2023 TaxPub(CL) 1842 (Del-HC)
COMPANIES ACT, 2013
Section
434
In petition before NCLT under I & B Code, an IRP had already been
appointed, while winding up proceedings were at a nascent stage and only
initial publication/citation was done in newspapers, it was deemed
appropriate to transfer winding petition to the NCLT, application for
transfer of winding up proceedings was allowed.
|
Transfer of certain pending proceedings -
IRP already appointed as per provisions of IBC - Winding up proceedings
being at a nascent stage - Whether it is deemed appropriate to transfer winding
petition to NCLT
Company filed winding up petition against the
company (OBP), which was allowed by Court. However, another company also filed
a petition against the company for initiation of corporate insolvency
resolution process, which was also admitted by NCLT. Therefore, an application
was filed for transfer of the winding up proceedings to the NCLT. Held:
Where winding up petition is not at an advanced stage, the matter is to be
transferred to the NCLT. In the present case, in the petition before the NCLT,
an IRP has already been appointed. Considering the fact that the winding up
proceedings are at a nascent stage and only initial publication/citation was
done in the newspapers, this Court is of the opinion that the matter cannot
proceed before two fora. IBC being a statute which is meant to encourage
revival of the company, it is deemed appropriate to transfer the present
petition to NCLT. Thus, the winding up proceedings is transferred to the NCLT.
REFERRED :
FAVOUR : Application allowed
A.Y. :
IN THE DELHI HIGH COURT
PRATHIBA M. SINGH, J.
Uma Sharma v. Octagon
Builders & Promoters & Anr.
Co. Pet. 147/2014
& Co. Appls. 858/2018, 301/2023, OLR 211/2019, OLR 293/2019
21 September, 2023
Petitioner by: Jai Bansal, Advocate
Respondents by: Ruchi Sindhwani, Sr. Standing Counsel with Megha Bharara, Advocate
for OL. (M: 9811533510)
Intervenor by: Rajat Bhatia, Alka Nupur Singh, Karan Ahuja, Ekta Mudgil, Advocates
(M: 9999251398)
Prathiba M. Singh, J.
(Oral)
1. This hearing has been done through hybrid mode.
2. The present petition has been filed under section 433(e) and section
439 of the Companies Act, 1956 seeking winding up of the Respondent Company.
The company in liquidation is 'M/s. Octagon Builders & Promoters'. The
following nine petitions were filed before this Court against the company in
liquidation seeking winding up on the ground that the amounts which they had
paid had not been returned to them. The details of the petitions are :--
S.No.
|
Petition
No.
|
Title
|
1
|
Co. Pet. 154/2014
|
Rajiv Mathur v. Octagon
Builders & Promoters
|
2
|
Co. Pet. 156/2014
|
Sudhir Anand v. Octagon
Builders & Promoters
|
3
|
Co. Pet. 157/2014
|
Mukesh Kumar v. Octagon
Builders & Promoters
|
4
|
Co. Pet. 168/2014
|
Deepak Mittal v. Octagon
Builders & Promoters & Anr.
|
5
|
Co. Pet. 169/2014
|
C P Sharma v. Octagon Builders
& Promoters & Anr.
|
6
|
Co. Pet. 170/2014
|
Ajay Kapur v. Octagon Builders
& Promoters & Anr.
|
7
|
Co. Pet. 212/2014
|
Mrs. Sikha Kaushal v. Octagon
Builders & Promoters
|
8
|
Co. Pet. 290/2014
|
Alankar Pathak & Anr. v.
Octagon Builders & Promoters & Anr.
|
9
|
Co. Pet. 147/2014
|
Uma Sharma v. Octagon Builders
& Promoters & Anr.
|
3. This Court had, vide Order, dated 27-8-2018 appointed the
liquidator in Co. Pet. 147/2014 in the following terms :--
'I,
accordingly, admit the present petition. The Official Liquidator attached to
this Court is appointed as the Liquidator. He is directed to take over all the
assets, books of accounts and records of the respondent company forthwith. The
citations be published in the Delhi editions of the newspapers 'Statesman'
(English) and 'Veer Arjun' (Hindi), as well as in the Delhi Gazette, at least
14 days prior to the next date of hearing. The cost of publication of Rs.75,000
will be paid to the OL collectively by the petitioners in Co. Petition Nos.
