the opinion of the Central
Government, be affected by the alteration; and
(b) that, with respect to every creditor who,
in the opinion of the Central Government, is entitled to object to the alteration,
and who signifies his objection in the manner directed by the Central
Government, either his consent to the alteration has been obtained or his debt
or claim has been discharged or has been determined, or has been secured :
Provided
that the Central Government may, in the case of any person or class of persons,
for special reasons, dispense with the notice required by clause (a).
(4) The Central Government
shall cause notice of the petition for confirmation of the alteration to be
served on the Registrar who shall also be given a reasonable opportunity of
appearing before the Central Government and state his objections and
suggestions, if any, with respect to the confirmation of the alteration.
(5) The Central Government
may make an order confirming the alteration on such terms and conditions, if
any, as it thinks fit, and may make such order as to costs as it thinks proper.
(6) The Central Government
shall, in exercising its powers under this section, have regard to the rights
and interests of the members of the company and of every class of them, as well
as to the rights and interests of the creditors of the company and of every
class of them.
(7) The Central Government
may, if it thinks fit, adjourn the proceedings in order that an arrangement may
be made to the satisfaction of the Central Government for the purchase of the
interests of dissentient members; and may give such directions and make such
orders as it thinks fit for facilitating, or carrying into effect, any such
arrangement :
Provided that no part of the capital of the company may be
expended for any such purchase.”.
Amendment of sections 18, 19, 43
and 49.
8. In sections
18, 19, 43 and 49 of the principal Act, for the words “Company Law Board”, wherever
they occur, the words “Central Government” shall be substituted.
Amendment of sections 55A and
58A.
9. In sections
55A and 58A of the principal Act, for the words “Company Law Board”, wherever
they occur, the word “Tribunal” shall be substituted.
10. In section 58AA of the
principal Act,—
(a) for
the words “Company Law Board”, wherever they occur, the word “Tribunal” shall
be substituted;
(b) in sub-section
(3), in the first proviso, for the words “the Board”, the words “the Tribunal”
shall be substituted.
11. In
section 75 of the principal Act, in sub-section (1), in clause (c), in sub-clause (ii), for the word “Court”, the word
“Tribunal” shall be substituted.
12. In section 79 of the principal Act,—
(a) for the words
“Company Law Board”, wherever they occur, the words “Central Government” shall
be substituted;
(b) in sub-section
(2), in clause (ii), in the
proviso, for the words “unless that Board is of opinion”, the words “unless the
Central Government is of opinion” shall be substituted;
(c) after
sub-section (3), the following proviso shall be inserted, namely:—
“Provided
that in the case of revival and rehabilitation of sick industrial companies under
Chapter VIA, the provisions of this section shall have effect as if for the
words “Central Government”, the word “Tribunal” had been substituted.”.
13. In section 80A of the
principal Act,—
(a) in sub-section
(1), in the proviso, for the words “Company Law Board”, the word “Tribunal”
shall be substituted;
(b) in sub-section
(2), for the words “any court”, the words “any court or the Tribunal” shall be
substituted.
Amendment of sections 100 to 104
and 107.
14. In sections 100
to 104 and 107 of the principal Act, for the word “Court”, wherever it occurs,
the word “Tribunal” shall be substituted.
Amendment of sections 111 and
111A.
15. In sections
111 and 111A of the principal Act, for the words “Company Law Board”, wherever
they occur, the word “Tribunal” shall be substituted.
16. In section
113 of the principal Act, for the words “Company Law Board”, wherever they
occur, the words “Central Government” shall be substituted.
17. In section 117B of the
principal Act,—
(a) in sub-section
(4), for the words “Company Law Board”, wherever they occur, the words “Central
Government” shall be substituted;
(b) after
sub-section (4), the following proviso shall be inserted namely :—
‘Provided
that in the case of revival and rehabilitation of a sick industrial company
under Part VIA, the provisions of this section shall have effect as if for the
words “Central Government”, the word “Tribunal” had been substituted.’.
18. In section
117C of the principal Act, for the words “Company Law Board”, at both the
places where they occur, the word “Tribunal” shall be substituted.
19. In section
118 of the principal Act, for the words “Company Law Board”, the words “Central
Government” shall be substituted.
Substitution of new section for
section 141.
20. For section 141 of the principal Act, the
following section shall be substituted, namely:—
“141. Rectification by Central Government of
register of charges.—(1) The Central Government, on being satisfied—
(a) that the omission to file with the
Registrar the particulars of any charge created by a company or of any charge
subject to which any property has been acquired by the company or of any
modification of any such charge or of any issue of debentures of a series, or
that the omission to register any charge within the time required by this Part
or that the omission to give intimation to the Registrar of the payment or satisfaction
of a charge, within the time required by this Part, or that the omission or
mis-statement of any particular with respect to any such charge, modification
or issue of debentures of a series or with respect to any memorandum of
satisfaction or other entry made in pursuance of section 138 or section 139,
was accidental or due to inadvertence or some other sufficient cause or is not
of a nature to prejudice the position of creditors or shareholders of the
company; or
(b) that on other grounds, it is just and
equitable to grant relief, may on the application of the company or any person
interested and on such terms and conditions as it may seem to the Central
Government just and expedient, direct that the time for the filing of the
particulars or for the registration of the charge or for the giving of
intimation of payment or satisfaction shall be extended or, as the case may
require, that the omission or mis-statement shall be rectified.
(2) The Central
Government may make such order as to the cost of an application under
sub-section (1) as it thinks fit.
(3) Where the Central
Government extends the time for the registration of a charge, the order shall
not prejudice any rights acquired in respect of the property concerned before
the charge is actually registered.”.
Amendment of sections 144 and
163.
21. In sections
144 and 163 of the principal Act, for the words “Company Law Board”, the words
“Central Government” shall be substituted.
Substitution of new section for
section 167.
22. For section 167 of the principal Act, the
following section shall be substituted, namely:—
“167. Power of Central Government to call annual
general meeting.—(1) If default is made in holding an annual general
meeting in accordance with section 166, the Central Government may,
notwithstanding anything contained in this Act or in the articles of the
company, on the application of any member of the company, call, or direct the
calling of, a general meeting of the company and give such ancillary or
consequential directions as the Central Government thinks expedient in relation
to the calling, holding and conducting of the meeting.
Explanation.—The directions that may
be given under this sub-section may include a direction that one member of the
company present in person or by proxy shall be deemed to constitute a meeting.
(2) A general meeting held in
pursuance of sub-section (1) shall, subject to any directions of the Central
Government, be deemed to be an annual general meeting of the company :
Provided
that in the case of revival and rehabilitation of sick industrial companies
under Chapter VIA, the provisions of this section shall have effect as if for
the words “Central Government”, the word “Tribunal” had been substituted.”.
23. In section
168 of the principal Act, for the words “Central Government”, the words
“Tribunal or the Central Government, as the case may be” shall be substituted.
Substitution of new section for
section 186.
24. For section 186 of the principal Act, the following
section shall be substituted, namely:—
“186. Power of Tribunal to order meeting to be
called.—(1) If for any
reason it is impracticable to call a meeting of a company, other than an annual
general meeting, in any manner in which meetings of the company may be called,
or to hold or conduct the meeting of the company in the manner prescribed by
this Act or the articles, the Tribunal may, either of its own motion or on the
application of any director of the company, or of any member of the company who
would be entitled to vote at the meeting,—
(a) order a meeting of the company to be
called, held and conducted in such manner as the Tribunal thinks fit; and
(b) give such ancillary or consequential
directions as the Tribunal thinks expedient, including directions modifying or
supplementing in relation to the calling, holding and conducting of the
meeting, the operation of the provisions of this Act and of the company’s
articles.
Explanation.—The directions that may
be given under this sub-section may include a direction that one member of the
company present in person or by proxy shall be deemed to constitute a meeting.
(2) Any meeting called, held and
conducted in accordance with any such order shall, for all purposes, be deemed
to be a meeting of the company duly called, held and conducted.”.
Amendment of sections 188 and
196.
25. In sections
188 and 196 of the principal Act, for the words “Company Law Board” wherever
they occur, the words “Central Government” shall be substituted.
26. In section 203 of the principal Act,—
(a) in sub-section
(1), for the word “Court”, at both the places where it occurs, the words “Court
or the Tribunal, as the case may be” shall be substituted;
(b) in
sub-section (2),—
(i) in clause (a), for the words “includes the Court
by which he is convicted as well as any Court having jurisdiction to wind up”,
the words “includes the Court or the Tribunal by which he is convicted, as well
as any Court or Tribunal having jurisdiction to wind up” shall be substituted;
(ii) in
clause (b), for the word
“Court”, the words “Court or Tribunal” shall be substituted;
(c) in sub-sections
(3) and (4), for the words “Court having jurisdiction to wind up a company”,
the words “Court or the Tribunal having jurisdiction to wind up a company”
shall be substituted;
(d) in sub-section
(5), for the words “attention of the Court”, the words “attention of the Court
or the Tribunal, as the case may be,” shall be substituted.
Amendment of sections 219 and 225.
27. In
sections 219 and 225 of the principal Act, for the words “Company Law Board”
wherever they occur, the words “Central Government” shall be substituted.
28. In
section 227 of the principal Act, in sub-section (3), after clause (f), the following clause shall be
inserted, namely :—
“(g) whether the cess
payable under section 441A has been paid and if not, the details of amount of
cess not so paid.”.
Amendment of sections 235 and
236.
29. In
sections 235 and 236 of the principal Act, for the words “Company Law Board”,
wherever they occur, the word “Tribunal” shall be substituted.
30. In
section 237 of the principal Act, in clause (b), in the opening portion, for the words “if in the opinion of
the Company Law Board”, the words “in its opinion or in the opinion of the
Tribunal” shall be substituted.
31. In
section 241 of the principal Act, in sub-section (2), in clause (dd), for the words “Company Law
Board”, the word “Tribunal” shall be substituted.
32. In
section 243 of the principal Act, for the word “Court”, at both the places
where it occurs, the word “Tribunal” shall be substituted.
Amendment of sections 247, 250,
251 and 269.
33. In
sections 247, 250, 251 and 269 of the principal Act, for the words “Company Law
Board”, wherever they occur, the word “Tribunal” shall be substituted.
34. In
section 284 of the principal Act, in sub-section (4), in the proviso, for the
words “Company Law Board”, the words “Central Government” shall be substituted.
Amendment of sections 304 and
307.
