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This article is written by Chandana pursuing B.Com.LLB(Hons) from The Tamil Nadu Dr. Ambedkar Law University (SOEL). This article deals with a memorandum of appeal preferred under Section 421 of the Companies Act, 2013.

Introduction

The constitution of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) was a great step towards improving the ease of doing business and bringing all the aspects of company law matters under one roof. 

One of the biggest advantages is it now brings all the matters relating to a company under one single window, which reduces the multiplicity of proceedings. It disposes of all the cases within three months from the date of presentation of the suit, which in turn helps the businessman to carry out their business effectively. Needless to say, it has reduced the burden of High Courts to a great extent. 

Memorandum of Appeal 

Memorandum of appeal as per law dictionary contains on what grounds on which an appeal is preferred for which a judicial examination is summoned.

Appeals from orders of Tribunal

An appeal may be filed by the parties to the proceedings to the national company law appellate tribunal when they are aggrieved from the orders or decisions from the tribunal.

Section 421 of Companies Act, 2013 states that:

  • Either one of the parties or both the parties to the proceedings who are aggrieved by an order of the tribunal shall file an appeal to the appellate tribunal.
  • An appeal shall not lie with the tribunal without the consent of both the parties.
  • It shall be filed to NCLAT within the forty-five days of the order of the tribunal and in such prescribed form and accompanied by such fees.
  • It can be filed after a said period of forty-five, if the tribunal is of the opinion there is sufficient cause from filing an appeal within that period but the time limit for filing cannot extend beyond forty-five days.
  • After giving a reasonable opportunity of being heard to both parties, the tribunal may pass such orders as it thinks fit. 
  • It may either confirm, modify or set aside the order appealed against.
  • The appellate authority shall send a copy of the order to the tribunal and the parties concerned.
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National Company Law Appellate Tribunal Rules, 2016

Presentation of appeal

Rule 27 of NCLAT  2016 states that:

  • An appeal shall be presented in Form No. NCLT 1 in triplicate either by the appellant, petitioner, applicant or respondent or by any person authorised on behalf of him in the prescribed form with necessary fee and it shall be submitted at the filing counter.
  • Non-compliance of the above rule shall constitute a valid ground for refusal.
  • An appeal shall also be accompanied by a certified copy of impugned order.
  • And all documents filed shall be accompanied by an index in triplicate containing the details.
  • In all the pending matters, other applications shall be presented after serving copies in advance on the opposite side or to his advocate or authorised representative.

The limitation period for filing appeals from orders of tribunals

Section 433 of Companies Act, 2013 states Section 5 of Limitation Act, shall as far as may be applied in filing any proceedings or appeals before either the tribunal or appellate tribunal.

Supreme Court judgment on the limitation period for appeal from NCLAT

In the case of Bengal Chemist and Druggist Association v Kalyan Choudhary

An appeal was preferred to the NCLAT after nine days of the expiration of forty-five days and further forty-five days as said in Section 421(3) of Companies Act, 2013. NCLAT dismissed the appeal as it was not maintainable.

An appeal was filed before the Hon’ble Supreme Court. The appellant contended that Section 433 of Companies Act, 2013 shall be applicable to the case.

The Supreme Court held that there is a mention of the second grace period in section 421(3) of Companies act, 2013 itself. And came to the conclusion the limitation act shall not apply as said in Section 433 of Companies Act, 2013.

Draft Rules under Companies Act, 2013

National Company Law Appellate Tribunal Rules, 2013

Limitation for filing an appeal

Rule 3 of NCLAT (Rules) 2013 provides limitation for filing an appeal

  • An appeal shall be filed within forty-five by an aggrieved person from the date of order of the tribunal
  • An appeal can be filed after a said period of forty-five days, if the tribunal is of the opinion there is sufficient cause from filing an appeal within that period but the time limit for filing cannot extend beyond forty-five days.

The procedure of filing appeal

Rule 4 of NCLAT (Rules) 2013 provides the procedure of filing an appeal:

  • Memorandum of appeal shall be presented to either the registry or can be sent in the post to the registrar of Appellate Tribunal within whose jurisdiction his call falls and it shall be in form Appendix ‘A’.
  • Memorandum of appeal is to be in three sets in a paper book and to be accompanied with the certified copy of the order against which appeal is preferred.
  • Where an authorised representative is to act on behalf of the party he shall give his consent in written form and shall be attached to the memorandum of appeal.
  • Every memorandum of appeal which is presented to the appellate tribunal shall be either in English or Hindi.
  • If the appeal, reference, application, representation, the document is other than in English or Hindi, it shall not be accepted by the registry unless it is accompanied by a true copy of translation either in English or Hindi.

Presentation and Scrutiny of Memorandum of Appeal

Rule 6 of NCLAT (Rules) 2013 provides for presentation and scrutiny of a memorandum of appeal 

  1. The registrar or the officer authorised by him shall have an obligation to endorse on every appeal on the date on which it presented or received under Rule 4 and shall also sign the endorsement.
  2. An appeal shall be in order and it shall be registered and given a serial number.
  3. When the appeal is found to be defective, the registrar within seven days shall send the appeal for removal of the defect.
  4. If the appellant does not remove the defects within seven days, then the registrar may write the reason for writing and decline to register the appeal and he shall inform the appellant within seven days.
  5. An appeal may be preferred by the aggrieved party if the order is passed against the sub-rule(4) within fifteen days of such order to the chairperson or any member or to any person such power is disposed of and the decision given by such member or chairperson shall be final.