154/2014, 156/2014, 157/2014, 168/2014, 16912014, 170/2014, 212/2014 &
290/2014.
Petitioners
shall deposit a sum of Rs. 75,000 with the Official Liquidator within 2 weeks,
subject to any further amounts that may be called for by the liquidator for
this purpose, if required. The Official Liquidator shall also endeavour to
prepare a complete inventory of all the assets of the respondent-company when
the same are taken over; and the premises in which they are kept shall be
sealed by him. At the same time, he may also seek the assistance of a valuer to
value all assets to facilitate the process of winding up. It will also be open
to the Official Liquidator to seek police help in the discharge of his duties,
if he considers it appropriate to do so. The Official Liquidator to take all
further steps that may be necessary in this regard to protect the premises and
assets of the respondent-company.'
4. On the said date, the following order was passed in the remaining
petitions :--
'These
petitions are filed seeking winding up of the respondent company. This court
has today in CP 147/2014 admitted the petition and appointed the OL as
the Provisional Liquidator. Accordingly, the present petitions have become
infructuous and stand disposed of.
Liberty is
granted to the petitioners to file their claim before the OL within six weeks
in the prescribed manner as per law.
Petitions
stand disposed of.'
5. Pursuant to the said Order, dated 27-8-2018, the amount of
Rs. 75,000 is stated to be deposited by the Petitioners and the citations were
published by the OL. However, as per Ms. Sindhwani, counsel for the OL, no
steps have been taken thereafter.
6. As per OLR Nos. 211/2019 and 293/2019 the stand of the
OL is that the directors have not been cooperating and that in effect, even the
statement of affairs is not fully recorded. Thus, the OL has even sought action
against Mr. Kuldip Nandrajog, the ex-director of the Respondent.
7. In the meantime, a petition has come to be filed before the NCLT,
Allahabad Bench, Prayagraj by one M/s. Mind Makers Communication Pvt. Ltd.
against the company which is under liquidation before this Court. The last Order,
dated 13-9-2023 passed by the NCLT has been handed over by Ms. Ruchi
Sindhwani, learned Senior Standing Counsel for the OL, which reads as under :--
'1. Learned
Counsel representing the IRP submits that the present IA No. 193/2019
has been filed for payment of the professional fees to be paid to the IRP. He
further submits that except for the initial amount which was paid to the IRP,
no further expenses towards the CIRP cost have been released to the IRP.
2. It is also
pointed by him that as per the Order, dated 27-8-2018 passed by the
Hon'ble Delhi High Court, the respondent company has already been ordered to be
wound up. He further undertakes to file the latest status report with respect
to the matter pending before the Hon'ble Delhi High Court.
3. With
respect to the payment of the fee/CIRP cost to the IRP, let the notice be
issued to the Operational Creditor through the learned Counsel representing the
Operational Creditor.
4. The matter
to come up on 1-11-2023 for further hearing along with other IAs.'
8. During the pendency of this petition, the Insolvency and Bankruptcy
Code, 2016 has been enacted and pending proceedings under section 434 of the
Companies Act, 1956 are to be transferred to the National Company Law Tribunal
(NCLT). The said section reads as under :--
'434.
Transfer of certain pending proceedings.--(1) On such date as may be
notified by the Central Government in this behalf, --
(a) all
matters, proceedings or cases pending before the Board of Company Law
Administration (herein in this section referred to as the Company Law Board)
constituted under sub-section (1) of section 10E of the Companies Act, 1956 (1
of 1956), immediately before such date shall stand transferred to the Tribunal
and the Tribunal shall dispose of such matters, proceedings or cases in
accordance with the provisions of this Act;
(b) any person
aggrieved by any decision or order of the Company Law Board made before such
date may file an appeal to the High Court within sixty days from the date of
communication of the decision or order of the Company Law Board to him on any
question of law arising out of such order:
Provided that the High Court may if it is satisfied that the appellant was
prevented by sufficient cause from filing an appeal within the said period,
allow it to be filed within a further period not exceeding sixty days; and
(c) all
proceedings under the Companies Act, 1956 (1 of 1956), including proceedings
relating to arbitration, compromise, arrangements and reconstruction and
winding up of companies, pending immediately before such date before any
District Court or High Court, shall stand transferred to the Tribunal and the
Tribunal may proceed to deal with such proceedings from the stage before their
transfer:
Provided that only such proceedings relating to the winding up of companies
shall be transferred to the Tribunal that are at a stage as may be prescribed
by the Central Government.