35. In
sections 304 and 307 of the principal Act, for the words “Company Law Board”,
the words “Central Government or Tribunal, as the case may be” shall be
substituted.
36. In
section 318 of the principal Act, in sub-section (3), in clause (d), for the words “or subject to the
supervision of Court”, the words “order of the Tribunal” shall be substituted.
37. In
section 349 of the principal Act, in sub-section (4), after clause (o), the following clause shall be
inserted, namely :—
“(p) amount paid as cess
under section 441A.”.
Amendment of Chapter IVA of Part
VI.
38. In
Part VI of the principal Act, in Chapter IVA, for the words “Company Law
Board”, wherever they occur, the word “Tribunal” shall be substituted.
39. In section 391 of the
principal Act,—
(a) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted;
(b) sub-section
(7) shall be omitted;
(c) below sub-section
(7), the portion beginning with the words, “The provisions of” and ending with the
words “the application” shall be omitted.
Substitution of new section for
section 392.
40. For section 392 of the
principal Act, the following section shall be substituted, namely :—
“392. Power of Tribunal to enforce compromise and
arrangement.—(1) Where
the Tribunal makes an order under section 391 sanctioning a compromise or an
arrangement in respect of a company, it—
(a) shall have power to
supervise the carrying out of the compromise or an arrangement; and
(b) may, at the time of making such order or
at any time thereafter, give such directions in regard to any matter or make
such modifications in the compromise or arrangement as it may consider
necessary for the proper working of the compromise or arrangement.
(2) If the Tribunal aforesaid is satisfied
that a compromise or an arrangement sanctioned under section 391 cannot be
worked satisfactorily with or without modifications, it may, either on its own
motion or on the application of any person interested in the affairs of the
company, make an order winding up the company, and such an order shall be
deemed to be an order made under section 433 of this Act.
(3) The provisions of this
section shall, so far as may be, also apply to a company in respect of which an
order has been made before the commencement of the Companies (Amendment) Act,
2001 sanctioning a compromise or an arrangement.”.
41. In section 394 of the
principal Act,—
(a) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted;
(b) in
the first proviso to sub-section (1), the words “the Company Law Board or”
shall be omitted.
Amendment of sections 394A and
395.
42. In
sections 394A and 395 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
43. In
section 396 of the principal Act, for the words “Company Law Board”, at both
the places where they occur, the word “Tribunal” shall be substituted.
Amendment of Chapter VI of Part
VI.
44. In
Part VI of the principal Act, in Chapter VI, for the words “Company Law Board”,
wherever they occur, the word “Tribunal” shall be substituted.
45. In section 410 of the
principal Act,—
(a) for
the words “Company Law Board”, the word “Tribunal” shall be substituted;
(b) for
the words “or Board”, the words “or the Tribunal” shall be substituted.
Substitution of new section for
section 424.
46. For section 424 of the
principal Act, the following section shall be substituted, namely:—
“424. Application of sections 421 to 423 to
receivers and managers appointed by Tribunal and managers appointed in
pursuance of an instrument.—The provisions of sections 421 to 423 shall
apply to the receiver of, or any person appointed to manage, the property of a
company, appointed by the Tribunal or to any person appointed to manage, the
property of a company under any powers contained in an instrument, in like
manner as they apply to a receiver appointed under any powers contained in an
instrument.”.
47. After Part VI of the
principal Act, the following Part shall be inserted, namely:—
Revival and
Rehabilitation of Sick Industrial Companies
424A. Reference to Tribunal.—(1) Where an industrial company, has
become a sick industrial company, the Board of directors of such company shall
make a reference to the Tribunal, and prepare a scheme of its revival and
rehabilitation and submit the same to the Tribunal along with an application
containing such particulars as may be prescribed, for determination of the
measures which may be adopted with respect to such company:
Provided that nothing contained in this sub-section shall apply to
a Government company:
Provided further
that a Government company may, with the prior approval of the Central
Government or a State Government, as the case may be, make a reference to the
Tribunal in accordance with the provisions of this sub-section and thereafter
all the provisions of this Act shall apply to such Government company.
(2) The application under
sub-section (1) shall be accompanied by a certificate from an auditor from a
panel of auditors prepared by the Tribunal indicating—
(a) the
reasons of the net worth of such company being fifty per cent or less than
fifty per cent; or
(b) the default in repayment of its debt
making such company a sick industrial company,as the case may be.
(3) Without prejudice to the
provisions of sub-section (1), the Central Government or the Reserve Bank or a
State Government or a public financial institution or a State level institution
or a scheduled bank may, if it has sufficient reasons to believe that any
industrial company has become, for the purposes of this Act, a sick industrial
company, make a reference in respect of such company to the Tribunal for
determination of the measures which may be adopted with respect to such
company:
Provided that a reference shall not be made under this sub-section
in respect of any industrial company by—
(a) the Government of any State unless all or
any of the industrial undertakings belonging to such company are situated in
such State;
(b) a public financial institution or a State level
institution or a scheduled bank unless it has, by reason of any financial
assistance or obligation rendered by it, or undertaken by it, with respect to
such company, an interest in such company.
(4) A reference under
sub-section (1) or sub-section (3) shall be made to the Tribunal within a
period of one hundred and eighty days from the date on which the Board of
directors of the company or the Central Government or the Reserve Bank of India
or a State Government or a public financial institution or a State level
institution or a scheduled bank, as the case may be, come to know, of the
relevant facts giving rise to causes of such reference or within sixty days of
final adoption of accounts, whichever is earlier.
(5) The Tribunal may, on
receipt of a reference under sub-section (1), pass an order as to whether a
company in respect of which a reference has been made has become a sick
industrial company and such order shall be final.
424B. Inquiry into working of sick industrial companies.—(1) The
Tribunal may make such inquiry as it may deem fit for determining whether any
industrial company has become a sick industrial company—
(a) upon receipt of a
reference with respect to such company under section 424A; or
(b) upon information received with respect to
such company or upon its own knowledge as to the financial condition of the
company.
(2) The Tribunal may, if it
deems necessary or expedient so to do for the expeditious disposal of an
inquiry under sub-section (1), require by order any operating agency to enquire
into the scheme for revival and make a report with respect to such matters as
may be specified in the order.
(3) The operating agency
shall complete its inquiry as expeditiously as possible and submit its report
to the Tribunal within twenty-one days from the date of such order:
Provided
that the Tribunal may extend the said period to forty days for reasons to be
recorded in writing for such extension.
(4) The Tribunal shall
conclude its enquiry as expeditiously as possible and pass final orders in the
proceedings within sixty days from the commencement of the inquiry:
Provided
that the Tribunal may extend the said period to ninety days for reasons to be
recorded in writing for such extension.
Explanation.—For the purposes of this
sub-section, an inquiry shall be deemed to have commenced upon the receipt by
the Tribunal of any reference or information or upon its own knowledge reduced
to writing by the Tribunal.
(5) Where the Tribunal deems
it fit to make an enquiry or to cause an inquiry to be made into any industrial
company under sub-section (1) or, as the case may be, under sub-section (2), it
may appoint one or more persons who possess knowledge, experience and expertise
in management and control of the affairs of any other company to be a special
director or special directors on the board of such industrial company on such
terms and conditions as may be prescribed for safeguarding its financial and
other interests or in the public interest.
(6) The special director or
special directors appointed under sub-section (5) shall submit a report to the
Tribunal within sixty days from the date of appointment of such director or
directors about the state of affairs of the company in respect of which reference
has been made under sub-section (1) and such special director or directors
shall have all the powers of a director of a company under this Act, necessary
for discharge of his or their duties.
(7) The Tribunal may issue
such directions to a special director appointed under sub-section (5) as it may
deem necessary or expedient for proper discharge of his duties.
(8) The appointment of a
special director referred to in sub-section (5) shall be valid and effective
notwithstanding anything to the contrary contained in any other provision of
this Act or in any other law for the time being in force or in the memorandum
and articles of association or any other instrument relating to the industrial
company, and any provision regarding share qualification, age limit, number of
directorships, removal from office of directors and such like conditions
contained in any such law or instrument aforesaid, shall not apply to any
special director or directors appointed by the Tribunal.
(9) Any special director
appointed under sub-section (5), shall—
(a) hold office during the pleasure of the
Tribunal and may be removed or substituted by any person by order of the
Tribunal;
(b) not incur any obligation or liability by
reason only of his being a director or for anything done or omitted to be done
in good faith in the discharge of his duties as a director or anything in
relation thereto;
(c) not be liable to retirement by rotation and
shall not be taken into account for computing the number of directors liable to
such retirement;
(d) not be liable to be prosecuted under any law
for anything done or omitted to be done in good faith in the discharge of his
duties in relation to the sick industrial company.
424C. Powers of Tribunal to make suitable order on completion of inquiry.—(1)
If after making an inquiry under section 424B, the Tribunal is satisfied that a
company has become a sick industrial company, the Tribunal shall, after
considering all the relevant facts and circumstances of the case, decide, as
soon as may be, by an order in writing, whether it is practicable for the
company to make its net worth exceed the accumulated losses or make the
repayment of its debts referred to in clause (b) of sub-section (2) of section 424A within a reasonable time.
(2) If the Tribunal decides
under sub-section (1) that it is practicable for a sick industrial company to
make its net worth exceed the accumulated losses or pay its debt referred to in
that sub-section within a reasonable time, the Tribunal shall, by order in
writing and subject to such restrictions or conditions as may be specified in
the order, give such time to the company as it may deem fit to make its net
worth exceed the accumulated losses or make repayment of the debt.
(3) If the Tribunal decides
under sub-section (1) that it is not practicable for a sick industrial company
to make its net worth exceed the accumulated losses or make the repayment of
its debts referred to in clause (b)
of sub-section (2) of section 424A, within a reasonable time and that it is
necessary or expedient in the public interest to adopt all or any of the
measures specified in section 424D in relation to the said company it may, as
soon as may be, by order in writing, direct any operating agency specified in
the order to prepare, having regard to such guidelines as may be specified in
the order, a scheme providing for such measures in relation to such company.
(4) The Tribunal may,—
(a) if any of the restrictions or conditions
specified in an order made under sub-section (2) are not complied with by the
company concerned, or if the company fails to revive in pursuance of the said
order, review such order on a reference in that behalf from any agency referred
to in sub-section (3) of section 424A or on its own motion and pass a fresh
order in respect of such company under sub-section (3);
(b) if the operating agency specified in an
order made under sub-section (3) makes a submission in that behalf, review such
order and modify the order in such manner as it may deem appropriate.
