2016 (12) TMI 1843 - HC - Companies Law

Establishment of NCLT Bench in the State of Kerala - suitable place for establishing an independent NCLT bench - Seeking direction to the respondents to continue hearing of Company Cases having jurisdiction in State of Kerala by the Hon'ble High Court till NCLT Bench is established at Ernakulam for hearing of Company Cases - establish NCLT Bench at Ernakulam on a time bound basis in the interest of justice - According to the petitioners, since a large number of cases under the Companies Act such as, company claims, company petitions, company applications, company suits, company cases, adjudication appeals, connected criminal complaints, miscellaneous company applications etc. are pending consideration before this Court, establishment of independent and separate NCLT bench for the State of Kerala at Kochi is absolutely necessary and if Tribunals are not established in each State, the basic objective with which, NCLTs are being established, that is, to speed up the company cases, will not be fulfilled - HELD THAT - Though the aforementioned submissions appear to be attractive at the first instance, they cannot be accepted for giving a direction to the respondents to establish NCLT bench in any particular State. It is for the authorities concerned to take a decision in the matter. This Court cannot frame guidelines or sit as an appellate authority to direct the policy makers to frame policy in a particular manner. It is for the authorities concerned to take a decision in respect of establishment of benches at a particular place or State. Since it is for the respondent authorities to take a decision in the matter and as this Court will not normally interfere with the policy decision of the State, we decline to entertain the writ petition. The writ petition fails and the same stands dismissed. It is open for the petitioners or the affected persons to make representations before the appropriate Government for establishment of NCLT bench in the State of Kerala, if they so choose.

Summary

Issues:
1. Establishment of NCLT Bench in Kerala
2. Transfer of Company Cases to NCLT
3. Policy Decision of Ministry of Corporate Affairs

Establishment of NCLT Bench in Kerala:
The petitioners sought a writ to direct the establishment of a National Company Law Tribunal (NCLT) Bench in Ernakulam, Kerala. They argued that due to the pending company cases in Kerala, having a separate bench would expedite proceedings. The petitioners highlighted the availability of suitable space in Ernakulam for the NCLT bench and emphasized the necessity of establishing more benches to speed up company cases. However, the Court held that the decision to establish NCLT benches in specific states is at the discretion of the authorities concerned. The Court stated that it cannot interfere with policy decisions regarding the establishment of benches and declined to entertain the writ petition, emphasizing that affected parties can make representations to the government for the establishment of an NCLT bench in Kerala.

Transfer of Company Cases to NCLT:
The Ministry of Corporate Affairs issued an order regarding the transfer of company cases from High Courts to the NCLT. The order specified that cases other than winding up, for which orders are not reserved by High Courts, shall be transferred to the Tribunal. The order outlined the transfer of proceedings under the Companies Act, 1956 to the NCLT and detailed the provisions for dealing with such cases. The order also mentioned the constitution of the NCLT and specified that the NCLT Bench in Chennai would have jurisdiction over Kerala. Consequently, the matters related to winding up of companies, amalgamation schemes, and other company cases pending before the High Court of Kerala were to be transferred to the NCLT in Chennai from December 15, 2016.

Policy Decision of Ministry of Corporate Affairs:
The Court acknowledged the Ministry of Corporate Affairs' order as a policy decision aimed at addressing difficulties in the transfer of company cases to the NCLT. The order inserted provisos in the Companies Act, 2013 to regulate the transfer of proceedings from High Courts to the NCLT. It clarified that only cases not reserved by High Courts for orders related to winding up would be transferred to the NCLT. The order highlighted the establishment of the NCLT and its jurisdiction, emphasizing the need for a systematic transfer of cases to expedite proceedings. The Court recognized the Ministry's authority to issue such orders to streamline the handling of company cases and ensure their efficient resolution.