Provided
further that only such proceedings relating to
cases other than winding-up, for which orders for allowing or otherwise of the
proceedings are not reserved by the High Courts shall be transferred to the
Tribunal
[Provided
also that] --
(i) all
proceedings under the Companies Act, 1956 other than the cases relating to
winding up of companies that are reserved for orders for allowing or otherwise
such proceedings; or
(ii) the
proceedings relating to winding up of companies which have not been transferred
from the High Courts; shall be dealt with in accordance with provisions of the
Companies Act, 1956 and the Companies (Court) Rules, 1959.]
Provided
also that proceedings relating to cases of
voluntary winding up of a company where notice of the resolution by
advertisement has been given under sub-section (1) of section 485 of the
Companies Act, 1956 but the Company has not been dissolved before the 1-4-2017
shall continue to be dealt with in accordance with provisions of the Companies
Act, 1956 and the Companies (Court) Rules, 1959.'
9. The issue of transfer of winding up petitions to the NCLT has been
dealt with in the Notification, dated 7-12-2016 passed by the Ministry
of Corporate Affairs where in respect of pending proceedings for winding up,
Rule 5 states as under :--
'5.
Transfer of pending proceedings of Winding up on the ground of inability to pay
debts.--(1) All petitions relating to winding up under clause (e) of
section 433 of the Act on the ground of inability to pay its debts pending
before a High Court, and where the petition has not been served on the
respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall
be transferred to the Bench of the Tribunal established under sub-section (4)
of section 419 of the Act, exercising territorial jurisdiction and such
petitions shall be treated as applications under sections 7, 8 or 9 of the
Code, as the case may be, and dealt with in accordance with Part II of the
Code:
Provided that the petitioner shall submit all information, other than
information forming part of the records transferred in accordance with Rule 7,
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 to
the Tribunal within sixty days from the date of this notification, failing
which the petition shall abate.
Provided that the petitioner shall submit all information, other than
information forming part of the records transferred in accordance with rule 7,
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 to
the Tribunal upto 15-7-2017, failing which the petition shall stand abated:
Provided
further that any party or parties to the petitions
shall, after the 15-7-2017, be eligible to file fresh applications under
sections 7 or 8 or 9 of the Code, as the case may be, in accordance with the
provisions of the Code:
Provided
also that where a petition relating to winding up
of a company is not transferred to the Tribunal under this rule and remains in
the High Court and where there is another petition under clause (e) of section
433 of the Act for winding up against the same company pending as on
15-12-2016, such other petition shall not be transferred to the Tribunal, even
if the petition has not been served on the respondent.'
10. The said issue of transfer of pending cases has also been considered
by this Court in Co. Pet 446/2013 titled Citicorp International
Limited v. Shiv-Vani Oil & Gas Exploration Services Limited wherein the
Court relying on the decision of the Supreme Court in Action Ispat and Power
Limited v. Shyam Metalics and Energy Limited (2021) 2 SCC 641 : 2021 TaxPub(CL)
0084 (SC) has observed as under :--
'20. As per
the proviso highlighted above, upon the application being filed by any of the
parties to the proceedings, the transfer may be made by the Court in terms of
the second proviso of section 434(1) of the Companies Act, 1956. In Action
Ispat (supra), if the winding up is not at an advanced stage, the High
Court may transfer the matter to the NCLT. The relevant portion of the said
judgment is set out below :--
31. Given the
aforesaid scheme of winding up under Chapter XX of the Companies Act, 2013, it
is clear that several stages are contemplated, with the Tribunal retaining the
power to control the proceedings in a winding up petition even after it is
admitted. Thus, in a winding up proceeding where the petition has not been
served in terms of Rule 26 of the Companies (Court) Rules, 1959 at a
pre-admission stage, given the beneficial result of the application of the
Code, such winding up proceeding is compulsorily transferable to the NCLT to be
resolved under the Code. Even post issue of notice and pre admission, the same
result would ensue. However, post admission of a winding up petition and after
the assets of the company sought to be wound up become in custodia legis
and are taken over by the Company Liquidator, section 290 of the Companies Act,
2013 would indicate that the Company Liquidator may carry on the business of
the company, so far as may be necessary, for the beneficial winding up of the
company, and may even sell the company as a going concern. So long as no actual
sales of the immovable or movable properties have taken place, nothing
irreversible is done which would warrant a Company Court staying its hands on a
transfer application made to it by a creditor or any party to the proceedings.