424D. Preparation and sanction of schemes.—(1) Where an order is made
under sub-section (3) of section 424C in relation to any sick industrial
company, the operating agency specified in the order shall prepare as
expeditiously as possible and ordinarily within a period of sixty days from the
date of such order, having regard to the guidelines framed by the Reserve Bank
of India in this behalf, a scheme with respect to such company providing for
any one or more of the following measures, namely:—
(a) the financial
reconstruction of such industrial company;
(b) the proper management of such industrial
company by change in, or take over of, the management of such industrial
company;
(c) the amalgamation
of—
(i) such
industrial company with any other company; or
(ii) any other company with such industrial
company (hereafter in this section, in the case of sub-clause (i), the other company, and in the
case of sub-clause (ii), such
industrial company, referred to as “transferee-company”);
(d) the sale or lease
of a part or whole of any industrial undertaking of such industrial company;
(e) the rationalisation
of managerial personnel, supervisory staff and workmen in accordance with law;
(f) such other
preventive, ameliorative and remedial measures as may be appropriate;
(g) repayment of debt;
(h) such incidental, consequential or
supplemental measures as may be necessary or expedient in connection with or
for the purposes of the measures specified in clauses (a) to (g):
Provided
that the Tribunal may extend the said period of sixty days to ninety days for
reasons to be recorded in writing for such extension.
(2) The scheme referred to in
sub-section (1) may provide for any one or more of the following, namely:—
(a) the constitution, name and registered
office, the capital, assets, powers, rights, interests, authorities and
privileges, duties and obligations of the sick industrial company or, as the
case may be, of the transferee-company;
(b) the transfer to the transferee-company of
the business, properties, assets and liabilities of the sick industrial company
on such terms and conditions as may be specified in the scheme;
(c) any change in the Board of directors, or
the appointment of a new Board of directors, of the sick industrial company and
the authority by whom, the manner in which and the other terms and conditions
on which, such change or appointment shall be made and in the case of
appointment of a new Board of directors or of any director, the period for
which such appointment shall be made;
(d) the alteration of the memorandum or
articles of association of the sick industrial company or, as the case may be,
of the transferee-company for the purpose of altering the capital structure
thereof, or for such other purposes as may be necessary to give effect to the reconstruction
or amalgamation;
(e) the continuation by or against the sick
industrial company or, as the case may be, the transferee-company of any action
or other legal proceeding pending against the sick industrial company
immediately before the date of the order made under sub-section (3) of section
424C;
(f) the reduction of the interest or rights
which the shareholders have in the sick industrial company to such extent as
the Tribunal considers necessary in the interests of the reconstruction,
revival or rehabilitation or repayment of debts of such the sick industrial
company or for the maintenance of the business of such industrial company;
(g) the allotment to the shareholders of the
sick industrial company, of shares in such company or, as the case may be, in
the transferee-company and where any shareholder claims payment in cash and not
allotment of shares, or where it is not possible to allot shares to any
shareholder, the payment of cash to those shareholders in full satisfaction of
their claims—
(i) in respect of their interest in
shares in the sick industrial company before its reconstruction or
amalgamation; or
(ii) where such interest has been reduced
under clause (f) in respect of
their interest in shares as so reduced;
(h) any other terms and
conditions for the reconstruction or amalgamation of the sick industrial
company;
(i) sale of the industrial undertaking of the
sick industrial company free from all encumbrances and all liabilities of the
company or other such encumbrances and liabilities as may be specified, to any
person, including a co-operative society formed by the employees of such
undertaking and fixing of reserve price for such sale;
(j) lease of the industrial undertaking of
the sick industrial company to any person, including a co-operative society
formed by the employees of such undertaking;
(k) method of sale of assets of the industrial
undertaking of the sick industrial company such as by public auction or by
inviting tenders or in any other manner as may be specified and for the manner
of publicity therefor;
(l) issue of the shares in the sick
industrial company at the face value or at the intrinsic value which may be at
discount value or such other value as may be specified to any industrial
company or any person including the executives and employees of such sick
industrial company;
(m) such incidental, consequential and
supplemental matters as may be necessary to secure that the reconstruction or
amalgamation or other measures mentioned in the scheme are fully and effectively
carried out.
(3)(a) The scheme prepared by the operating agency
shall be examined by the Tribunal and a copy of the scheme with modification,
if any, made by the Tribunal shall be sent, in draft, to the sick industrial
company and the operating agency and in the case of amalgamation, also to any
other company concerned, and the Tribunal may publish or cause to be published
the draft scheme in brief in such daily newspapers as the Tribunal may consider
necessary, for suggestions and objections, if any, within such period as the
Tribunal may specify.
(b) The complete draft scheme shall be kept
at the place where registered office of the company is situated or at such
places as mentioned in the advertisement.
(c) The Tribunal may make such modifications,
if any, in the draft scheme as it may consider necessary in the light of the
suggestions and objections received from the sick industrial company and the
operating agency and also from the transferee-company and any other company
concerned in the amalgamation and from any shareholder or any creditors or
employees of such companies:
Provided
that where the scheme relates to amalgamation, the said scheme shall be laid
before the company other than the sick industrial company in the general
meeting for the approval of the scheme by its shareholders and no such scheme
shall be proceeded with unless it has been approved, with or without
modification, by a special resolution passed by the shareholders of the
transferee-company.
(4) The scheme may thereafter
be sanctioned, within sixty days by the Tribunal (hereinafter referred to as
the sanctioned scheme) and shall come into force on such date as the Tribunal
may specify in this behalf:
Provided
that the Tribunal may extend the said period of sixty to ninety days for
reasons to be recorded in writing for such extension:
Provided further that different dates may be specified for
different provisions of the scheme.
(5) The Tribunal may, on the
recommendations of the operating agency or otherwise, review any sanctioned
scheme and make such modifications as it may deem fit or may by order in
writing direct any operating agency specified in the order, having regard to
such guidelines including the guidelines framed by the Reserve Bank of India in
this behalf in order to prepare a fresh scheme providing for such measures as
the operating agency may consider necessary.
(6) When a fresh scheme is
prepared under sub-section (5), the provisions of sub-sections (3) and (4)
shall apply in relation thereto as they apply to in relation to a scheme
prepared under sub-section (1).
(7) Where a sanctioned scheme
provides for the transfer of any property or liability of the sick industrial
company in favour of any other company or person or where such scheme provides
for the transfer of any property or liability of any other company or person in
favour of the sick industrial company, then, by virtue of, and to the extent
provided in, the scheme, on and from the date of coming into operation of the
sanctioned scheme or any provision thereof, the property shall be transferred
to, and vest in, and the liability shall become the liability of, such other
company or person or, as the case may be, the sick industrial company.
(8) The sanction accorded by
the Tribunal under sub-section (4) shall be conclusive evidence that all the
requirements of this scheme relating to the reconstruction or amalgamation, or
any other measure specified therein have been complied with and a copy of the
sanctioned scheme certified in writing by an officer of the Tribunal to be a
true copy thereof, shall, in all legal proceedings (whether in appeal or
otherwise), be admitted as evidence.
(9) A copy of the sanctioned
scheme referred to in sub-section (8) shall be filed with the Registrar within
the prescribed time by the company in respect of which such scheme relates.
(10) On and from the date of
the coming into operation of the sanctioned scheme or any provision thereof,
the scheme or such provision shall be binding on the sick industrial company
and the transferee-company or, as the case may be, the other company and also
on the shareholders, creditors and guarantors and employees of the said
companies.
(11) The creditors of a sick
industrial company may also prepare a scheme for revival or rehabilitation of
such sick industrial company and submit the same to the Tribunal for its
sanction:
Provided
that no scheme shall be submitted by the creditors to the Tribunal unless such
scheme has been approved by at least three-fourth in value of creditors of the
sick industrial company.
(12) All the provisions
relating to the preparation of scheme by the operating agency and sanction of
such scheme by the Tribunal shall, as far as may be, apply to the scheme
referred to in sub-section (11).
(13) The scheme referred to in
sub-section (11) if sanctioned by the Tribunal shall be binding on all the
creditors and on other concerned.
(14) If any difficulty arises
in giving effect to the provisions of the sanctioned scheme, the Tribunal may,
on the recommendation of the operating agency or otherwise, by order, do
anything, not inconsistent with such provisions, which appears to it to be
necessary or expedient for the purpose of removing the difficulty.
(15) The Tribunal may, if it
deems necessary or expedient so to do, by order in writing, direct any
operating agency specified in the order to implement a sanctioned scheme with
such terms and conditions and in relation to the sick industrial company as may
be specified in the order.
(16) Where the whole of the
undertaking of the sick industrial company is sold under a sanctioned scheme,
the Tribunal may distribute the sale proceeds to the parties entitled thereto
in accordance with the provisions of section 529A and other provisions of this
Act.
(17) The Tribunal may monitor
periodically the implementation of the sanctioned scheme.
424E. Rehabilitation by giving financial assistance.—(1) Whether the
scheme relates to preventive, ameliorative, remedial and other measures with
respect to the sick industrial company, the scheme may provide for financial
assistance by way of loans, advances or guarantees or reliefs or concessions or
sacrifices from the Central Government, a State Government, any scheduled bank
or other bank, a public financial institution or State level institution or any
institution or other authority (any Government, bank, institution or other
authority required by a scheme to provide for such financial assistance being
hereafter in this section referred to as the person required by the scheme to
provide financial assistance) to the sick industrial company.
(2) Every scheme referred to
in sub-section (1) shall be circulated to every person required by the scheme
to provide financial assistance for his consent within a period of sixty days
from the date of such circulation or within such further period, not exceeding
sixty days, as may be allowed by the Tribunal, and if no consent is received
within such period or further period, it shall be deemed that consent has been
given.
(3) Where in respect of any
scheme the consent referred to in sub-section (2) is given by every person
required by the scheme to provide financial assistance, the Tribunal may, as
soon as may be, sanction the scheme and on and from the date of such sanction
the scheme shall be binding on all concerned.
(4) On the sanction of the
scheme under sub-section (3), the financial institutions and the banks required
to provide financial assistance, shall designate by mutual agreement financial
institution and a bank from amongst themselves which shall be responsible to
disburse financial assistance by way of loans or advances or guarantees or
reliefs or concessions or sacrifices agreed to be provided or granted under the
scheme on behalf of all financial institutions and banks concerned.
(5) The financial institution
and the bank designated under sub-section (4) shall forthwith proceed to
release the financial assistance to the sick industrial company in fulfilment
of the requirement in this regard.