Summary dismissal of the appeal

Rule 8 of NCLAT (Rules) 2013 provides summary dismissal of an appeal

Tribunal shall have the right to dismiss an appeal after writing the reasons in writing and if the tribunal is of the opinion that there are not sufficient grounds for proceeding with.

Important provisions in the Memorandum of Association 

Memorandum of Association

Section 2(56) of Companies Act, 2013 defines a memorandum of association which is originally framed under the Act or altered from time to time in pursuance of any previous company law or this Act.

An object of registration an MOA

  1. Once an MOA is registered with the registrar, companies cannot do anything which is outside the scope of a memorandum.
  2. As per Section 399 of Companies Act, 2013, a memorandum of association is a public document anyone can inspect the document.

                   

An important provision in MOA

Section 4 of Companies Act, 2013 provides important provision in MOA

  • Section 4(a) deals with

 Name clause

  • If it is a public limited company it should end with the word limited.
  • If it is a private limited company it should end with the word private limited.
  • But the above points shall not apply to the companies which are registered under Section 8 of the Companies Act, 2013.
  • The only important point to note here is to see that the name of the company does not resemble already existing names or which is undesirable in the opinion of the central government.
  • Section 4(b) of Companies Act, 2013 deals with

Registered office clause

  • Section 12 of the Companies Act, 2013 deals with the registered clause of the company.
  • It states that within thirty days of the incorporation of the company it shall have the registered office which is capable of receiving and acknowledging all communications and notices which are addressed to it.
  • It is important that every company shall affix its name and address of the registered office outside the office where the company conducts its business. 
  • Section 4(c) of Companies Act, 2013 deals with 

Object clause

  • Object clause is one of the most important clauses in the MOA because this clause clearly defines the objects for which a company is incorporated. 
  • Object clause also contains all the objects which are incidental or ancillary to the main object clause.
  • When a company does any act which is outside the scope of the object as not mentioned in the clause it is declared to be an ultra vires act and which is null and void.
  • Section 4(d) of Companies Act, 2013 deals with liability clause:
  • The liability clause states whether the liability of shareholders is limited or unlimited.
  • There are two kinds of limited liabilities:

a) Section 2(21) of Companies Act, 2013 deals with a company limited by guarantee which states that members of the company will be liable to contribute to the assets of the company during the time of winding up of the company.

b) Section 2(22) of Companies Act, 2013 deals with a company limited by shares which states the liability of the members will be liable only to the number of unpaid shares held by them.

  •   Subscription clause
  • Subscription clause states that each subscriber that number of shares they have subscribed to the  memorandum
  • Each subscriber must subscribe to at least one share to the memorandum.
  • Association clause
  • Members of the association will give a declaration stating that they want to associate themselves with the company and form an association. 

Form NCLAT 1

Form NCLAT 1

Memorandum of appeal preferred under Section 421 of the Companies Act, 2013

In the National Company Law Appellate Tribunal

At New Delhi

Appellate Jurisdiction

Appeal No __ of 2020

CAUSE TITLE

Between 

A.B ……. Appellant (s)

C.D ……. Respondent (s)

  1. Details of appeal
  2. The date on which order appealed against is communicated and proof
  3. The address of the appellant and respondent
  4. Jurisdiction of the appellate tribunal
  5. Limitation
  6. Facts of the case
  7. Formulate 
  1. The facts in issue or specify the dispute between parties and
  2. Summarise the question of law that arises for consideration in the appeal.
  1. Grounds raised with legal provisions
  2. Matters not previously filed or pending with any other court.
  3. Specify below explaining the grounds for such relief and legal provisions 
  4. Details of an interim application
  5. Details of appeals if any preferred before this appellate tribunal against the same impugned orders or directions by the respondent.
  6. Details of index
  7. Particulars of fees payable
  8. List of enclosures
  9. Whether the order appealed as communicated is original is filed? If not explain the reasons for not filing the same
  10. Whether the appellant is ready to file written submissions or argument before the first hearing after serving the copy of same on the respondent
  11. Whether the copy of a memorandum of appeal with all enclosures has been forwarded to all the respondent and all the interested parties if so enclose postal receipt along with the payment of fees
  12. Any other relevant or material particulars
  13. Relief sought
  14. Declaration by the appellant

Conclusion

The tribunal is bound by the rules of Civil Procedure Code, 1908  with all the rules laid down by the Central government and it is guided by the principles of natural justice. The principles of natural justice are:

  1. The rule against bias.
  2. Rule of Audi alteram.
  3. Reasoned decision.

It has the right to make its own procedure. No civil court has jurisdiction to decide the cases where NCLT and NCLAT are empowered to do so.

References

  1. https://indiacode.nic.in/handle/123456789/2191?locale=en
  2. https://nclat.nic.in/wp-content/uploads/2018/08/nclat_form_reg.pdf
  3. https://nclat.nic.in/wp-content/uploads/2018/08/nclat_form_reg.pdf

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