NCLT Seeks Clarification on Insolvency vs. Winding Up: Key Questions and Referral Process

The Tribunal referred the matter to the Hon'ble President of NCLT for consideration by a Larger Bench or as deemed fit due to conflicting views among NCLT benches. The questions referred include whether the insolvency process can commence amidst pending winding up petitions, whether the petition should be transferred to the High Court or await winding up proceedings, the permissibility of adjourning the petition sine die, and the potential revival of the petition if the winding up petition is dismissed or set aside in appeal. The Registrar, NCLT, New Delhi, is instructed to promptly present this reference to the Hon'ble President for further action.

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Issues Involved:
1. Whether the process under the Insolvency and Bankruptcy Code, 2016 can be triggered in the face of the pendency of the winding up petitions.
2. Whether the petition filed under the Code is required to be transferred to the concerned High Court or await the outcome of the winding up proceedings.
3. Whether the Code allows for adjourning the petition sine die considering the statutory mandate for expeditious disposal.
4. Whether there is scope for revival of the petition if the winding up petition is dismissed or set aside in appeal.

Detailed Analysis:

Issue 1: Triggering Insolvency Process Amidst Pending Winding Up Petitions
- The Financial Creditor, Union Bank of India, initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor under the Insolvency & Bankruptcy Code, 2016. However, the Corporate Debtor contested the maintainability of this process due to pending winding up petitions before the High Court of Delhi.
- The Tribunal noted different views from various NCLT benches. The NCLT Chennai and Ahmedabad benches held that the pendency of winding up petitions does not bar the initiation of CIRP as long as no winding up order or appointment of an Official Liquidator has been made.
- Conversely, the Principal Bench, NCLT, New Delhi, in cases like Nauvata Engineering (P.) Ltd. v. Punj Lloyds Ltd., opined that initiating insolvency proceedings amidst pending winding up petitions could lead to conflicts between the Official Liquidator and the Insolvency Resolution Professional, thus preferring to defer to the High Court.

Issue 2: Transfer of Petition to High Court or Await Outcome
- The Tribunal considered whether petitions under the Code should be transferred to the High Court or await the outcome of the winding up proceedings. The Principal Bench, NCLT, New Delhi, in cases like Nikhil Mehta & Sons (HUF) v. AMR Infrastructure Ltd., indicated that where winding up petitions are pending and an Official Liquidator is appointed, the matter should be referred back to the High Court.
- The Tribunal also referred to the categorization of cases under Section 434 of the Companies Act, 2013, and relevant notifications, which differentiate the jurisdiction of the High Court and NCLT based on the status of notice service and admission of winding up petitions.

Issue 3: Adjourning Petition Sine Die
- The Tribunal deliberated on whether the Code permits adjourning the petition sine die in light of the statutory mandate for expeditious disposal within a fixed timeframe. The NCLT, New Delhi, in cases like Nowfloats Technologies Pvt. Ltd Vs Getit Infoservices Pvt. Ltd., held that proceedings cannot be sustained without obtaining leave from the High Court if an Official Liquidator is appointed.
- The Tribunal highlighted the conflict in jurisdiction and the need for clarity on whether the Tribunal can exercise discretion to adjourn petitions sine die.

Issue 4: Scope for Revival of Petition
- The Tribunal examined the possibility of reviving the petition within the framework of the Code if the winding up petition is dismissed or set aside in appeal. The Tribunal acknowledged the need for a clear mechanism to address such eventualities to ensure the statutory mandate of the Code is upheld.

Conclusion:
- Given the differing views among NCLT benches and the complexities involved, the Tribunal decided to refer the matter to the Hon'ble President of NCLT for consideration by a Larger Bench or as deemed fit. The questions referred for consideration include:
1. Whether the insolvency process under the Code can be initiated amidst pending winding up petitions.
2. Whether the petition should be transferred to the High Court or await the outcome of the winding up proceedings.
3. Whether the Code allows for adjourning the petition sine die.
4. Whether there is scope for revival of the petition if the winding up petition is dismissed or set aside in appeal.

The Registrar, NCLT, New Delhi, is directed to expedite the placement of this reference before the Hon'ble President.

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