The Ministry of Corporate Affairs, vide a notification dated 7 December 2016, has notified the Companies (Transfer of Pending Proceedings) Rules, 2016 (TPP Rules) which would become effective from 15 December 2016, except rule 4 (pertaining to pending voluntary winding up proceedings) which would come into effect from 1 April 2017.
Set out below are salient features of the TPP Rules:
1. Transfer, fees and records
Pending proceedings would be transferred to the National Company Law Tribunal (NCLT) of respective territorial jurisdictions. No fee would be payable upon transfer and the relevant records would be transferred by the respective high courts to NCLT.
2. Cases to be transferred to NCLT
The following pending proceedings would be transferred to NCLT from 15 December 2016:
(i) All pending proceedings (including arbitration, compromise, arrangements and reconstruction) under the Companies Act, 1956 (1956 Act).
(i) Matters pertaining to winding up on account of inability to repay debts (section 433(e) of the 1956 Act), pending before any high court and where petition has not been served upon the respondent. These matters would be transferred as petitions under section 7 (initiation of corporate insolvency resolution process by financial creditor), section 8 (insolvency resolution by operational creditor) and section 9 (application for initiation of corporate insolvency resolution process by operational creditor) of the Insolvency and Bankruptcy Code, 2016 and the petitioner would need to comply with conditions prescribed therein.
(ii) Petitions where a special resolution has been passed for winding up by a tribunal or where the tribunal is of the opinion that it is just and equitable that the company should be wound up (clauses (a) and (f) of section 433 of the 1956 Act), pending before a high court and where the petition has not been served on the respondent. Upon transfer, such petitions would be treated as petitions under the Companies Act, 2013.
3. Cases not to be transferred
The following pending proceedings would not be transferred:
(i) winding up proceedings which are not covered under paragraph 2 above;
(i) proceedings covered under paragraph 2(i) above which are reserved for orders to allow or otherwise;
(ii) applications and petitions for voluntary winding up of companies which are pending before a high court as on 1 April 2017; and
(iii) cases where winding up proceedings have been initiated pursuant to an opinion forwarded, to a high court, by the Board for Industrial and Financial Reconstruction (BIFR) for winding up of a company and where no appeal is pending.
The TPP Rules may be accessed at: