The Companies (Transfer of Pending Proceedings) Rules, 2016

#rules

#companiesact2013

#section434

#pendingproceedings

#transfer

In exercising the powers conferred under Section 434 of the Companies Act, 2013, the Central Government made the 'The Companies (Transfer of Pending Proceedings) Rules, 2016'.

Rule 3 relates to the transfer of pending proceedings other than winding-up cases. It states that on the date of the coming into force of these rules, all proceedings under the previous Act, including proceedings relating to arbitration, compromise, arrangements, and reconstruction, other than proceedings relating to winding up, shall be transferred to the Benches of the Tribunal exercising respective territorial jurisdiction. Provided, however, that all cases reserved for orders permitting or otherwise would not be shared.

Rule 4 was substituted by the Companies (Transfer of Pending Proceedings) Second Amendment Rules, 2017 and states that all voluntary winding-up applications and petitions pending before a High Court on the date of this rule's implementation will be continued and dealt with by the High Court according to the Act's provisions.

Rule 5 deals with the transfer of pending winding-up proceedings based on the inability to pay debts. The first clause provides that all petitions pending before a High Court relating to winding up under clause (e) of section 433 of the Companies Act, 1956, based on inability to pay its debts and where the petition has not been served on the respondent, shall be transferred to the Bench of the Tribunal exercising territorial jurisdiction. Such petitions shall be treated as applications under sections 7, 8, or 9 of the Insolvency and Bankruptcy Code. Provided, however, that the petitioner shall submit to the Tribunal all information required for admission of the petition under sections 7, 8, or 9 of the Code, as the case may be, including details of the proposed insolvency professional, within six months of the date of the notification, failing which the petition shall abate.

The second clause states that the proceedings for winding up initiated according to section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985, shall continue to be dealt with by such High Court following the provisions of the Act in all cases where the Board for Industrial and Financial Reconstruction has forwarded an opinion for winding up of a company to a High Court and where no appeal is pending.

According to rule 6, all petitions pending before a High Court under clauses (a) and (f) of section 433 of the Companies Act, 1956, where the petition has not been served on the respondent, shall be transferred to the Bench of the Tribunal exercising territorial jurisdiction, and such petitions shall be treated as petitions under the Companies Act, 2013.

Rule 7 provides that the respective High Courts shall also transfer the necessary records to the National Company Law Tribunal Benches having jurisdiction over the cases so transferred following these rules.

Lastly, rule 8 states that no fee shall be due in respect of any proceedings transferred to the Tribunal according to these rules, notwithstanding anything said in the National Company Law Tribunal Rules, 2016.