In a landmark decision by the Supreme Court of India, regarding the transfer of winding-up proceedings to the National Company Law Tribunal (NCLT), the case involving the parties related to the Company Petition for winding up has been resolved. This ruling sets a precedent for similar cases in the future. Stay informed on the implications of this crucial judgment for corporate law and insolvency proceedings in the country.
Facts
- Provisional Liquidator appointed to respondent company on 17.03.2010.
- Cheques issued by respondent company dishonored due to insufficient funds on 31.07.2008.
- Notice issued under Section 138 of the Negotiable Instruments Act of 1881 on 11.08.2008.
- Company Petition filed seeking winding up under Sections 433(e), 434, and 439 of the Companies Act, 1956.
- Recall of Provisional Liquidator appointment on 18.10.2010.
- Legal demand notice served on respondent company on 15.09.2008 for outstanding amount repayment.
- Failure of respondent company to repay outstanding amount leading to institution of present petition.
- Issuance of cheques by respondent company to partly discharge liabilities.
- Failure of respondent company to pay debt leading to filing of petition.
- Agreement between parties for supply of goods to an associate company of respondent.
Analysis
- Winding up proceedings not served can be transferred to NCLT under the Code.
- No irreversible actions justify Company Court not transferring the proceedings.
- Post admission, Company Liquidator can manage business and sell company as going concern.
- Section 434 of Companies Act, 2013 allows transfer of winding up proceedings to NCLT.
- No substantial progress in the liquidation of the company under the winding up petition.
- Reference to Supreme Court decision in Action Ispat and Power Pvt. Limited v. Shyam Metalics and Energy Limited for interpretation of winding up proceedings.
- Proceedings under the Companies Act, 1956, excluding cases related to winding up of companies, are reserved for orders for allowing or otherwise.
- Proceedings related to winding up of companies that have not been transferred from the High Courts shall be dealt with according to the provisions of the Companies Act, 1956.
- The Supreme Court decision cited is a foundation for the present ruling.
- The decision states that the stage of the winding up proceedings is crucial in determining the transfer to NCLT.
- The transfer decision depends on the specifics of each case.
- Citicorp International Limited v. Shiv-Vani Oil & Gas Exploration Services Limited case used the Supreme Court decision as a basis.
- In cases where winding up proceedings are at an early stage, transfer to NCLT is recommended.
Decision
- Electronic record of the petitions to be transmitted to the NCLT within one week by the Registry.
- Interim orders from this Court to continue until the NCLT date.
- Petition transferred to the NCLT, parties to appear on 27.05.2024.
- Present company petition and pending applications disposed of.
- NCLT to consider the matter and issue appropriate orders.
- Parties can present their rights and contentions before the NCLT.
Case Title: ESTER INDUSTRIES LTD Vs. INDUS POLYFILMS SPECIALISTS PVT LTD (2024:DHC:3168)
Case Number: CO.PET.-320/2008
