November 9, 2018
Insolvency Law Committee submits report on cross-border insolvency
The Insolvency Law Committee (Chair: Mr. Injeti Srinivas) submitted it report recommending amendments to the cross-border insolvency provisions in the Insolvency and Bankruptcy Code, 2016.
The Committee proposed a draft ‘Part Z’ in the Code, based on an analysis of the UNCITRAL Model Law on Cross-Border Insolvency, 1997.
The Model Law provides a legal framework that states may adopt in their domestic legislation to deal with cross-border insolvency issues.
Key recommendations of the Committee include:
(i) Applicability: The Committee recommended that the draft Part Z should be extended to corporate debtors only, including foreign companies.
(ii) Duplicity of regimes: The Committee noted that currently the Companies Act, 2013 contains provisions to deal with insolvency of foreign companies. It observed that once cross-border insolvency provisions are introduced in the Code, it will result in a dual regime to handle insolvency of foreign companies. It recommended that the Ministry of Corporate Affairs undertake a study of such provisions of the 2013 Act to analyse the efficacy of retaining them.
(iii) Reciprocity: The Committee recommended adoption of the Model Law on a reciprocity basis initially. Reciprocity means that a domestic court will recognise and enforce a foreign court’s judgment only if the foreign country has adopted similar legislation to the domestic country.
(iv) Centre of Main Interests (COMI): The Model Law provides that if domestic courts determine that the debtor has its COMI in foreign country, such foreign proceedings will be recognised as the main proceedings. This recognition will result in certain automatic relief, such as allowing foreign representatives greater powers in handling the debtor’s estate. A list of indicative factors comprising COMI may be inserted through rule-making powers. Such factors may include location of the debtor’s books and records, location of financing, etc.
(v) Public policy considerations: Part Z provides that the National Company Law Tribunal may refuse to take action under Part Z if it is contrary to public policy.
The Committee recommended that in proceedings where the Tribunal is of the opinion that a violation of public policy may be involved, a notice must be issued to the central government to provide its submissions. If the Tribunal does not issue a notice, the central government may be empowered to apply to it directly.
Salient Features of Insolvency and Bankruptcy Amendment Act(2018)
1. Limitation Act applicable to insolvency proceedings – section 238A introduced
2. Amount raised from allottee of a real estate project is included in the definition of financial debt.
3. Section 30 now requires a mandatory certificate on affidavit for eligibility as a resolution applicant
4. Section 9(3)(c) certificate is now to be filed “if available”
5. Section 12A introduced to recognise settlement after the commencement of insolvency
6. Surety in a contract of guarantee to a corporate debtor is not covered in the moratorium under section 14.
7. Section 22 to confirm IRP to RP – now only 66% votes needed at COC not 75%
8. Section 23- RP to manage the company till resolution plan is approved by the adjudicating authority. Section 31(4) introduced that RP is to get plan approved with all permissions within 1 year of approval of resolution plan by COC
9. Section 30(2) (f) if plan requires approval of shareholders then the same is deemed to be given
10. Proviso to section 434 Companies Act has been introduced that where a winding up petition is pending in the high court the petitioner may apply for transfer of proceeding to the Adjudicating Authority and to treat the petition as one under the insolvency code.
RBI gives big relief to MSME sector
Providing major relief to the MSME sector, RBI today eased NPA classification norms for such units facing input credit linkages and associated issues.
"In continuation of support and relief to MSMEs, NPA recognition for GST and non GST MSMEs now at 180 days for dues up to December 31, 2018.
In February, banks and NBFCs were allowed to temporarily classify their exposures to the Goods and Services Tax (GST) registered Micro, Small and Medium Enterprises (MSMEs), having aggregate credit facilities from these lenders up to Rs 25 crore, as per a 180 day past due criterion.
"This was done with a view to ease the transition of MSMEs to the formalised sector post their registration under the GST," RBI said in the monetary policy review.
"Having regard to the input credit linkages and associated issues, it has now been decided to temporarily allow banks and NBFCs to classify their exposure, as per the 180 day past due criterion, to all MSMEs with aggregate credit facilities up to the above limit, including those not registered under GST," it said.
Accordingly, eligible MSME accounts, which were standard as on August 31, 2017, shall continue to be classified as standard by banks and NBFCs "if the payments due as on September 1, 2017 and falling due thereafter up to December 31, 2018 were/are paid not later than 180 days from their original due date", it added
April 29, 2018
SEBI Puts In Place Detailed Framework On Beneficial Owners Of FPIs
Under the framework, beneficial ownership of FPIs having structure of company or trust should be identified on controlling ownership interest and control basis.
In case of partnership firm and unincorporated association of individuals, BOs should be identified on ownership or entitlement basis, the Securities and Exchange Board of India said in a circular.
In order to bring consistency, SEBI has asked Category II and III FPIs to provide a list of their BOs in a prescribed format.
Besides, they need to disclose to SEBI
a) The name and address of the beneficial owner;
b) whether they are acting alone or together through one or more natural persons as group, with their name and address;
c) tax residency jurisdiction;
d) BO group's percentage shareholding capital or profit ownership in the FPIs.
According to SEBI, this list should be certified by FPI and such overseas investors should also certify that there are no other BOs other than those referred in list.
The existing FPIs should provide the list of BOs within six months.
The regulator said that non resident Indians, overseas citizen of India cannot be BO of FPIs.
However, if an FPI is Category II Investment manager of other FPIs and is non-investing entity, it may be promoted by NRIs or OCIs.
Further, it said that that resident Indian cannot be a BO of FPI.
April 10, 2018
Liquidation under the IBC – Order of priority signals shift in economic rationale
What happens if the CIRP is unsuccessful and the corporate debtor needs to be liquidated.
Unlike the CIRP which aims to sell a composite business, the liquidation of a corporate debtor involves the selling of its assets piecemeal and the distribution of the sale proceeds among its various creditors. The National Company Law Tribunal (“NCLT”) can order a liquidation under Section 33 of the IBC if no resolution plan has been submitted to it before the expiry of the CIRP period, or if it rejects a plan because it does not comply with the provisions of the IBC.
The NCLT can also order a liquidation after a resolution plan is approved. Under Section 33(4), any person (other than the corporate debtor) whose interests are prejudicially affected by a contravention of the resolution plan, can make an application to the NCLT. Judicial decisions have not yet provided colour to when interests can be considered prejudicially affected and it remains to be seen whether the courts establish some threshold principles to avoid liquidation being ordered for minor contraventions or frivolous litigation.
The resolution professional will be appointed as the liquidator unless the Insolvency and Bankruptcy Board of India (IBBI) recommends otherwise, or if the resolution professional submits a plan that is rejected for failing to meet the requirements under Section 30(2) of the IBC.
The liquidator is ordinarily required to sell the assets of the company through an auction process, as this is generally considered to be the best, and most transparent, price discovery mechanism. However, in certain circumstances, such as if the asset is perishable or likely to deteriorate in value if it is not sold quickly, a private sale can be conducted. Regulation 44 (1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 require a liquidator to liquidate the corporate debtor within a period of two years.
Priority in Liquidation
Section 53 of the IBC sets out the priority in which the proceeds of a liquidation will be distributed. The priority is:
1) The insolvency resolution process costs and the liquidation costs;
2) The following debts which rank equally:
(i) workmen’s dues for the period of twenty-four months preceding the liquidation commencement date; and
(ii) debts owed to a secured creditor in the event such secured creditor has relinquished its security to the liquidation estate;
3) Wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date;
financial debts owed to unsecured creditors;
4) Other Debts whilst ranking equally,
(i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date;
(ii) debts owed to a secured creditor for any amount unpaid following the enforcement of security interest;
( iii) any remaining debts and dues;
(iv) preference shareholders, if any; and
(v) equity shareholders or partners, as the case may be.