(6) Where in respect of any
scheme consent under sub-section (2) is not given by any person required by the
scheme to provide financial assistance, the Tribunal may adopt such other
measures, including the winding up of the sick industrial company, as it may
deem fit.
424F. Arrangement for continuing operations, etc., during inquiry.—(1)
At any time before completion of the inquiry under section 424B, the sick
industrial company or the Central Government or the Reserve Bank of India or a
State Government or a public financial institution or a State level institution
or a scheduled bank or any other institution, bank or authority providing or
intending to provide any financial assistance by way of loans or advances or
guarantees or reliefs, or concessions to such industrial company may make an
application to the Tribunal—
(a) agreeing
to an arrangement for continuing the operations of the sick industrial company;
or
(b) suggesting
a scheme for the financial reconstruction of the sick industrial company.
(2) The Tribunal may, within
sixty days of the receipt of the application under sub-section (1), pass such
orders thereon as it may deem fit.
424G. Winding up of sick industrial company.—(1) Where the Tribunal,
after making inquiry under section 424B and after consideration of all the
relevant facts and circumstances and after giving an opportunity of being heard
to all concerned parties, is of the opinion that the sick industrial company is
not likely to make its net worth exceed the accumulated losses within a
reasonable time while meeting all its financial obligations and that the
company as a result thereof is not likely to become viable in future and that
it is just and equitable that the company should be wound up, it may record its
findings and order winding up of the company.
(2) For the purpose of
winding up of the sick industrial company, the Tribunal may appoint any officer
of the operating agency, if the operating agency gives its consent, as the
liquidator of such industrial company and the officer so appointed shall for
the purpose of the winding up of such sick industrial company, be deemed to be,
and have all the powers of, the official liquidator under this Act.
(3) Notwithstanding anything
contained in sub-section (2), the Tribunal may cause to be sold the assets of
the sick industrial company in such manner as it may deem fit and pass orders
for distribution in accordance with the provisions of section 529A, and other
provisions of this Act.
(4) Without prejudice to the
other provisions contained in this Act, the winding up of a company shall, as
far as may be, concluded within one year from the date of the order made under
sub-section (1).
424H. Operating agency to prepare complete inventory, etc.—Where for
the proper discharge of the functions of the Tribunal under this Part, the
circumstances so require, the Tribunal may, through any operating agency, cause
to be prepared—
(a) with respect to a
company a complete inventory of—
(i) all assets and
liabilities of whatever nature;
(ii) all books of
account, registers, maps, plans, records, documents of title or ownership of
property and all other documents of whatever nature relating thereto;
(b) a list of shareholders and a list of
creditors showing separately in the list of creditors, the secured creditors
and unsecured creditors;
(c) a valuation report in respect of the shares
and assets in order to arrive at the reserve price for the sale of a part or
whole of the industrial undertaking of the company or for fixation of the lease
rent or share exchange ratio;
(d) an estimate of
reserve price, lease rent or share exchange ratio;
(e) proforma accounts,
where no up-to-date audited accounts are available.
424-I. Direction not to dispose of assets.—The Tribunal may, if it is
of opinion, that any direction is necessary in the interest of the sick
industrial company or creditors or shareholders or in the public interest, by
order, direct such company not to dispose of, except with the prior approval of
the Tribunal, any of its assets during the period of inquiry under section 424B
or during the period of preparation or consideration of the scheme under
section 424C.
424J. Power of Tribunal to call for periodic information.—On receipt
of reference under section 424A, the Tribunal may call for any periodic
information from the company as to the steps taken by the company to make its
net worth exceed the accumulated losses or to make repayment of its debts
referred to in that section, as the case may be, and the company shall furnish
such information.
424K. Misfeasance proceedings.—(1) If, in the course of scrutiny or
implementation of any scheme or proposal, it appears to the Tribunal that any
person who has taken part in the promotion, formation or management of the sick
industrial company or its undertaking, including any past or present director,
manager or officer or employee of the sick industrial company—
(a) has misapplied or retained, or become
liable or accountable for, any money or property of the sick industrial
company; or
(b) has been guilty of any misfeasance,
malfeasance or non-feasance or breach of trust in relation to the sick
industrial company,
the Tribunal
may, by order, direct him to repay or restore the money or property or any part
thereof, with or without interest, as it thinks just, or to contribute such sum
to the assets of the sick industrial company or the other person, entitled
thereto by way of compensation in respect of the misapplication, retainer,
misfeasance or breach of trust as the Tribunal thinks just, and also report the
matter to the Central Government for any other action which that Government may
deem fit.
(2) If the Tribunal is
satisfied on the basis of the information and evidence in its possession with
respect to any person who is or was a director or an officer or other employee
of the sick industrial company, that such person by himself or along with
others had diverted the funds or other property of such company for any purpose
other than a bona fide purpose
of the company or had managed the affairs of the company in a manner highly
detrimental to the interests of the company, the Tribunal shall by order,
direct the public financial institutions, scheduled banks and State level
institutions not to provide, during a period of ten years from the date of the
order, any financial assistance to such person or any firm of which such person
is a partner or any company or other body corporate of which such person is a
director (by whatever name called).
(3) No order shall be made by
the Tribunal under this section against any person unless such person has been
given an opportunity for making his submissions.
(4) This section shall apply
notwithstanding that the matter is one for which the person may be criminally
liable.
424L. Penalty for certain offences.—(1) Whoever violates provisions of
this Part or any scheme, or any order, of the Tribunal or the Appellate
Tribunal or makes a false statement or gives false evidence to the Tribunal or
the Appellate Tribunal, and attempt to tamper the records of reference or
appeal filed under this Act, shall be punishable with simple imprisonment for a
term which may extend to three years or shall be liable to fine not exceeding
ten lakhs rupees.
(2) No court shall take
cognizance of any offence under sub-section (1) except on a complaint in
writing of an officer of the Tribunal or the Appellate Tribunal or any officer
of the Central Government authorised by it or any officer of an operating
agency as may be authorised in this behalf by the Tribunal or the Appellate
Tribunal, as the case may be.’.
48. In section 425 of the
principal Act, in sub-section (1),—
(i) in
clause (a), for the word
“Court”, the word “Tribunal” shall be substituted;
(ii) in
clause (b), the word “or”
occurring at the end shall be omitted;
(iii) clause
(c) shall be omitted.
Amendment of sections 426 and
427.
49. In sections 426 and 427 of
the principal Act, for the word “Court”, the word “Tribunal” shall be
substituted.
Amendment of heading and
sub-heading before section 433.
50. In
the heading and sub-heading before section 433 of the principal Act, for the
word “Court”, the word “Tribunal” shall be substituted.
Substitution of new section for
section 433.
51. For section 433 of the principal
Act, the following section shall be substituted, namely :—
“433. Circumstances in which company may be wound
up by Tribunal.—A company may be wound up by the Tribunal,—
(a) if the company has,
by special resolution, resolved that the company be wound up by the Tribunal;
(b) if default is made
in delivering the statutory report to the Registrar or in holding the statutory
meeting;
(c) if the company does not commence its business
within a year from its incorporation, or suspends its business for a whole
year;
(d) if the number of members is reduced, in
the case of a public company, below seven, and in the case of a private
company, below two;
(e) if the company is
unable to pay its debts;
(f) if the Tribunal is
of the opinion that it is just and equitable that the company should be wound
up;
(g) if the company has made a default in
filing with the Registrar its balance sheet and profit and loss account or
annual return for any five consecutive financial years;
(h) if the company has acted against the
interests of the sovereignty and integrity of India, the security of the State,
friendly relations with foreign States, public order, decency or morality;
(i) if the Tribunal is of the opinion that
the company should be wound up under the circumstances specified in section
424G :
Provided
that the Tribunal shall make an order for winding up of a company under clause
(h) on application made by the
Central Government or a State Government.”.
52. In section 434 of the
principal Act, in sub-section (1),—
(i) in clause (a), for the words “five hundred
rupees”, the words “one lakh rupees” shall be substituted;
(ii) in
clause (b), for the words “any Court”,
the words “any Court or Tribunal” shall be substituted;
(iii) in clause (c), for the word “Court”, at both the
places where it occurs, the word “Tribunal” shall be substituted.
Omission of heading before
section 435 and sections 435 to 438.
53. Heading occurring before
section 435 and sections 435 to 438 of the principal Act shall be omitted.
54. In section 439 of the
principal Act,—
(i) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted;
(ii) in
sub-section (1), after clause (f),
the following clause shall be inserted, namely :—
“(g) in a case falling
under clause (h) of section
433, by the Central Government or a State Government;”;
(iii) in sub-section
(5), for the word, brackets and letter “and (f)”, the brackets, letters and word “(f) and (g)”
shall be substituted.
Insertion of new section 439A.
55. After section 439 of the
principal Act, the following section shall be inserted, namely :—
“439A. Statement of affairs to be filed on winding
up of a company.—(1) Every company shall file with the Tribunal a
statement of its affairs along with the petition for winding up.
(2) Where a
company opposes a petition for its winding up, it shall file with the Tribunal
a statement of its affairs.
(3) The
statement of affairs referred to in sub-section (1) or sub-section (2) shall be
accompanied by—
(a) the last known
addresses of all directors and company secretary of such company;
(b) the details of location
of assets of the company and their value;
(c) the details of all
debtors and creditors with their complete addresses;
(d) the details of
workmen and other employees and any amount outstanding to them;
(e) such other details as
the Tribunal may direct.”.
Substitution of new sections for
sections 440 and 441.
56. For sections 440 and 441 of
the principal Act, the following sections shall be substituted, namely :—
“440. Right to present winding up petition where
company is being wound up voluntarily.—(1) Where a company is being
wound up voluntarily, a petition for its winding up by the Tribunal may be
presented by—
(a) any person
authorised to do so under section 439; or
(b) the Official
Liquidator.
(2) The Tribunal shall not
make a winding up order on a petition presented to it under sub-section (1),
unless it is satisfied that the voluntary winding up cannot be continued with
due regard to the interests of the creditors or contributories or both.
441. Commencement of winding up by Tribunal.—(1) Where, before the
presentation of a petition for the winding up of a company by the Tribunal, a
resolution has been passed by the company for voluntary winding up, the winding
up of the company shall be deemed to have commenced at the time of the passing
of the resolution, and unless the Tribunal, on proof of fraud or mistake,
thinks fit to direct otherwise, all proceedings taken in the voluntary winding
up shall be deemed to have been validly taken.