It is only where the winding up proceedings have reached a stage where it would
be irreversible, making it impossible to set the clock back that the Company
Court must proceed with the winding up, instead of transferring the proceedings
to the NCLT to now be decided in accordance with the provisions of the Code.
Whether this stage is reached would depend upon the facts and circumstances of
each case.'
11. A conjoint reading of Rule 5 of the Notification, dated 7-12-2016
along with the aforementioned judgment would show that in cases where the
petition is not at an advanced stage, the matter is to be transferred to the
NCLT.
12. Furthermore, in the petition before the NCLT being CP(IB)
No.289/ALD/2018, an IRP has already been appointed. Considering the fact
that the winding up proceedings are at a nascent stage and only initial
publication/citation was done in the newspapers, this Court is of the opinion
that the matter cannot proceed before two fora.
13. One of the primary objectives of the enactment of IBC is to provide
for the revival of the corporate debtor and liquidation has to be resorted to
only as a last resort as observed by the Supreme Court in K.N. Rajakumar v.
V. Nagarajan [C.A. No. 1792/2021, date of decision 15-9-2021]. The relevant
portion of the said judgment reads as under :--
'It could thus
be seen that one of the principal objects of the IBC is providing for revival
of the Corporate Debtor and to make it a going concern. Every attempt has to be
first made to revive the concern and make it a going concern, liquidation being
the last resort.'
14. IBC being a statute which is meant to encourage revival of the
company, it is deemed appropriate to transfer the present petition to NCLT,
Allahabad Bench, Prayagraj.
15. In view of the fact that the remaining company petitions have been
disposed of permitting them to file claims before the OL, the following
petitions deserve to be revived :--
1
|
Co. Pet. 154/2014
|
Rajiv Mathur v. Octagon
Builders & Promoters
|
2
|
Co. Pet. 156/2014
|
Sudhir Anand v. Octagon
Builders & Promoters
|
3
|
Co. Pet. 157/2014
|
Mukesh Kumar v. Octagon
Builders & Promoters
|
4
|
Co. Pet. 168/2014
|
Deepak Mittal v. Octagon
Builders & Promoters & Anr.
|
5
|
Co. Pet. 169/2014
|
C P Sharma v. Octagon Builders
& Promoters & Anr.
|
6
|
Co. Pet. 170/2014
|
Ajay Kapur v. Octagon Builders
& Promoters & ANR.
|
7
|
Co. Pet. 212/2014
|
Mrs. Sikha Kaushal v. Octagon
Builders & Promoters
|
8
|
Co. Pet. 290/2014
|
Alankar Pathak & Anr. v.
Octagon Builders & Promoters & Anr.
|
16. The Order, dated 27-8-2018 appointing the Liquidator is
recalled. The present petition is transferred to the NCLT. The claimant in this
petition is free to pursue its claim before the NCLT.
17. List before the NCLT Allahabad Bench on 1-11-2023.
18. It is made clear that any transactions carried out post the filing
of these petitions would be liable to be dealt with in accordance with law by
the NCLT. The said transactions would also not prejudice the interest of the
Petitioners.
19. The electronic records of this Court shall be transmitted to the
Registrar NCLT within one week along with a copy of today's order.
20. The petition, along with all pending applications, is disposed of in
the above terms.
Co. Appl. 301/2023 (for
impleadment)
21. This is an application for impleadment which has been filed by Mr.
Naresh Kumar Dhawaria, who also has a claim against the company in liquidation.
In view of the order passed above, the said applicant is also permitted to
appear before the NCLT and pursue his claim in accordance with law.
22. The application is disposed of.