The order of priority under the IBC is similar to the order for distribution under a winding up under the Companies Act, but with a couple of significant differences.
Unsecured financial creditors have greater primacy under the IBC, and now take ahead of both crown debts, that is, debts owed to government, and other unsecured creditors.
While these changes are consistent with the general theme of the IBC, which seeks to provide greater protection to financial creditors, the considerations for this particular preference are not easily apparent.
To begin with, it is unclear what class of financial creditors this order is trying to protect.
Institutional lenders, which provide most of the debt financing in the economy, typically take security over a debtor’s assets and are protected as secured creditors.
Thus, the broader justification for providing a more effective recovery mechanism for banks does not seem to apply here.
It is possible the framers envisaged protection of individual bond and debenture holders, but this seems contrary to the thinking in other legislative attempts, such as the Companies Act, 2013, which seek to protect them by mandating the creation of security for such creditors.
Regardless of the rationale, prioritising unsecured financial creditors over crown debts clearly signals a shift in economic rationale.
Crown debts, which are essentially public debt, are less important than unsecured financial creditors.
January 01, 2018
Key takeaways from the Companies Amendment Bill, 2017
1. Relaxed norms for conversion of Partnership Firm into a Private Company: The 2017 Bill proposes that Partnership firm with two or more partners can be converted into a private company [presently, partnership must have at least seven partners for conversion into a company] These provisions are useful to convert a partnership firm, LLP, society, cooperative society or society or any other business entity formed under any law into a company under section 366(1) of Companies Act, 2013.
2. Streamlining of private placement of shares: The provisions relating to Private Placement have been revamped completely. The 2017 Bill proposes that Private placement should be only to 'identified persons'. Further, more than one issue of securities can be made to each class of identified persons.
3. Appointment of auditors: The 2017 Bill proposes to do away with the requirements of annual ratification by members with respect to appointment of auditors when auditors have been appointed for five years.
4. Prohibition on Loan & Guarantee: Section 185 has been completely re-written under the Companies Amendment Bill, 2017. This Section limits the prohibition on loans, advances, etc., to any person in which any of the director is interested in.
Under the 2017 Bill, It has been proposed to allow companies to give loan's or guarantee's or provide security to any person in whom any of the director is interested in subject to passing of special resolution by the company and utilization of loans by the borrower for its principal business activities.
As per the substituted section 185(1), no company shall, directly or indirectly advance any loan, including any loan represented by a book debt to or give any guarantee or provide any security in connection with any loan taken by (a) any director of company or of a company which is holding company or any partner or relative of any such director or (b) any firm in which any such director or relative is a partner.
Such loan or security or guarantee can be given in connection with any loan taken by any person in whom any of the directors of the company is interested, if (a) special resolution is passed in general meeting and (b) the loans are utilized by borrowing company for its principal business activities
From the above we can infer that, now loan can be given only to another company, not to director or his relative or any firm.
5. Managerial remuneration: It has been proposed to do away with requirement of obtaining special resolution and approval of Central Govt. for payment of managerial remuneration in excess of prescribed limits of Schedule V. However, for making such payments prior approval of bank or public financial institution or non-convertible debenture holder or secured creditor is also required before taking approval from shareholders.
6. E-voting: The 2017 Bill proviso to Section 110 has been inserted which provides that any item of business required to be transacted by means of postal ballot can be transacted at general meeting by a company which is required to provide facility to members to vote by electronic means under section 108. This means, if a company is providing facility to members to vote by electronic means then postal ballot is not required.
7. Board report: Size of Board report is proposed to be reduced as some information can be given on company's website and only its reference in Board report is required. The 2017 Bill proposed to insert first proviso to section 134(3) which provides that if disclosures as required in Board report are made in financial statement, its reference in Board Report is sufficient. Its repetition is not required.
8. Annual Return: The 2017 Bill proposes to remove the extract of annual return forming part of Board's report and provide disclosure of web address/web-link of the annual return in Board's report. It also proposes to omit requirement regarding disclosure of indebtedness, and modify requirement of disclosure of names, addresses, countries of incorporation, registration and percentage of shareholding of Foreign Institutional Investors.
