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2017 (4) TMI 478 - AT - Companies LawNCLT President power to decide which Bench will hear the matter - Held that - The President of the NCLT has not been empowered to decide which Bench will hear the matter, if a petition under section 388-B of Act 1856 is filed. Even if it is presumed, though not accepted that the Notification issued by the President under Regulation 4 of Company Law Board Regulations 1991 deemed to be continuing, it cannot override the Notification dated 1st June 2016 issued by Central Government in exercise of power conferred by sub-section (1) of Section 419 of the Companies Act, 2013. The circular issued by Company Law Board, under Regulation 4 also cannot override Rule-64 of NCLT Rules, 2016.Sub-section (1) of Section 434 mandates transfer of proceedings pending before the Company Law Board to respective Tribunal having territorial jurisdiction. The circular issued under Regulation 4 of 1991 Regulation cannot be given effect in view of the aforesaid mandate under the Act. Section 434(a) read with sub-section (1) of Section 419 of Companies Act, 2013 and Notification dated 1st June 2016 issued by Central Government under sub-section (1) of Section 419 and the Rule 64 of NCLT Rule it is clear the Benches, including Principal Bench have territorial jurisdiction on the Companies exclusively on the basis of location of the registered office of such company. In fact, this law is also being followed by the Principal Bench of NCLT, New Delhi for placing all the petitioners before one or other Bench and that Section 488-B of Act 1956, cannot be exception of the same. For the reasons aforesaid we set aside the impugned order dated 6th December 2016 passed by the Principal Bench of NCLT, New Delhi in C.P. No. 01/2015 with the direction to the Registry of the Principal Bench, NCLT, New Delhi to transfer the C.P. No. 01/2015 to the NCLT Bench at Chennai, where registered office of the appellant company is situated.
Issues Involved:
1. Jurisdiction of NCLT Benches 2. Transfer of pending proceedings 3. Interpretation of relevant sections of Companies Act, 1956 and 2013 4. Application of NCLT Rules, 2016 5. Role of Principal Bench of NCLT Issue-Wise Detailed Analysis: 1. Jurisdiction of NCLT Benches: The primary issue was whether a petition under Section 388-B of the Companies Act, 1956 should be heard by the 'Principal Bench' of the NCLT, New Delhi, or the Bench having jurisdiction over the area where the registered office of the company is situated. The appellant argued that the jurisdiction of an NCLT Bench to decide or adjudicate a proceeding is dependent on the location of the registered office of the company. The respondents contended that the Principal Bench, New Delhi has territorial jurisdiction to entertain the petition under Section 388-B, as established in previous cases. 2. Transfer of Pending Proceedings: The appellant sought the transfer of the Company Petition to the NCLT Bench at Chennai, which has territorial jurisdiction over the registered office of the company. The Principal Bench, New Delhi, rejected this request, stating that the appellant had already appeared before it on multiple occasions and that transferring the case would cause delays. The Tribunal emphasized that all matters under Section 388-B of the Companies Act, 1956, used to be heard by the Principal Bench of the erstwhile Company Law Board. 3. Interpretation of Relevant Sections of Companies Act, 1956 and 2013: The judgment referenced various sections of the Companies Act, 1956, and 2013, including Sections 397-398, 388B, 388C, 401, 402, 403, 406, 408, and 419. It was noted that the 1956 Act determined jurisdiction based on the location of the registered office of the company. The 2013 Act, particularly Section 419, outlines the constitution of NCLT Benches and their jurisdiction. 4. Application of NCLT Rules, 2016: Rule 64 of the NCLT Rules, 2016, mandates the transfer of pending proceedings from the Company Law Board to the respective NCLT Benches exercising corresponding territorial jurisdiction. The judgment highlighted that the circular issued by the Company Law Board under Regulation 4 of the 1991 Regulations cannot override Rule 64 of the NCLT Rules, 2016. 5. Role of Principal Bench of NCLT: The Principal Bench of NCLT, New Delhi, initially handled the petition under Section 388-B. However, the judgment concluded that the Principal Bench does not have exclusive jurisdiction over such matters. The President of the NCLT is not empowered to decide which Bench will hear the matter if a petition under Section 388-B is filed. The judgment ultimately directed the transfer of the petition to the NCLT Bench at Chennai, where the registered office of the appellant company is situated. Conclusion: The judgment set aside the impugned order dated 6th December 2016 by the Principal Bench, NCLT, New Delhi, and directed the transfer of the Company Petition to the NCLT Bench at Chennai. The Chennai Bench was instructed to ensure the early disposal of the petition in accordance with the law. The appeal was allowed with the observations and directions mentioned above.
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