(2) In any other case, the
winding up of a company by the Tribunal shall be deemed to commence at the time
of the presentation of the petition for the winding up.”.
Insertion of new sections 441A,
441B, 441C, 441D, 441E, 441F and 441G.
57. After section 441 of the
principal Act, the following shall be inserted, namely :—
“Levy by way of cess and formation of
Rehabilitation and Revival Fund
441A. Levy and collection of cess on turnover or gross receipts of companies.—(1)
There shall be levied and collected, for the purposes of rehabilitation or
revival or protection of assets of the sick industrial company, a levy by way
of cess at such rate not less than 0.005 per cent and not more than 0.1 per
cent on the value of annual turnover of every company or its annual gross
receipt, whichever is more as the Central Government may, from time to time,
specify by notification in the Official Gazette.
(2) Every company shall pay
to the Central Government the cess referred to in sub-section (1) within three
months from the close of every financial year.
(3) Every company shall
furnish, in such form as may be prescribed, to the Central Government and the
Tribunal the details of its turnover and gross receipts with payment of cess
under sub-section (1).
(4) The Central Government
may, be rules made in this behalf, specify the manner in which the cess shall
be paid under sub-section (2).
441B. Crediting proceeds of cess to Consolidated Fund of India.—The
proceeds of the cess levied and collected under section 441A shall first be
credited to the Consolidated Fund of India and the Central Government may, if
Parliament by appropriation made by law in this behalf so provides, pay to the
Tribunal, from time to time, out of such proceeds (after deducting the cost of
collection), such sums of money as it may think fit for being utilised for the
purposes of the Fund.
441C. Rehabilitation Fund.—(1) There shall be formed for the purposes
of rehabilitation or revival or protection of assets of a sick industrial
company, a Fund to be called the Rehabilitation and Revival Fund.
(2) There shall be credited
to the Fund—
(a) all
amounts paid under section 441B;
(b) any
amount given as grants by the Central Government for the purposes of this Fund;
(c) any
amount given to the Fund from any other source;
(d) any
income from investment of the amount in the Fund;
(e) amount
refunded by the company under section 441G.
441D. Application of Fund.—The Fund shall
be applied by the Tribunal for the purpose of—
(a) making interim payment of workmen’s dues
pending the revival or rehabilitation of the sick industrial company; or
(b) payment of workmen’s dues due to the
workmen, referred to in sub-section (3) of section 529, of the sick industrial
company; or
(c) protection of
assets of sick industrial company; or
(d) revival or
rehabilitation of sick industrial company;
which in the opinion of the Tribunal are necessary or expedient for the
said purposes.
441E. Power to call for information.—The Central Government or
Tribunal may require any company to furnish for the purposes of rehabilitation
or revival or protection of assets of sick industrial companies, such
statistical and other information in such form and within such period as may be
prescribed.
441F. Penalty for non-payment of cess.—(1) If any cess payable by a
company under section 441A is not paid in accordance with the provisions of
that section, it shall be deemed to be in arrears and the same shall be
recovered by the Tribunal in such manner as may be prescribed.
(2) The Tribunal may, after
such inquiry as it deems fit, impose on the company, which is in arrears under
sub-section (1), a penalty not exceeding ten times the amount in arrears :
Provided
that before imposing such penalty, such company shall be given a reasonable
opportunity of being heard, and if, after such hearing, the Tribunal is
satisfied that the default was for any good and sufficient reason, no penalty
shall be imposed under this sub-section.
441G. Refund of fund in certain cases.—(1) Where the fund has been applied
by the Tribunal for any of the purposes specified in clauses (a) to (d) of section 441D, such amount of fund shall be recovered from
the company after its revival or rehabilitation or out of sale proceeds of its
assets after discharging the statutory liabilities and payment of dues to
creditors.
(2) The amount referred to in
sub-section (1) shall be recovered in the manner as the Tribunal may direct.”.
Amendment of heading before
section 442.
58. In the heading before
section 442, for the word “Court”, the word “Tribunal” shall be substituted.
59. Section 442 of the principal
Act shall be omitted.
Substitution of new sections for
sections 443 and 444.
60. For sections 443 and 444 of
the principal Act, the following sections shall be substituted, namely :—
“443. Power of Tribunal on hearing petition.—(1)
On hearing a winding up petition, the Tribunal may—
(a) dismiss it, with or
without costs; or
(b) adjourn the hearing
conditionally or unconditionally; or
(c) make any interim
order that it thinks fit; or
(d) make an order for
winding up the company with or without costs, or any other order that it thinks
fit :
Provided
that the Tribunal shall not refuse to make a winding up order on the ground
only that the assets of the company have been mortgaged to an amount equal to
or in excess of those assets, or that the company has no assets.
(2) Where the petition is
presented on the ground that it is just and equitable that the company should
be wound up, the Tribunal may refuse to make an order of winding up, if it is
of the opinion that some other remedy is available to the petitioners and that
they are acting unreasonably in seeking to have the company wound up instead of
pursuing that other remedy.
(3) Where the petition is presented
on the ground of default in delivering the statutory report to the Registrar,
or in holding the statutory meeting, the Tribunal may—
(a) instead of making a winding up order, direct
that the statutory report shall be delivered or that a meeting shall be held;
and
(b) order the costs to be paid by any persons
who, in the opinion of the Tribunal, are responsible for the default.
444. Order for winding up to be communicated to Official Liquidator and
Registrar.—Where the Tribunal makes an order for the winding up of the
company, the Tribunal, shall within a period not exceeding two weeks from the
date of passing of the order, cause intimation thereof to be sent to the
Official Liquidator and the Registrar.”.
61. In section 446 of the
principal Act,—
(a) in
sub-section (1), for the word “Court” at both the places where it occurs, the
word “Tribunal” shall be substituted;
(b) in
sub-section (2), for the words “The court which is winding up the company”, the
words “The Tribunal” shall be substituted;
(c) sub-section
(3) shall be omitted.
Insertion of new section 446A.
62. After section 446, the
following section shall be inserted, namely :—
“446A. Responsibility of directors and officers to
submit to Tribunal audited books and accounts.—The directors and other
officers of every company shall ensure that books of account of the company are
completed and audited up to date of winding up order made by the Tribunal and
submitted to it at the cost of the company, failing which such directors and
officers shall be liable for punishment for a term not exceeding one year and
fine for an amount not exceeding one lakh rupees.”.
Substitution of new section for
section 448.
63. For section 448 of the
principal Act, the following section shall be substituted, namely :—
‘448. Appointment of Official Liquidator.—(1)
For the purposes of this Act, so far as it relates to the winding up of a
company by the Tribunal, there shall be an Official Liquidator who—
(a) may be appointed from a panel of professional
firms of chartered accountants, advocates, company secretaries, costs and works
accountants or firms having a combination of these professions, which the
Central Government shall constitute for the Tribunal; or
(b) may be a body corporate consisting of such
professionals as may be approved by the Central Government from time to time;
or
(c) may be a whole-time
or a part-time officer appointed by the Central Government :
Provided
that, before appointing the Official Liquidator, the Tribunal may give due
regard to the views or opinion of the secured creditors and workmen.
(2) The terms and conditions for
the appointment of the Official Liquidator and the remuneration payable to him
shall be—
(a) approved by the Tribunal for those
appointed under clauses (a) and
(b) of sub-section (1), subject
to a maximum remuneration of five per cent of the value of debt recovered and
realisation of sale of assets;
(b) approved by the Central Government for
those appointed under clause (c)
of sub-section (1) in accordance with the rules made by it in this behalf.
(3) Where the Official Liquidator
is an officer appointed by the Central Government under clause (c) of sub-section (1), the Central
Government may also appoint, if considered necessary, one or more Deputy
Official Liquidators or Assistant Official Liquidators to assist the Official
Liquidator in the discharge of his functions, and the terms and conditions for
the appointment of such Official Liquidators and the remuneration payable to
them shall also be in accordance with the rules made by the Central Government.
(4) All references to the “Official
Liquidator” in this Act shall be construed as reference to the Official
Liquidator specified in sub-section (1), or to the Deputy Official Liquidator
or Assistant Official Liquidator referred to in sub-section (3), as the case
may be.
(5) The amount of the remuneration payable shall—
(a) form part of the
winding up order made by the Tribunal;
(b) be treated as first charge on the
realisation of the assets and be paid to the Official Liquidator or to the
Central Government, as the case may be.
(6) The Official Liquidator shall
conduct proceedings in the winding up of a company and perform such duties in
reference thereto as the Tribunal may specify in this behalf :
Provided that the Tribunal may—
(a) transfer the work assigned from one
Official Liquidator to another Official Liquidator for the reasons to be
recorded in writing;
(b) remove the Official
Liquidator on sufficient cause being shown;
(c) proceed against the
Official Liquidator for professional misconduct.’.
64. In
section 450 of the principal Act, for the word “Court” wherever it occurs, the
word “Tribunal” shall be substituted.
65. In section 451 of the
principal Act,—
(a) in
sub-section (1), for the word “Court”, the word “Tribunal” shall be
substituted;
(b) in sub-section
(2), for the words “Official Liquidator”, the words, brackets, letter and
figures “the Official Liquidator referred to in clause (c) of sub-section (1) of section 448” shall be substituted.
Amendment of sections 453 to
456.
66. In
sections 453 to 456 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
67. In section 457 of the
principal Act,—
(a) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted;
(b) in
sub-section (1), after clause (c),
the following clause shall be inserted, namely:—
“(ca) to sell whole of the
undertaking of the company as a going concern;”;
(c) after
sub-section (2), the following sub-sections shall be inserted, namely:—
“(2A) The
liquidator shall—
(a) appoint security guards to protect the
property of the company taken into his custody and to make out an inventory of
the assets in consultation with secured creditors after giving them notice;
(b) appoint, as the case may be, valuer,
chartered surveyors or chartered accountant to assess the value of the
company’s assets within fifteen days after taking into custody of property,
assets referred to in sub-clause (a)
and effects or actionable claims subject to such terms and conditions as may be
specified by the Tribunal;
(c) give an advertisement, inviting bids
for sale of the assets of the company, within fifteen days from the date of
receiving valuation report from the valuer, chartered surveyors or chartered
accountants referred to in clause (b),
as the case may be.
(2B) The liquidator shall, immediately
after the order for winding up or appointing the liquidator as provisional
liquidator is made, issue a notice requiring any of the persons mentioned in
sub-section (2) of section 454, to submit and verify a statement of affairs of
the company and such notice shall be served by the liquidator.
