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ACTION ISPAT & POWER PVT. LTD v. SHYAM METALICS & ENERGY LIMITED & ORS. - (High Court of Delhi) (10 Oct 2019)

A winding up order passed by a Company Judge is not irrevocable and proceedings can be later transferred to NCLT, if same is in company’s interest

MANU/DE/3262/2019

Company

The instant appeal has been preferred in the name, and on behalf of the Appellant-company, by Mr. Naresh Kumar Aggarwal, who claims himself to be the Managing Director of the said Appellant company, to assail the order passed by the Learned Company Judge in Application. By the impugned order, the Learned Company Judge allowed the said Application preferred by Respondent No.2 – SBI, and directed transfer of the Company Petition to the National Company Law Tribunal (NCLT). The Learned Company Judge revoked the order admitting the winding up petition and appointing the Official Liquidator as the provisional Liquidator.

When the plea of a creditor – particularly the secured creditor, to transfer the proceedings to the NCLT from the Company Court is pitted against the plea of the ex-management not to do so, unless very strong reasons for accepting the plea of the ex-management are brought forth such as a clear statutory bar, the Company Court would lean in favour of transferring the winding up proceedings pending before it to the NCLT.

Merely because the learned Company Judge had ordered the winding up of the appellant company on 03.08.2004, it does not follow that the appellant company should necessarily be liquidated and dissolved. The other options available, namely to resolve/ revive the appellant company can and should always be explored for which purpose the NCLT is invested with jurisdiction, unless irrevocable steps towards liquidation have already been undertaken. Respondent No. 2 being the secured creditor of the appellant clearly has a stake in the proceedings for winding up and their impleadment was really a foregone conclusion.

The process under IBC is meant to find the best possible solution in a given case, which is beneficial to the company concerned as well as its creditors and other stakeholders. Therefore, in the interest of equity and justice, and keeping in mind the special nature of the IBC, if the Learned Company Judge has found it fit to transfer the winding up petition to NCLT on the application of Respondent No. SBI– who is a secured creditor, present Court would not ordinarily interfere with the judgment of the Learned Company Judge, and that too, on the asking of the erstwhile management.

Pertinently, the respondent No. 2 has already initiated proceedings before the NCLT in respect of the appellant company which, in any event, would continue. Continuation of two parallel proceedings – one before the Company Court for liquidation, and the other before the IBC for resolution/ revival, would serve no useful purpose. As per statutory scheme found in Section 434(1)(c) of Companies Act, 1956, the proceedings for winding up pending before the Company Court could be transferred to the NCLT and there is no provision for transfer of proceedings from the NCLT to the Company Court. The impugned order passed by Company Judge is upheld. Appeal dismissed.

Tags : WINDING UP   TRANSFER   NCLT  

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