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2016 (11) TMI 459 - Tri - Companies LawConversion from public to private company - Held that - The Petitioner has complied with provisions of Section 14 to be read with Rule 68 of NCLT Rules, 2016. Therefore, having regard to all the circumstances, the conversion from public to private is in the interest of the Company which is being made with a view to comply efficiently with the provisions of Companies Act, 2013 causing no prejudice either to the members or to the creditors of the Petitioner. Therefore, the conversion is hereby allowed. The Petitioner is hereby directed to give effect of the conversion by alteration in its Articles which is hereby addressed and communicate the altered Articles within a period of 15 days to the Registrar.
Issues:
- Interpretation of Section 14 of the Companies Act, 2013 regarding alteration of articles for conversion of company type. - Impact of Ministry of Corporate Affairs notification dated 11.06.2014 on the provisions of Section 14. - Relevance of Rule 33 of the Companies (Incorporation) Rule, 2014 in light of Section 14(2) of the Act. - Applicability of the National Company Law Tribunal Rules, 2016, specifically Rule 68, for conversion of a Public Company to a Private Company. - Compliance assessment of a Petition for conversion of a Public Company to a Private Company under Rule 68 of NCLT Rules, 2016. Analysis: The judgment primarily deals with the interpretation and application of Section 14 of the Companies Act, 2013, concerning the alteration of articles for the conversion of a company from public to private or vice versa. It acknowledges the impact of a Ministry of Corporate Affairs notification dated 11.06.2014, which clarified the applicability of provisions until the corresponding provisions of the Companies Act, 2013 were notified. The Tribunal held that Rule 33 of the Companies (Incorporation) Rule, 2014 became redundant following the notification and the enforcement of Section 14(2) of the Act. Furthermore, the judgment emphasizes the supremacy of the statute over rules, highlighting that the NCLT has the authority to approve conversions as per Section 14 of the Act. The NCLT Rules, 2016, specifically Rule 68, provide guidelines for the conversion process, ensuring compliance with the legal requirements. The case under consideration involved a Petition for the conversion of a Public Company to a Private Company, which was assessed for compliance with Rule 68 of the NCLT Rules, 2016. The judgment details the conditions met by the Petitioner for the conversion, including board and member approvals, creditor no-objection, and publication of intention. The Petitioner's compliance with the provisions of Section 14 and Rule 68 was deemed satisfactory, and the conversion was allowed in the interest of the Company without causing prejudice to stakeholders. The Petitioner was directed to communicate the altered articles to the Registrar within a specified timeframe, and the Company Petition was allowed with no costs imposed.
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