(2C) The liquidator may apply to the
Tribunal for an order directing any person who, in his opinion, is competent to
furnish a statement of the affairs under sections 439A and 454 and such person
shall for the said purpose be served a notice by the liquidator in the manner
as may be prescribed.
(2D) The liquidator may, from time to
time, call any person for recording any statement for the purpose of
investigating the affairs of the company which is being wound up and it shall
be the duty of every such person to attend to the liquidator at such time and
place as the liquidator may appoint and give the liquidator all information
which he may require and answer all such questions relating to winding up of
company as may be put to him by the liquidator.
(2E) Every bidder shall, in response to
advertisement referred to in clause (c)
of sub-section (2A), deposit,
his offer in the manner as may be prescribed, with liquidator or provisional
liquidator, as the case may be, within forty-five days from the date of the
advertisement and the liquidator or provisional liquidator shall permit
inspection of property and assets in respect of which bids were invited :
Provided
that such bid may be withdrawn within three days before the last day of closing
of the bid :
Provided
further that the inspection of property shall be open for not more than
five days before closing of the bid.
(2F) The
advertisement inviting bids shall contain the following details, namely:—
(a) name, address of registered office of
the company and its branch offices, factories and plants and the place where
assets of the company are kept and available for sale;
(b) last date for
submitting bids which shall not exceed ninety days from the date of advertisement;
(c) time during
which the premises of the company shall remain open for inspection;
(d) the last date
for withdrawing the bid;
(e) financial
guarantee which shall not be less than one-half of the value of the bid;
(f) validity period
of the bids;
(g) place and date
of opening of the bids in public;
(h) reserve price
and earnest money to be deposited along with the bid;
(i) any other
terms and conditions of sale which may be prescribed.
(2G) The
liquidator appointed shall—
(a) maintain a separate bank account for
each company under his charge for depositing the sale proceeds of the assets
and recovery of debts of each company;
(b) maintain proper books of account in respect
of all receipts and payments made by him in respect of each company and submit
half- yearly return of receipts and payments to the Tribunal.”.
Amendment of sections 458 and
458A.
68. In
sections 458 and 458A of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
Substitution of new section for
section 459.
69. For section 459 of the
principal Act, the following section shall be substituted, namely:—
“459. Provision for legal assistance to liquidator.—The
liquidator may, with the sanction of the Tribunal, appoint one or more
chartered accountants or company secretaries or cost accountants or legal
practitioners entitled to appear before the Tribunal under section 10GD to
assist him in the performance of his duties.”.
Amendment of sections 460 to
465.
70. In
sections 460 to 465 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
Amendment of heading before
section 466.
71. In
the heading before section 466 of the principal Act, for the word “Court”, the
word “Tribunal” shall be substituted.
Substitution of new section for
section 466.
72. For section 466 of the
principal Act, the following section shall be substituted, namely:—
“466. Power of Tribunal to stay winding up.—(1)
The Tribunal may at any time after making a winding up order, on the
application either of the Official Liquidator or of any creditor or
contributory, and on proof to the satisfaction of the Tribunal that all
proceedings in relation to the winding up ought to be stayed, make an order
staying the proceedings, either altogether or for a limited time, on such terms
and conditions as the Tribunal thinks fit.
(2) On any application under this
section, the Tribunal may, before making an order, require the Official
Liquidator to furnish to the Tribunal a report with respect to any facts or
matters which are in his opinion relevant to the application.
(3) A copy of every order made
under this section shall forthwith be forwarded by the company, or otherwise as
may be prescribed, to the Registrar, who shall make a minute of the order in
his books relating to the company.”.
Amendment of sections 467 to
469.
73. In
sections 467 to 469 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
Substitution of new section for
section 470.
74. For section 470 of the
principal Act, the following section shall be substituted, namely:—
“470. Power of Tribunal to make calls.—(1)
The Tribunal may, at any time after making winding up order, and either before
or after it has ascertained the sufficiency of the assets of the company,—
(a) make calls on all or any of the
contributories for the time being on the list of the contributories, to the
extent of their liability, for payment of any money which the Tribunal
considers necessary to satisfy the debts and liabilities of the company, and
the costs, charges and expenses of winding up, and for the adjustment of the
rights of the contributories among themselves; and
(b) make an order for
payment of any calls so made.
(2) In making a call, the Tribunal
may take into consideration the probability that some of the contributories
may, partly or wholly, fail to pay the call.”.
75. In
section 471 of the principal Act, for the word “Court”, at both the places
where it occurs, the word “Tribunal” shall be substituted.
Substitution of new section for
section 472.
76. For section 472 of the
principal Act, the following section shall be substituted, namely:—
“472. Monies and securities paid into bank to be
subject to order of Tribunal.—All moneys, bills, hundis, notes and other
securities paid or delivered into the Reserve Bank of India in the course of
the winding up of a company by the Tribunal, shall be subject in all respects
to the orders of the Tribunal.”.
Amendment of sections 473 to
477.
77. In
sections 473 to 477 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
78. In section 478 of the
principal Act,—
(a) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted;
(b) in
sub-section (3) and clause (b)
of sub-section (6), for the words “advocate, attorney or pleader entitled to
appear before the Court”, the words, figures and letters “chartered accountants
or company secretaries or cost accountants or legal practitioners entitled to
appear before the Tribunal under section 10GD” shall be substituted;
(c) for
sub-section (10), the following sub-section shall be substituted, namely:—
“(10) An examination under
this section may, if the Tribunal so directs, be held before any person or
authority authorised by the Tribunal.”;
(d) in sub-section
(11), for the words “exercised by the Judge or officer”, the words “exercised
by the person or authority” shall be substituted.
79. In
section 479 of the principal Act, for the word “Court”, wherever it occurs, the
word “Tribunal” shall be substituted.
Substitution of new section for
section 480.
80. For section 480 of the
principal Act, the following section shall be substituted, namely:—
“480. Saving of existing powers of Tribunal.—Any
powers conferred on the Tribunal by this Act shall be in addition to, and not
in derogation of, any existing powers of instituting proceedings against any
contributory or debtor of the company, or the estate of any contributory or
debtor, for the recovery of any call or other sums.”.
81. In
section 481 of the principal Act, for the word “Court” at both the places where
it occurs, the word “Tribunal” shall be substituted.
82. In
section 483 of the principal Act, for the words “any order made, or decision
given”, the words, brackets and figures “any order made or decision given
before the commencement of the Companies (Second Amendment) Act, 2002” shall be
substituted.
Amendment of sections 490 and
492.
83. In
sections 490 and 492 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
84. In section 494 of the
principal Act, in sub-section (5),—
(a) for the words
“or subject to the supervision of the Court”, the words “the Tribunal” shall be
substituted;
(b) for
the words “sanctioned by the Court” the words “sanctioned by the Tribunal”
shall be substituted.
85. In section 497 of the
principal Act,—
(a) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted;
(b) for the words
“Official Liquidator”, wherever they occur, the words, brackets, letter and
figures “Official Liquidator referred to in clause (c) of sub-section (1) of section 448” shall be substituted.
Amendment of sections 502 to
504, 506 and 507.
86. In
sections 502 to 504, 506 and 507 of the principal Act, for the word “Court”,
wherever it occurs, the word “Tribunal” shall be substituted.
87. In section 509 of the
principal Act,—
(a) for the words
“Official Liquidator”, wherever they occur, the words, brackets, letter and
figures “Official Liquidator referred to in clause (c) of sub-section (1) of section 448” shall be substituted;
(b) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted.
Amendment of sections 511A and
512.
88. In
sections 511A and 512 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
89. In section 513 of the
principal Act, after sub-section (3), the following proviso shall be inserted,
namely:—
“Provided
that, notwithstanding anything contained in any other law for the time being in
force, a body corporate consisting of such professionals as may be approved by
the Central Government from time to time, shall be qualified for appointment as
Official Liquidator under section 448.”
Substitution of new section for
section 515.
90. For section 515 of the
principal Act, the following section shall be substituted, namely:—
“515. Power of Tribunal to appoint and remove
liquidator in voluntary winding up.—(1) If from any cause whatever,
there is no liquidator acting, the Tribunal may appoint the Official Liquidator
or any other person as a liquidator.
(2) The Tribunal may, on cause shown, remove a liquidator and appoint the
Official Liquidator or any other person as a liquidator in place of the removed
liquidator.
(3) The Tribunal may also appoint
or remove a liquidator on the application made by the Registrar in this behalf.
(4) If the Official Liquidator is
appointed as liquidator under the proviso to sub-section (2) of section 502 or
under this section, the remuneration to be paid to him shall be fixed by the
Tribunal and shall be credited to the Central Government.”.
91. In
section 517 of the principal Act, for the word “Court”, at both the places
where it occurs, the word “Tribunal” shall be substituted.
Substitution of new sections for
sections 518 and 519.
92. For sections 518 and 519 of
the principal Act, the following sections shall be substituted, namely:—
“518. Power to apply to Tribunal to have questions
determined or powers exercised.—(1) The liquidator or any contributory
or creditor may apply to the Tribunal,—
(a) to determine any
question arising in the winding up of a company; or
(b) to exercise, as respects the enforcing of
calls, the staying of proceedings or any other matter, all or any of the powers
which the Tribunal might exercise if the company were being wound up by the
Tribunal.
(2) The liquidator or any
creditor or contributory may apply to the Tribunal for an order setting aside
any attachment, distress or execution put into force against the estate or
effects of the company after the commencement of the winding up.
(3) The Tribunal, if
satisfied on an application under sub-section (1) or sub-section (2) that the determination
of the question or the required exercise of power or the order applied for will
be just and beneficial, may accede wholly or partially to the application on
such terms and conditions as it thinks fit, or may make such other order on the
applications as it thinks just.
(4) A copy of an order
staying the proceedings in the winding up, made by virtue of this section,
shall forthwith be forwarded by the company, or otherwise as may be prescribed,
to the Registrar, who shall make a minute of the order in his books relating to
the company.
519. Application of liquidator to Tribunal for public examination of
promoters, directors, etc.—(1) The liquidator may make a report to the
Tribunal stating that in his opinion a fraud has been committed by any person
in the promotion or formation of the company or by any officer of the company
in relation to the company since its formation; and the Tribunal may, after
considering the report, direct that that person or officer shall attend before
the Tribunal on a day appointed by it for that purpose, and be publicly
examined as to the promotion or formation or the conduct of the business of the
company, or as to his conduct and dealings as officer thereof.
(2) The provisions of
sub-sections (2) to (11) of section 478 shall apply in relation to any
examination directed under sub-section (1) as they apply in relation to an
examination directed under sub-section (1) of section 478 with references to
the liquidator being substituted for references to the Official Liquidator in
those provisions.”.
Omission of sections 522 to 527.
93. Sections 522 to 527 of the
principal Act shall be omitted.
Amendment of sections 531 and
531A.
94. In
sections 531 and 531A of the principal Act, for the words “or subject to the
supervision of the Court”, the words “the Tribunal” shall be substituted.
Amendment of sections 533 and
535.
95. In
sections 533 and 535 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
96. In section 536 of the
principal Act, in sub-section (2),—
(a) for the words “or
subject to the supervision of the Court”, the words “the Tribunal” shall be
substituted;
(b) for
the words “unless the Court”, the words “unless the Tribunal” shall be
substituted.
Substitution of new section for
section 537.
97. For section 537 of the
principal Act, the following section shall be substituted, namely:—
“537. Avoidance of certain attachments,
executions, etc., in winding up by Tribunal.—(1) Where any company is
being wound up by the Tribunal—
(a) any attachment, distress or execution put
in force, without leave of the Tribunal against the estate or effects of the
company, after the commencement of the winding up; or
(b) any sale held, without leave of the
Tribunal of any of the properties or effects of the company after such
commencement, shall be void.
(2) Nothing in
this section applies to any proceedings for the recovery of any tax or impost
or any dues payable to the Government.”.
98. In section 538 of the principal Act, in
sub-section (1),—
(a) for the words “or
subject to the supervision of the Court”, the words “the Tribunal” shall be
substituted;
(b) for
the words “by the Court”, the words “by the Tribunal” shall be substituted.
Amendment of sections 540 and
542.
99. In
sections 540 and 542 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
Substitution of new section for
section 543.
100. For section 543 of the principal Act, the
following section shall be substituted, namely :—
“543. Power of Tribunal to assess damages against
delinquent directors, etc.—(1) If in the course of winding up of a
company, it appears that any person who has taken part in the promotion or
formation of the company, or any past or present director, manager, liquidator
or officer of the company—
(a) has misapplied, or retained, or become
liable or accountable for, any money or property of the company; or
(b) has been guilty of any misfeasance or
breach of trust in relation to the company, the Tribunal may, on the
application of the Official Liquidator, or the liquidator, or of any creditor
or contributory, made within the time specified in that behalf in sub-section
(2), examine into the conduct of the person, director, manager, liquidator or
officer aforesaid, and compel him to repay or restore the money or property or
any part thereof respectively, with interest at such rate as the Tribunal
thinks just, or to contribute such sum to the assets of the company by way of
compensation in respect of the misapplication, retainer, misfeasance or breach
of trust, as the Tribunal thinks just.
(2) An application under
sub-section (1) shall be made within five years from the date of the order for
winding up, or of the first appointment of the liquidator in the winding up, or
of the misapplication, retainer, misfeasance or breach of trust as the case may
be, whichever is longer.
(3) This section shall apply
notwithstanding that the matter is one for which the person concerned may be
criminally liable.”.
101. In section 544 of the
principal Act, for the word “Court”, the word “Tribunal” shall be substituted.
102. In section 545 of the
principal Act,—
(a) in sub-section
(1), for the words “or subject to the supervision of Court”, the words “the
Tribunal” shall be substituted;
(b) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted.
103. In section 546 of the
principal Act,—
(a) in
sub-section (1),—
(i) for
the words “sanction of the Court”, the words “sanction of the Tribunal” shall
be substituted;
(ii) for the words “or
subject to the supervision of the Court”, the words “the Tribunal” shall be
substituted;
(b) in
sub-section (1A),—
(i) for
the words “winding up by the Court”, the words “winding up by the Tribunal”
shall be substituted;
(ii) for
the words “sanction of the Court”, the words “sanction of the Tribunal” shall
be substituted;
(c) in
sub-sections (2) and (3), for the word “Court”, wherever it occurs, the word
“Tribunal” shall be substituted.
104. In section
547 of the principal Act, in sub-section (1), for the words “or under the
supervision of the Court”, the words “the Tribunal” shall be substituted.
105. In
section 549 of the principal Act, for the words “or subject to the supervision
of Court”, the words “the Tribunal” shall be substituted.
106. In section 550 of the
principal Act,—
(i) in
sub-section (1), for clause (a),
the following clause shall be substituted, namely:—
“(a) in
the case of winding up by the Tribunal, in such manner as the Tribunal
directs;”;
(ii) in sub-section
(3), in clause (b), for the
words “appeal to the Court”, the words “appeal to the Tribunal” shall be
substituted.
107. In section 551 of the
principal Act,—
(a) in
sub-section (1), for clause (a),
the following clause shall be substituted, namely:—
“(a) in the case of a
winding up by the Tribunal, in Tribunal; and”;
(b) in
sub-section (2), for the word “Court”, the word “Tribunal” shall be
substituted.
108. In
section 553 of the principal Act, for the word “Court”, wherever it occurs, the
word “Tribunal” shall be substituted.
109. In section 555 of the principal Act,—
(a) in sub-sections
(6) and (9), for the words “or under the supervision of the Court”, the words
“the Tribunal” shall be substituted;
(b) for
the word “Court”, wherever it occurs, the word “Tribunal” shall be substituted.
110. In section
556 of the principal Act, for the word “Court”, at both the places where it
occurs, the word “Tribunal” shall be substituted.
Amendment of heading before
section 557.
111. In
the heading before section 557 of the principal Act, for the word “Court”, the
word “Tribunal” shall be substituted.
112. In
section 557 of the principal Act, for the word “Court”, wherever it occurs, the
word “Tribunal” shall be substituted.
113. In section 558 of the principal
Act,—
(a) in sub-section
(1), in clause (a), for the
word “Court”, the words “Court or the Tribunal” shall be substituted;
(b) in
sub-section (2),—
(i) for
the words “All Courts”, the words “All Courts, Tribunals” shall be substituted;
(ii) for
the words “such Court”, the words “such Court, Tribunal” shall be substituted.
Amendment of sections 559, 560,
581 and 582.
114. In
sections 559, 560, 581 and 582 of the principal Act, for the word “Court”,
wherever it occurs, the word “Tribunal” shall be substituted.
115. In section 583 of the
principal Act,—
(a) in sub-section
(1), for the words, brackets and figure “sub-sections (2)”, the words, brackets
and figure “sub-sections (3)” shall be substituted;
(b) sub-section
(2) shall be omitted;
(c) in sub-section
(3), for the words “or subject to the supervision of Court”, the words “by the
Tribunal” shall be substituted;
(d) in
sub-section (4), for the word “Court”, the word “Tribunal” shall be
substituted;
(e) in
sub-section (5),—
(i) in
clauses (a) and (b), for the word “Court”, the word
“Tribunal” shall be substituted;
(ii) in clause (c), for the words “order of any
Court”, the words “order of any Court or Tribunal” shall be substituted;
(iii) in clause (d), for the words “satisfaction of
the Court”, the words “satisfaction of the Tribunal” shall be substituted.
Amendment of sections 587 to
589.
116. In
sections 587 to 589 of the principal Act, for the word “Court”, wherever it
occurs, the word “Tribunal” shall be substituted.
117. In
section 610 of the principal Act, in sub-section (2), for the words “Company
Law Board”, wherever they occur, the word “Tribunal” shall be substituted.
118. In section 614
of the principal Act, in sub-section (1), for the words “Company Law Board”,
the word “Tribunal” shall be substituted.
119. In
section 621 of the principal Act, in sub-section (1), the brackets, words and
figures “(other than an offence
with respect to which proceedings are
instituted under section 545)” shall be omitted.
Substitution of new section for
section 621A.
120. For section 621A of the
principal Act, the following section shall be substituted, namely:—
“621A. Composition of certain offences.—(1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), any offence punishable under this Act (whether committed by a company
or any officer thereof), not being an offence punishable with imprisonment
only, or with imprisonment and also with fine, may, either before or after the
institution of any prosecution, be compounded by the Central Government on
payment or credit, by the company or the officer, as the case may be, to the Central
Government of such sums as that the Government may prescribe :
Provided
that the sum prescribed shall not, in any case, exceed the maximum amount of
the fine which may be imposed for the offence so compounded :
Provided
further that in prescribing the sum required to be paid or credited for the
compounding of an offence under this sub-section, the sum, if any, paid by way
of additional fee under sub-section (2) of section 611 shall be taken into
account.
(2) Nothing in sub-section
(1) shall apply to an offence committed by a company or its officer within a
period of three years from the date on which a similar offence committed by it
or him was compounded under this section.
Explanation.—For the purposes of this
section, any second or subsequent offence committed after the expiry of a
period of three years from the date on which the offence was previously
compounded, shall be deemed to be a first offence.
(3) (a) Every application for the compounding of an offence shall be
made to the Registrar who shall forward the same, together with his comments
thereon to the Central Government.
(b) Where any offence is compounded
under this section, whether before or after the institution of any prosecution,
an intimation thereof shall be given by the company to the Registrar within
seven days from the date on which the offence is so compounded.
(c) Where any offence is compounded
before the institution of any prosecution, no prosecution shall be instituted
in relation to such offence, either by the Registrar or by any shareholder of
the company or by any person authorised by the Central Government against the
offender in relation to whom the offence is so compounded.
(d) Where the composition of any
offence is made after the institution of any prosecution, such composition
shall be brought by the Registrar in writing, to the notice of the Court in
which the prosecution is pending and on such notice of the composition of the
offence being given, the company or its officer in relation to whom the offence
is so compounded shall be discharged.
(4) The Central Government
while dealing with a proposal for the compounding of an offence for a default
in compliance with any provision of this Act which requires a company or its
officer to file or register with, or deliver or send to, the Registrar any
return, account or other document, may, direct, by order, if it or he thinks
fit to do so, any officer or other employee of the company to file or register
with, or on payment of the fee, and the additional fee, required to be paid
under section 611, such return, account or other document within such time as
may be specified in the order.
(5) Any officer or other
employee of the company who fails to comply with any order made by the Central
Government under sub-section (4) shall be punishable with imprisonment for a
term which may extend to six months, or with fine not exceeding fifty thousand
rupees or with both.
(6) Notwithstanding anything
contained in the Code of Criminal Procedure, 1973 (2 of 1974)—
(a) any offence which is punishable under this
Act with imprisonment or with fine, or with both, shall be compoundable with
the permission of the Court, in accordance with the procedure laid down in that
Act for compounding of offences;
(b) any offence which is punishable under this
Act with imprisonment only or with imprisonment and also with fine shall not be
compoundable.