9. Maintenance of registered office: Under the extant provisions, the company has to maintain its registered office within 15 days of its incorporation. The bill proposed to provide that a company to has to maintain its registered office within 30 days of incorporation.
10. Higher late fee for large Companies: It is proposed that if document under section 92 (Annual Return) or 137 (financial statement) is not filed with Registrar within prescribed time, the minimum additional fees of Rs. 100 per day are payable. Further, the additional fees in above cases can be different/higher for different classes of companies.
December 27, 2017
Plea to initiate insolvency process could not be withdrawn even if settlement had made between parties
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI, Kapil Gupta v. Indiabulls Housing Finance Ltd.
Once an application to initiate insolvency resolution process had been admitted, financial creditor or operational creditor or corporate applicant could not withdraw same even if a settlement had been made between parties,
Section 7 of the Insolvency and Bankruptcy Code, 2016, read with rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Corporate insolvency resolution process - Application by financial creditor - Whether after admission of an application to initiate insolvency resolution process, financial creditor or operational creditor or corporate applicant could not withdraw same even if a settlement had been made between parties - Held, yes
Key takeaways from the Companies Amendment Bill, 2017
November 28, 2017
Govt may exempt crowdfunding from Companies Act and bring it under the regulatory
The government may exempt crowdfunding activities from provisions of the Companies Act as it seeks to bring such fund-raising under the regulatory ambit of Securities and Exchange Board of India (Sebi), according to people with knowledge of discussions between the corporate affairs ministry and Securities and Exchange Board of India (Sebi). The government may invoke Section 462 of the Companies Act (which gives the central government powers to exempt any company or business from the provisions of the Act).Invoking this section of the Companies Act requires Parliament’s approval.
Crowdfunding is defined as the use of money collected from a large number of individuals, typically through internet or social media, to finance a new business venture.
One of the key hurdles for crowdfunding is Section 42 of the Companies Act, which says that the number of investors in any private placement cannot be more than 50 at one go and 200 in a year. The law also requires a private company to compulsorily make a public offer and list the securities on a recognized stock exchange if the number of investors is 200 or more in a year.
October 27, 2017
For Plea to initiate insolvency process, a certificate from Fls confirming non-payment of debt is mandatory
NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI BENCH, Sonitech Travels Co. v. Centre for Vocational Training & Entrepreneurship Studies
Filing of a copy of certificate from 'Financial Institution' maintaining accounts of Operational Creditor confirming that there is no payment of unpaid operational debt by 'Corporate Debtor' as prescribed under clause (c) of sub-section (3) of section 9 is mandatory.
Provision of limitation Act doesn’t apply to Insolvency and Bankruptcy Code
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI BENCH
Neelkanth Township & Construction (P.) Ltd. v. Urban Infrastructure Trustees Ltd
Section 7 of the Insolvency and Bankruptcy Code, 2016 - Corporate insolvency resolution process - Initiation by financial creditor - Whether debentures come within meaning of Financial Debt - Held, yes - Whether debentures matured in three consecutive years were not paid by corporate debtors, there was a 'default' as defined under section 3(12) - Held, yes
Section 7 of the Insolvency and Bankruptcy Code, 2016, read with section 3 of the Limitation Act, 1963 - Corporate insolvency resolution process - Initiation by financial creditor - Whether Limitation Act, 1963 does not apply on Bankruptcy Code, and, therefore, application by financial creditor to initiate insolvency process even after 6 years could not be said to be time barred - Held, yes
September 22, 2017
Insolvency & Bankruptcy Code- SC Interprets Scope Of ‘Existence Of Dispute’ Between Operational Creditor And Corporate
The judgment of the Supreme Court in Mobilox Innovations Pvt.Ltd. v.Kirusa Software Pvt.Ltd. rendered by a bench of Justices R. F Nariman and Sanjay Kishan Kaul settles a significant issue under the Insolvency and Bankruptcy Code 2016.
The issue was whether the existence of a dispute by itself without the record of initiation of any suit or arbitration proceedings in relation to it is sufficient to make an application for insolvency resolution at the instance of operational creditor unsustainable.
SECTION 8(2)(a)- ‘AND’ HAS TO BE READ AS ‘OR’
Section 8(2)(a) of IBC states that the creditor debtor within ten days of receipt of demand notice by operational creditor shall point out the existence of dispute and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute.
The argument by the operational creditor was that existence of dispute by itself is not sufficient, and that there should be a suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute.
The Court however held that such an interpretation will lead to injustice and anomalies, and hence construed ‘and’ as ‘or’ to make the phrases disjunctive.
September 06, 2017
Demand notice issued by lawyer of creditor’s co. couldn’t be treated as notice issued under Bankruptcy Code
NATIONAL COMPANY LAW TRIBUNAL NEW DELHI, Uttam Galva Steels Ltd. v. DF Deutsche Forfait Ag J
Section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate insolvency resolution process - Application by operational creditor - Whether petition to initiate insolvency resolution process is to be filed by operational creditor individually and not jointly - Held, yes - Whether thus, joint application filed by more than one operational credit is not maintainable - Held,yes
Section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate insolvency resolution process - Application by operational creditor - Whether where along with application to initiate insolvency process, certificate of notified financial institution maintaining account of operational creditors had not been filed by operational creditors, in support of their claim that there was no payment of unpaid operational debt by corporate debtor, application to initiate resolution process was not maintainable- Held, yes
Section 8, read with section 9, of the Insolvency and Bankruptcy Code, 2016 - Corporate insolvency resolution process - Demand by Operational Creditor - Whether where along with application to initiate insolvency process lawyer of operational creditor had given demand notice but there was nothing on record to suggest that he had been authorized by Board of Directors of Operational creditor and that lawyer did not hold any position with relation to Operational creditor, notice issued by lawyer on behalf of Operational creditor could not be treated as notice under insolvency resolution process - Held, yes
Section 8, read with section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate insolvency resolution process - Demand by Operational Creditor - Whether where operational creditor's claim was disputed by corporate debtor by detailed reply much prior to notice under insolvency resolution process, it could be said that there was an existence of dispute and hence, no application to initiate insolvency resolution process could be filed - Held, yes
August 12, 2017
Petition for corporate insolvency process wasn’t maintainable as debt in question had not arisen out of sale
Where applicant made investment in commercial space constructed by real estate company, applicant could not be 'treated as operational creditor as debt in question had not arisen out of sale of any goods or services
NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI BENCH
Sanjeev Jain v. Eternity Infracon (P.) Ltd.
Section 5(20), read with section 9, of the Insolvency and Bankruptcy Code, 2016 - Operational Creditor - Applicant claimed to have invested an amount in commercial space which was under construction by a real estate company which failed to fulfil its commitment of return on said investment - Whether applicant could not acquire status of an operational creditor since section 5(21) stipulates sale/supply of goods or rendering of services - Held, yes
Application for insolvency process to be dismissed as debtor had raised counter claim against creditor
NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI BENCH
Sri Pitambara Enterprises v. Valeda Herbals (P.) Ltd.
Where operational creditor acting in capacity of super stockiest of products manufactured by corporate debtor, issued a legal notice to corporate debtor to pay its operational debt, since corporate debtor denied said debt and raised a counter claim, it being a case of disputed claim within meaning of section 9(5)(ii)(d), application seeking initiation of corporate insolvency resolution process deserved to be dismissed
May 18, 2017
NCLT reiterates compliance of norms relating to transfer of proceedings from High Courts to NCLT before Jun 14, 2017
SECTION 419 OF THE COMPANIES ACT, 2013, READ WITH RULE 5 OF THE COMPANIES (TRANSFER OF PROCEEDINGS) RULES, 2016 - NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL - ADVISORY TO ALL CONCERNED REGARDING TRANSFER OF ALL MATTERS CONNECTED WITH WINDING UP AND AMALGAMATION FROM VARIOUS HIGH COURTS TO NATIONAL COMPANY LAW TRIBUNAL (NCLT) NOTICE, DATED 17-5-2017
Therefore, all concerned are hereby informed to comply with the provisions of the abovementioned notifications dated 7th December, 2016 and dated 28th February, 2017 failing which all matters related to section 433(e) of the Companies Act, 1956 transferred from various High Courts to National Company Law Tribunal shall abate.
