2019 (9) TMI 1655 - HC - Companies Law

Company petition transferred for insolvency proceedings, court upholds decision.

Alfavision Overseas (India) Limited Versus Kanak Fairdeal (India) Private Limited

The company petition filed under Section 433(e) of the Companies Act, 1956 was transferred to the National Company Law Tribunal (NCLT) for initiation of ... Seeking transfer of the company petition to National Company Law Tribunal Bench at Ahmedabad for initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, during the pendency of petition filed under Section 433(e) of the Companies Act, 1956 - HELD THAT:- The judgment in FORECH INDIA LTD. VERSUS EDELWEISS ASSETS RECONSTRUCTION CO. LTD. [2019 (1) TMI 1442 - SUPREME COURT] makes it very clear that in a winding up petition, even in which, notice has been served, any person could apply for transfer of such petition to NCLT under the Insolvency and Bankruptcy Code, 2016 and the same would and have to be transferred by the High Court to the adjudicating authority and treated as insolvency petition under the Code. In the considered opinion of this Court, the learned Company Judge has rightly transferred the company petition to NCLT. The judgment delivered in the case of Forech India Limited is a direct judgment on the issue, which is involved in the present company appeal. Hence, this Court does not find any reason to interfere with the order passed by the learned Company Judge. The admission is declined. Issues:Transfer of company petition to National Company Law Tribunal (NCLT) for initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.Analysis:The case involved a company petition filed under Section 433(e) of the Companies Act, 1956 by one company against another. During the pendency of the petition, an application was made to transfer the matter to the NCLT for initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016. The learned Company Judge transferred the petition to the NCLT at Ahmedabad based on the provision inserted by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018. This provision allows for the transfer of winding up proceedings to the NCLT, even if notice has been served, to be treated as an application for initiation of corporate insolvency resolution process under the Code.The judgment in the case of Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. provided clarity on the transfer of winding up petitions to the NCLT under the Insolvency and Bankruptcy Code, emphasizing the need to avoid parallel proceedings in High Courts and the adjudicating authority. The Court highlighted that even in cases where notice has been served, a party has the right to apply for the transfer of the petition to the NCLT, and the High Court has the power to effectuate such transfer. The judgment also addressed the issue of forum non convenience, stating that in this case, the transfer to NCLT was appropriate as the parties were located in different cities and the NCLT bench in Ahmedabad was accessible.The appellant's counsel relied on judgments in other cases, but the Court found the judgment in Forech India Limited to be directly relevant to the present appeal. Consequently, the Court upheld the decision of the learned Company Judge to transfer the company petition to the NCLT, as per the provisions of the Insolvency and Bankruptcy Code, 2016. The Court declined admission and directed the issuance of a certified copy in accordance with the rules.