High Court admits winding-up petition against insolvent company, appoints Official Liquidator. Rules on jurisdiction and dismisses transfer plea.

The High Court admitted the winding-up petition against the respondent company, appointing the Official Liquidator as a Provisional Liquidator due to the respondent's insolvency and inability to pay debts. The court rejected the respondent's plea to transfer the case to the NCLT, emphasizing the High Court's jurisdiction under the Companies (Transfer of Pending Proceedings) Rules, 2016. The court also dismissed the request for adjournment, citing the respondent's attempt to delay proceedings. Additionally, the court disregarded opposition from workers and creditors, focusing on the respondent's financial distress and the need to protect creditors' interests.

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Issues Involved:
1. Jurisdiction of High Court vs. NCLT under Insolvency and Bankruptcy Code, 2016.
2. Legislative conflict between Companies Act, 1956/2013 and Insolvency and Bankruptcy Code, 2016.
3. Applicability of non-obstante clause in Section 238 of the Insolvency and Bankruptcy Code, 2016.
4. Discretionary power of the court to adjourn proceedings.
5. Admission of winding-up petition and appointment of Official Liquidator.
6. Impact on workers and creditors.
7. Status of other petitions and proceedings against the respondent.

Detailed Analysis:

1. Jurisdiction of High Court vs. NCLT under Insolvency and Bankruptcy Code, 2016:
The petitioner sought the winding up of the respondent company under sections 433(e), 434(1)(a), and 439 of the Companies Act, 1956. The respondent argued that the petition should be transferred to the National Company Law Tribunal (NCLT) following the amendment to the Insolvency and Bankruptcy Code, 2016, and the notification dated 7th December 2016. The court noted that the petition was served on the respondent before 15th December 2016, thus falling under the jurisdiction of the High Court as per the Companies (Transfer of Pending Proceedings) Rules, 2016.

2. Legislative conflict between Companies Act, 1956/2013 and Insolvency and Bankruptcy Code, 2016:
The respondent's counsel argued that the Insolvency and Bankruptcy Code, 2016, with its non-obstante clause in Section 238, should prevail over the Companies Act, 1956/2013. The court held that there was no conflict between the provisions of the Insolvency and Bankruptcy Code, 2016, and the Companies Act, 1956/2013, regarding the jurisdiction of the High Court and NCLT for winding-up proceedings.

3. Applicability of non-obstante clause in Section 238 of the Insolvency and Bankruptcy Code, 2016:
The court found that Section 238 of the Insolvency and Bankruptcy Code, 2016, which gives the Code an overriding effect, was not applicable in this case, as there was no inconsistency between the Code and the Companies Act, 1956/2013. The court emphasized that the legislative intent was clear that certain winding-up proceedings would continue to be heard by the High Court.

4. Discretionary power of the court to adjourn proceedings:
The respondent sought to adjourn the hearing of the petition until the outcome of the petition filed by ICICI Bank before the NCLT. The court rejected this request, noting that the petition by ICICI Bank was not even admitted, and the respondent was attempting to delay the proceedings. The court decided to proceed with the hearing on merits.

5. Admission of winding-up petition and appointment of Official Liquidator:
The court found that the respondent was heavily indebted, unable to pay its debts, and had no bona fide defense. The court admitted the winding-up petition and ordered the appointment of the Official Liquidator as a Provisional Liquidator to prevent the frittering away of the respondent's assets.

6. Impact on workers and creditors:
The court considered the opposition from the intervenor representing the workers but found inconsistencies in their affidavits. The court noted that the workers' dues were unpaid since July 2016. The court held that the opposition from the workers was not decisive at the admission stage of the winding-up petition. The court also noted that the respondent's liabilities far exceeded its assets, and the creditors, including unsecured creditors, were pressing for recovery.

7. Status of other petitions and proceedings against the respondent:
The court noted that several other petitions for winding up were pending against the respondent, and the secured creditors had already filed recovery proceedings. The court emphasized that the petitioner's claim should not be delayed based on speculative outcomes of other proceedings, such as the one filed by ICICI Bank before the NCLT.

Conclusion:
The court admitted the winding-up petition and ordered its advertisement. The court also appointed the Official Liquidator as a Provisional Liquidator, emphasizing the need to protect the interests of the creditors and prevent the dissipation of the respondent's assets. The court rejected the respondent's request to adjourn the proceedings and noted that the legislative framework allowed the High Court to continue hearing the petition. The court provided a stay on the advertisement and interim relief for two weeks to allow the respondent to appeal.

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