The office of NCLT and registry shall remain open to accept the filing during the vacation i.e. month of June, 2017.
May 01, 2017
NCLT allows conversion of public co. into private co. as it wasn't prejudicial to members or creditors'
Where conversion of a public company into private company with a view to comply efficiently with provisions of Companies Act was not prejudicial either to its members, creditors, etc., same was to be allowed, NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH, Fiabila India Ltd., In re
March 24, 2017
Sebi passes Rs 447-cr disgorgement order against Reliance Industries
The Securities and Exchange Board of India (Sebi) on Friday directed Mukesh Ambani’s Reliance Industries Ltd (RIL) to disgorge Rs 447.27 crore, made “unlawfully” by dealing in shares of its erstwhile subsidiary, Reliance Petroleum (RPL).
The markets regulator also barred RIL from the futures and options (F&O) segment for a year and asked it to settle all existing open positions. It will also have to pay 12 per cent interest on the disgorgement amount since November 29, 2007.
March 04, 2017
1) PoEM won’t apply to cos with turnover less than Rs 50 cr per annum, clarifies govt:-
In a relief to smaller companies and firms, the Central Board of Direct Taxes (CBDT) on Friday clarified that place of effective management (PoEM) regulations won't apply to companies and firms that have a turnover or gross receipts of less than Rs 50 crore per annum.
2) The Government simplifies maintenance of registers under various Labour Laws Government reduces 56 labour registers to only 5.
The Government has simplified the maintenance of Labour registers of about 5.85 crore establishments in agriculture and non- agriculture sectors. These registers are related to details of employees, their salaries, loans/recoveries, attendance etc. This exercise will drastically reduce the number of registers being maintained by these establishments from 56 to only 5 by doing away with overlapping/redundant fields. This will help these establishments to save cost and efforts and ensure better compliance of Labour Laws.
3) SEBI exempts cos. for making draft scheme of arrangement in case of merger between holding and subsidiary
In the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in regulation 37, after sub-regulation (5),the following sub-regulation and proviso may be inserted, namely,—
"(6) Nothing contained in this regulation shall apply to draft schemes which solely provide for merger of a wholly owned subsidiary with its holding company:
Provided that such draft schemes shall be filed with the stock exchanges for the purpose of disclosures."
FEBRUARY 24, 2017
Allotment of share without notice is an act of oppression when it is turning majority into minority
NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD BENCH, Sanjivbhai Kiritbhai Patel v. Biocare Remedies (P.) Ltd.
Where contract for acquisition of shares of company between petitioners and respondents had not concluded, petitioners continued to have exercised their rights as shareholders in respondent-company and, therefore, allotment of shares by respondents without offering them to petitioners and without knowledge to petitioner's group and, thereby, reducing petitioners to minority clearly, amounted to an act of oppression
February 17, 2017
HIGH COURT OF KARNATAKA, IAE International Aero Engines AG v. United Breweries (Holdings) Ltd.
United Breweries (Holdings) Ltd.(UBHL) ordered to be wound up for its failure to pay back creditors, including banks, as per corporate guarantees extended to Kingfisher Airlines Ltd.
