Parallel insolvency proceedings cannot override pending winding up matters when transfer rules do not apply.

Where winding up proceedings were already pending before the High Court, with notices served and the matter actively dealt with, the case was treated as outside the transfer categories under the Companies (Transfer of Pending Proceedings) Rules, 2016. On that basis, a fresh insolvency application under the Insolvency and Bankruptcy Code was held to be not maintainable because it would create parallel proceedings and defeat the transfer scheme. The NCLT's order appointing the interim resolution professional and declaring moratorium was also treated as without jurisdiction, as the High Court had already assumed seisin of the matter and the insolvency process could not displace the pending winding up proceedings.

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Issues: (i) Whether the winding up proceedings pending before the High Court could continue and remain outside the transfer mechanism under the Companies (Transfer of Pending Proceedings) Rules, 2016, and whether a fresh application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable. (ii) Whether the order passed by the NCLT appointing the interim resolution professional and declaring moratorium could be acted upon in the face of the pending High Court proceedings.

Issue (i): Whether the winding up proceedings pending before the High Court could continue and remain outside the transfer mechanism under the Companies (Transfer of Pending Proceedings) Rules, 2016, and whether a fresh application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable.

Analysis: The pending matter was a winding up proceeding arising from a reference under the erstwhile statutory framework and had been actively dealt with by the High Court for a considerable period. Notices had been served, parties were already before the Court, and a provisional liquidator had been engaged for valuation and related steps. On that basis, the Court held that the matter did not fall within the class of cases intended for transfer under Rule 5 or Rule 6 of the 2016 Rules. The Court further held that permitting a fresh insolvency application while the winding up proceedings were already pending would create parallel proceedings and defeat the scheme of the 2016 Rules.

Conclusion: The fresh Section 7 application was held to be not maintainable and an abuse of process in the circumstances.

Issue (ii): Whether the order passed by the NCLT appointing the interim resolution professional and declaring moratorium could be acted upon in the face of the pending High Court proceedings.

Analysis: Since the High Court had already assumed seisin of the matter and the statutory conditions for transfer were not met, the NCLT was held to have proceeded without jurisdiction. The Court concluded that the insolvency proceedings could not displace the ongoing winding up proceedings and that the invocation of the Insolvency and Bankruptcy Code did not justify interruption of the High Court process in the facts of the case. The order of the NCLT was therefore treated as non-est and incapable of being implemented.

Conclusion: The NCLT order appointing the interim resolution professional and declaring moratorium was held to be without jurisdiction and liable to be ignored.

Final Conclusion: The High Court retained control over the pending winding up proceedings, rejected the attempt to invoke parallel insolvency proceedings, and directed that the NCLT order should not be given effect to.

Ratio Decidendi: Where winding up proceedings are already pending before the High Court, notices have been served, and the matter falls outside the transfer categories under the applicable transfer rules, a parallel insolvency application under the Insolvency and Bankruptcy Code cannot be used to override or displace the High Court proceedings.

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