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2017 (5) TMI 219 - AT - Companies LawEnforcement of order of Company Law Board - entitled to file the application under Section 634A of Companies Act - Held that - Bare reading of Section 634A of Companies Act, 1956 it is clear that the power was vested with the Company Law Board (now National Company Law Tribunal) to enforce its order 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 that Board to send, in the case of its inability to execute such order, to the Court within the local limits of whose jurisdiction. It is only in the case the Board is unable to execute its own order, the Company Law Board was liable to enforce the order through the Court where the registered office of the company is situated. Now sub-section (3) of Section 424 of the Companies Act, 2013 empowers the Tribunal to get its order executed. The provision does not confine itself only to the beneficiary of the order. If any of the party to the Company Petition whether petitioner or the respondent brings it to the notice of the Company Law Board (now Tribunal) that the order passed by it has not been enforced, it is always open to the Company Law Board (now Tribunal) to get the same executed in the same manner as if it were a decree made by a court in a suit, and it is lawful for the Company Law Board or this Tribunal to send the order for execution to the competent court within the local limits of whose jurisdiction the registered office of the company is situated. In view of the aforesaid provision of law, we hold that the Tribunal by the impugned order dated 20.1.2017 has rightly held that the application preferred by 1st Respondent/applicant (6th Respondent in Company Petition) is entitled to file the application under Section 634A of Companies Act yet the application is pre-mature. However, the applicant/Respondent No.6 has been granted liberty to file the Company Application at the time when the order of Company Law.
Issues:
1. Appeal against the order passed by the National Company Law Tribunal Chennai in TCA No. 11 of 2016 in C.P. No.64 of 2006 for execution of a decree. 2. Interpretation of Section 634A of the Companies Act, 1956 (now sub-section (3) of Section 424 of Companies Act, 2013). 3. Rights and obligations of parties regarding enforcement of orders by the Company Law Board (now National Company Law Tribunal). Issue 1: Appeal against the Tribunal's Order: The appeal was filed against the order passed by the National Company Law Tribunal Chennai in TCA No. 11 of 2016 in C.P. No.64 of 2006 for execution of a decree. The Tribunal held that the application under Section 634A of the Companies Act, 1956 was premature. The appellant argued that the respondent, who was the 6th respondent before the Company Law Board, was not the beneficiary of the judgment and decree. However, the Tribunal allowed the respondent to file the Company Application when the order of the Company Law Board was ready for execution. The Chartered Accountant was directed to submit a report based on the directions given by the Company Law Board. Issue 2: Interpretation of Section 634A of the Companies Act: Section 634A of the Companies Act, 1956 (now sub-section (3) of Section 424 of Companies Act, 2013) empowers the Company Law Board (now Tribunal) to enforce its orders similar to a court decree. The provision allows the Board to send the order for execution to the competent court within the local limits where the registered office of the company is situated. The Tribunal under the new provision can get its order executed, not limited to the beneficiary of the order, upon receiving information that the order has not been enforced. The Tribunal rightly concluded that the respondent was entitled to file the application under Section 634A, even though it was premature, and granted liberty to file the Company Application at the appropriate time. Issue 3: Rights and Obligations of Parties for Order Enforcement: The Tribunal clarified that the Chartered Accountant, as directed by the Company Law Board, should proceed with the investigative audit and submit a report based on the financial transactions of the company. The appellant's concern regarding the Chartered Accountant's process was noted, and the Tribunal advised the appellant to address any issues directly with the Chartered Accountant and, if necessary, with the Tribunal. The appeal was dismissed as lacking merit, with no costs imposed. This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the Tribunal's decision and the interpretation of relevant legal provisions.
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