Appellate Tribunal directs claim settlement & costs payment, clarifies rules on Companies Act transfer

The Appellate Tribunal set aside the impugned orders and disposed of the case with directions for settling the claim amicably and payment of costs to the Interim Resolution Professional. The Tribunal noted the substitution of Rule 5 and directed reconsideration in light of the amended rule, expressing a prima facie view on the Central Government's power to frame Rules under the Insolvency and Bankruptcy Code. It clarified that the transfer of cases under the Companies Act should be done under the relevant provisions of the Companies Act, not as applications under the Insolvency and Bankruptcy Code.

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Issues:
1. Transfer of pending proceedings under Section 433 of the Companies Act, 1956 to the National Company Law Tribunal.
2. Validity of the Notification dated 7th December, 2016 issued by the Central Government.
3. Power of the Central Government to frame Rules under Section 239 of the Insolvency and Bankruptcy Code.
4. Treatment of petition under Section 433(e) of the Companies Act, 1956 as an application under the Insolvency and Bankruptcy Code.

Analysis:
1. The case involved the transfer of pending proceedings under Section 433 of the Companies Act, 1956 to the National Company Law Tribunal as per the Companies (Transfer of Pending Proceedings) Rules, 2016. The Learned Adjudicating Authority treated the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 as admitted and ordered a moratorium.

2. The Appellate Tribunal, in a separate case, doubted the validity of the Notification dated 7th December, 2016, issued by the Central Government. Subsequently, a new Notification dated 29th June, 2017, was issued, amending Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. The Appellate Tribunal noted the substitution of Rule 5 and directed the Tribunal to reconsider the matter in light of the amended rule.

3. The Appellate Tribunal expressed a prima facie view on the power of the Central Government to frame Rules under Section 239 of the Insolvency and Bankruptcy Code. It highlighted that the transfer of cases under Section 433 of the Companies Act, 1956 should be done under Section 434 of the Companies Act, 2013, and not as applications under Sections 7, 9, or 10 of the Insolvency and Bankruptcy Code.

4. Consequently, the impugned orders dated 24th February, 2017, and 4th April, 2017, passed by the Learned Adjudicating Authority were set aside by the Appellate Tribunal. The case was disposed of with observations on settling the claim amicably and directions for payment of costs, if any, to the Interim Resolution Professional. No costs were awarded based on the circumstances of the case.

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