Explore the Delhi High Court’s recent judgment on the transfer of pending winding up proceedings. This analysis delves into the nuances of the case, shedding light on the Court’s discretion and the relevant legal provisions. Stay informed on the intricacies of the law with regard to the transfer of proceedings in the case involving Kaledonia Jute and Fibres Private Limited v. Axis Nirman and Industries Limited & Ors. and Action Ispat and Power Private Limited v. Shyam Metalics and Energy Limited.
Facts
- Respondent company confirmed work executed and assured payment in email dated 21.08.2014.
- Petitioner raised bills of Rs. 2,52,59,522/- on 14.08.2014 and 20.08.2014.
- Despite reminders, respondent company failed to release the due amount.
- Petitioner issued reminders for payment.
Arguments
- The petitioner argues that the provisions for transferring pending winding up proceedings aim to prevent parallel proceedings.
- No proceedings have been initiated before the NCLT in the current case.
- Counsel for the petitioner cites the cases of Kaledonia Jute and Fibres Private Limited v. Axis Nirman and Industries Limited & Ors. and Action Ispat and Power Private Limited v. Shyam Metalics and Energy Limited for support.
- The company petitions are in a pre-admission but post-notice stage, which does not mandate compulsory transfer to the NCLT but is at the discretion of the Court.
- The Court’s discretion to transfer the petition can only be exercised if an appropriate application seeking transfer is filed.
- The statute uses the word ‘may’ regarding the requirement of moving an application for transfer of proceedings.
- The Court questioned the petitioners on why the present proceedings should not be transferred to the NCLT.
- There is no need for a separate application to be moved for transfer in the present petitions.
Analysis
- In winding up proceedings, various stages are contemplated with the Tribunal having the power to control the process even after admission of the petition.
- Post admission of a winding up petition, the Company Liquidator can manage the company’s assets for its beneficial winding up, including selling the company as a going concern.
- Winding up proceedings where the petition has not been served before admission are compulsorily transferable to the NCLT for resolution under the Code.
- No irreversible actions are taken until actual sales of properties occur, allowing for the transfer of proceedings to the NCLT.
- Even after notice issuance and pre-admission, the same result of transfer to the NCLT applies.
- All matters, proceedings, or cases pending before the Company Law Board shall stand transferred to the Tribunal.
- Appeals related to Company Law Board decisions may be filed with the High Court within sixty days.
- Proceedings under the Companies Act, 1956 pending before District Court or High Court shall stand transferred to the Tribunal.
- Specific provisions regarding the transfer of proceedings related to winding up of companies are outlined.
- Proceedings relating to voluntary winding up of companies under specific conditions shall be governed by the Companies Act, 1956.
- Provisions for transfer of winding up proceedings to the Tribunal under the Insolvency and Bankruptcy Code, 2016.
- Supreme Court has considered the statutory scheme and judgments regarding winding up of companies.
- Even post admission, a winding up petition may be transferred to the NCLT if no irreversible steps have been taken.
- The High Court can transfer the petition to NCLT as a matter of jurisdiction, even without a formal application.
- Since no substantive proceedings towards winding up have been taken, the petitions are transferred to NCLT.
- NCLT will consider the matters on merits and pass appropriate orders.
- The electronic record of the petitions will be transmitted to NCLT within a week.
- Next listing before NCLT is set for 08.07.2024.
Decision
- Interim orders passed by the Court will continue until a specified date
- Parties directed to appear before NCLT on the specified date
- Company petitions and pending applications disposed of
Case Title: GURBAKHSH SINGH BA, BULIDERS PRIVATE LIMITED Vs. FORTIS HOSPITAL LIMITED ESCORT HEART INSTITUTE & RESEARCH CENTRE (2024:DHC:3900)
Case Number: CO.PET.-299/2015