(7) No offence specified in this
section shall be compounded except under and in accordance with the provisions
of this section.”.
121. In section 626 of the principal Act, for the
word “Court”, the words “Court or Tribunal” shall be substituted.
122. In section 627 of the
principal Act,—
(a) in sub-section
(1), after the words “a Judge of a High Court in Chambers”, the words “or
Tribunal, as the case may be” shall be inserted;
(b) in sub-section
(3), after the words “Judge of the High Court”, the words “or Tribunal, as the
case may be” shall be inserted.
123. In section 632 of the principal Act, for the
word “Court”, the words “Court or Tribunal” shall be substituted.
124. In section 634A of the principal Act, the
following proviso shall be inserted, namely:—
“Provided that
the provisions of this section shall not apply on and after the commencement of
the Companies (Second Amendment) Act, 2002.”.
125. In
section 635 of the principal Act, in sub-section (4), for the words “Company
Law Board”, the words “Company Law Board or Tribunal” shall be substituted.
126. In
section 635B of the principal Act,—
(a) for the words “Company
Law Board” wherever they occur, the word “Tribunal” shall be substituted;
(b) for
the word “Court” at both the places where it occurs, the words “Appellate
Tribunal” shall be substituted.
Substitution
of new section for section 637A.
127. For
section 637A of the principal Act, the following section shall be substituted,
namely :—
“637A. Power of Central
Government or Tribunal to accord approval, etc., subject to conditions and to
prescribe fees on applications—(1) Where the Central Government or Tribunal
is required or authorised by any provision of this Act,—
(a) to
accord approval, sanction, consent, confirmation or recognition to or in
relation to, any matter; or
(b) to
give any direction in relation to any matter; or
(c) to
grant any exemption in relation to any matter,
then, in the absence of anything to the contrary contained in such or any
other provision of this Act, the Central Government or Tribunal may accord,
give or grant such approval, sanction, consent, confirmation, recognition,
direction or exemption, subject to such conditions, limitations or restrictions
as it may think fit to impose and may, in the case of contravention of any such
condition, limitation or restriction, rescind or withdraw such approval, sanction,
consent, confirmation, recognition, direction or exemption.
(2) Save
as otherwise expressly provided in this Act, every application which may be, or
is required to be, made to the Central Government or Tribunal under any
provision of this Act—
(a) in respect of any approval, sanction,
consent, confirmation or recognition to be accorded by that Government or
Tribunal to, or in relation to, any matter; or
(b) in respect of any direction or exemption
to be given or granted by that Government or Tribunal in relation to any
matter; or
(c) in
respect of any other matter,
shall be accompanied by such fee as may be
prescribed :
Provided that different fees may be prescribed for applications in
respect of different matters or in case of applications by companies, for
applications by different classes of companies.”.
Amendment
of heading before section 640A.
128. In
the heading before section 640A of the principal Act, for the words “Court or
the Company Law Board”, the words “Court or the Tribunal” shall be substituted.
Substitution
of new section for section 640A.
129. For section
640A of the principal Act, the following section shall be substituted, namely:—
“640A. Exclusion of time
required in obtaining copies of order of Court or Tribunal—Except as
expressly provided in this behalf elsewhere in this Act, where by any provision
of this Act, any order of the Court or Tribunal is required to be filed with
the Registrar, or a company or any other person within a period specified
therein, then, in computing that period, the time taken in drawing up the order
and in obtaining a copy thereof shall be excluded.”.
Substitution
of new section for section 643.
130. For
section 643 of the principal Act, the following section shall be substituted,
namely:—
“643. Powers of Central
Government to make rules relating to winding up.—(1) The Central
Government shall, make rules consistent with the Code of Civil Procedure, 1908
(5 of 1908), providing for all matters relating to the winding up of companies,
which by this Act, are to be prescribed, and may make rules providing for all
such matters, as may be prescribed.
(2) In
particular, and without prejudice to the generality of the foregoing power,
such rule may provide for all or any of the following matters, namely:—
(i) as
to the mode of proceedings to be held for winding up a company by the Tribunal;
(ii) for
the voluntary winding up of companies, whether by members or by creditors;
(iii) for the holding of meetings of creditors and
members in connection with proceedings under section 391;
(iv) for
giving effect to the provisions of this Act as to the reduction of the capital;
(v) generally
for all applications to be made to the Tribunal under the provisions of this
Act;
(vi) the
holding and conducting of meetings to ascertain the wishes of creditors and
contributories;
(vii) the settling of lists of contributories and
the rectifying of the register of members where required and collecting and
applying the assets;
(viii) the payment, delivery, conveyance, surrender
or transfer of money, property, books or papers to the liquidator;
(ix) the
making of calls; and
(x) the
fixing of a time within which debts and claims shall be proved.
(3) All
rules made by the Supreme Court on the matters referred to in this section as
it stood immediately before the commencement of the Companies (Second
Amendment) Act, 2002, and in force at such commencement, shall continue to be
in force, insofar as they are not inconsistent with the provisions of this Act,
till such time the rules are made by the Central Government and any reference
to the High Court in relation to winding up of a company in such rules shall be
construed as a reference to the Tribunal.”.
Insertion
of new section 647A.
131. After
section 647 of the principal Act, the following section shall be inserted,
namely :—
“647A. Transfer of winding up
proceedings to Tribunal—All proceedings (including proceedings relating
to arbitration, compromises, arrangements and reconstruction and winding up of
a company) pending before the commencement of the Companies (Second Amendment)
Act, 2002 before any District Court or High Court, under this Act, or the
Insurance Act, 1938 (4 of 1938) or any other law for the time being in force
other than under the Banking Regulation Act, 1949 (10 of 1949), shall be
transferred to the Tribunal from the date to be notified by the Central
Government, in the Official Gazette, and the Tribunal may proceed with the
matter either de novo or from
the stage it was so transferred :
Provided that where the winding up of a company has commenced,
subject to the supervision of the District Court or a High Court, before the
commencement of the Companies (Second Amendment) Act, 2002, such winding up
shall continue to be under the supervision of the District Court or the High
Court, as the case may be, and the company shall be wound up in the same manner
and in the same incidents as if the Companies (Second Amendment) Act, 2002 had
not been passed.”.
Amendment
of Schedule XI to Companies Act, 1956.
132. In
Schedule XI to the principal Act, for the words “Company Law Board” wherever
they occur, the word “Tribunal” shall be substituted.
133. The enactment
specified in the Schedule to this Act shall be amended in the manner specified
therein.
Insertion
of new section 651A.
134. After
section 651 of the principal Act, the following section shall be inserted,
namely :—
“651A. Reference of winding up
of companies in other laws—Unless the context otherwise requires,—
(a) any reference to the winding up of a
company by a Court or High Court or winding up of a company subject to
supervision of a Court or High Court in any other law [except the Banking
Regulation Act, 1949] (10 of 1949) shall, in so far as it relates to winding up
of a company, be construed as winding up of a company by the Tribunal in
accordance with the provisions of this Act;
(b) any reference to the Company Law Board in
any other law, so far as it relates to the Company Law Board, shall be
construed as the Tribunal under this Act.”
(See section 121)
(4 of 1938)
1. Section
2,—
(a) in
clause (8), for “the Indian
Companies Act, 1913 (7 of 1913)”, substitute “the Companies Act, 1956 (1 of
1956)”;
(b) after
clause (13B), insert the
following:—
‘(13BA) “National Company
Law Tribunal” means the National Company Law Tribunal constituted under section
10FB of the Companies Act, 1956 (1 of 1956);
(13BB) “the National
Company Law Appellate Tribunal” means the National Company Law Appellate
Tribunal constituted under sub-section (1) of section 10FR of the Companies
Act, 1956 (1 of 1956);’.
2. Section
53,—
(a) for
sub-section (1), substitute the following, namely:—
“(1) The Tribunal may order the winding up in accordance with the
Companies Act, 1956 (1 of 1956) of any insurance company and the provisions of
that Act shall, subject to the provisions of this Act, apply accordingly.”;
(b) in sub-section
(2), for “Court” wherever it occurs, substitute “Tribunal”.
3. Section
54, for “Indian Companies Act, 1913 (7 of 1913)”, substitute “Companies Act,
1956 (1 of 1956)”.
4. Section
55,—
(a) for
“Court”, wherever it occurs, substitute “Tribunal”;
(b) in
sub-section (3), for “section 246 of the Indian Companies Act, 1913 (7 of
1913)”, substitute “section 643 of the Companies Act, 1956 (1 of 1956)”.
5. Section
56, in sub-section (2), in the proviso, in clause (a), for “Court” at both the places where it occurs, substitute
“Tribunal”.
6. Section
57,—
(a) in
sub-section (1), omit “or under the supervision of the Court”;
(b) for “Court”
wherever it occurs, substitute “Tribunal”.
7. Sections
58, 59, 60 and 61, for “Court” wherever it occurs, substitute “Tribunal”.
8. After
section 61, insert the following:—
“61A. Appeal to National Company
Law Appellate Tribunal.—(1) Any person aggrieved by an order or decision
of the Tribunal may prefer an appeal to the National Company Law Appellate
Tribunal.
(2) No
appeal shall lie to the National Company Law Appellate Tribunal from an order
made by the Tribunal with the consent of parties.
(3) Every
appeal under sub-section (1) shall be filed within a period of forty-five days
from the date on which a copy of the order or decision made by the Tribunal is
received by the appellant and it shall be in such form and accompanied by such
fee as may be prescribed:
Provided that the National Company Law Appellate Tribunal may
entertain an appeal after the expiry of said period of forty-five days if it is
satisfied that there was sufficient cause for not filing it within that period.
(4) On
receipt of an appeal under sub-section (1), the National Company Law Appellate
Tribunal shall, after giving parties to the appeal, an opportunity of being
heard, pass such orders thereon as it thinks fit, confirming, modifying or
setting aside the order appealed against.
(5) The
National Company Law Appellate Tribunal shall send a copy of every order made
by it to the Tribunal and parties to the appeal.
(6) The
appeal filed before the National Company Law Appellate Tribunal under
sub-section (1) shall be dealt with by it as expeditiously as possible and
endeavour shall be made by it to dispose of the appeal finally within six
months from the date of the receipt of the appeal.”.
9.
In section
110, in sub-section (1), in clause (f),
omit “an insurer or”.