• On the basis of summary of the Financial Reports and constant increase in losses and complete erosion of net worth and reticent refusal of Company, UBHL to square up its Guarantee obligations and raising sham and moonshine defences to avoid winding up, it was held that UBHL is a commercially insolvent Company and is unable to meet its admitted financial obligations and square up its admitted liability towards the petitioning creditors. Further, it is evident from relevant and cogent material that the specified amounts of debts were due to be recovered from UBHL under its contractual Guarantee obligations incurred by it for the financial obligations of the Kingfisher Airlines Ltd, which it has failed to discharge, despite due notice without any cogent reasons. Therefore, on a totality of the facts and circumstances, the Company, UBHL deserves to be wound up for its failure to discharge its admittedly liability towards the petitioning creditors.
Feb 04, 2017
Oppression plea wasn't maintainable as alternate remedy was available to parties under JV agreement
NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD BENCH, Demerara Distillers (P.) Ltd. v. Demerara Distillers Ltd., Guyan
Section 241, read with section 242, of the Companies Act, 2013/Section 397, read with section 398, of the Companies Act, 1956 and section 8 of the Arbitration and Conciliation Act, 1996 - Oppression and mismanagement - Whether when an alternative remedy is available to parties, under Joint Venture Agreement in question by way of Arbitration and, an Arbitrator has already been appointed by Supreme Court, approaching Tribunal, under section 397/398 is not at all tenable - Held, yes
FEBRUARY 04, 2017
Management of family business to be transferred to mother who was holding 98% shares
NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH, Sanjay Parlikar v. Ajit Scanning & Diagnostic Centre (P.) Ltd.
Section 241, read with section 242, of the Companies Act, 2013/Section 397, read with section 398, of the Companies Act, 1956 - Oppression and mismanagement - Respondent company, a family company, was started by petitioner's father 'S' -
On his death 98 per cent of shareholding was transferred to his wife (R2) - A company petition was filed by petitioner and his wife against his mother (R2) and his brother (R3) under sections 397 & 398 on ground that R2 and R3 were holding EGM for ouster of petitioner and R2 & R3 were non co-operating with petitioner for clearance of all statutory dues which petitioner claimed was oppressive against petitioners and detrimental to interest of company - Whether since account of company was fully operated by petitioner and he had control over funds of company, petitioner had failed to prove that respondents caused hinderance for clearing statutory dues - Held, yes - Whether since petitioner kept bank account of company to himself and not allowed his own mother (wife of progenitor of family business) to take money for her treatment, mother (R2) being 98 per cent shareholder and brother R3 having remained looking after her would continue to manage respondent-company for time being - Held, yes
February 04, 2017
NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD BENCH, Monarch Ergonomics India (P.) Ltd. v. Registrar of Companies
Act of increasing share capital without member's approval is compoundable offence
Section 61, read with section 441, of the Companies Act, 2013/ Section 94, read with section 621A, of the Companies Act, 1956 - Share capital - Power of limited company to alter - Applicant-company had increased its share capital without obtaining prior approval of its members - It was stated by applicant-company that since there were only two directors and they were also shareholders of company, hence board meeting was called rather than General Meeting, as it would not have any impact on public at large or detrimental to interest of other shareholders - ROC issued show cause notice to applicant-company stating violation of section 94(2) - Directors of company filed instant application for compounding of offence by levying minimum penalty - Whether, on facts minimum penalty was to be imposed on appellant-company and its Directors - Held, yes
January 1, 2017
Ministry of Corporate Affairs ('MCA') vide its commencement notification dated 7thDecember, 2016 has notified various provisions of the Companies Act, 2013 pertaining to proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies which will get enforced w.e.f. 15th December, 2016. Simultaneously, some of the provisions of the Insolvency and Bankruptcy Code, 2016 have also been notified to be enforced with effect from the said date. Consequent to such enforcement, cases which were dealt by the High Court, will get transferred to the Tribunal and the proceedings thereunder will be constituted pursuant to the NCLT Rules, 2016, which has already been notified by the MCA. The same is provided by way of notification No. GSR 1119 (E) dated 7th December, 2016 by way of Companies (Transfer of Pending Proceedings) Rules, 2016
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