Removal of judicial difficulty


This is 13th Removal of difficulty for the Companies Act, 2013. Central Government on 7th December 2016 notified the Companies (Removal of Difficulty) fourth Order, 2016 which shall come into effect from 15th December 2016.

In a separate notification of same date Central Government notified Section 434 of the Companies Act, 2013 to come into effect from 15th December 2016. Section 434 deals with transfer of certain proceedings to National Company Law Tribunal. This is important to note that Section 434 was recently amended by virtue of Notification S.O. 3453 (E) dated 15th November 2016, by which the section 255 of the Insolvency and Bankruptcy Code, 2016 shall come into force. Notification of Section 255 results amendment of the Companies Act, 2013 including amendment of Section 434.

We briefly discussed these amendments in earlier post here.

Clause (c) of sub-section (1) of section 434 of the Companies Act, 2013 (hereinafter referred to as the 2013 Act) provides that on a date which may be notified by the Central Government for the purpose of transfer of pending proceedings, all proceedings under the Companies Act, 1956 (hereinafter referred to as the 1956 Act) including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer.

The proviso thereof further provides that only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government.

Central Government decided that (i) proceedings under the 1956 Act with High Courts on all cases other than winding-up as on 15th December, 2016 shall stand transferred to the Benches of the Tribunals exercising respective territorial jurisdiction and (ii) all cases of winding up under the 1956 Act which are pending before High Courts as on 15th December, 2016 and wherein petitions have not been served to the respondents as per rule 26 of Companies (Court) Rules, 1959 shall be transferred to Tribunal, and all remaining cases of winding up pending on that date would continue with the respective High Courts.

To enable smooth transfer of proceedings Central Government by notification made this order.

This order insert following proviso in sub-section (1), in clause (c), after the proviso –

“Provided further that only such proceedings relating to cases other than winding-up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal:

Provided further that –

(i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or

(ii) the proceedings relating to winding up of companies which have not been transferred from High Courts;

shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.”

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