2019 (9) TMI 287 - HC - Companies Law

Court Transfers Company Petition to NCLT for Insolvency Proceedings

Bank of Nova Scotia Versus Opto Infrastructure Ltd.

The Court transferred Company Petition No.125/2014 to the NCLT under the Companies Act, 2013, pursuant to the second proviso of Section 434[1][c], ... Territorial Jurisdiction - transfer of the Company Petition to the Hon’ble National Company Law Tribunal, Bengaluru - proviso inserted to Section 434[1][c] of the Companies Act, 2013 - HELD THAT:- In view of the application filed by the petitioner under Section 434 [1][c] of the Companies Act read with proviso thereof, there is no inhibition for this Court to transfer the pending Company Petition to NCLT to enable the applicant/petitioner to pursue its remedies under the provisions of the Code, accepting the reasons set out for such transfer - It is to achieve the objects of the new Rules, 2016 as regards to provide an opportunity of arrangements and re-construction/rehabilitation and other proceedings relating to the winding up to be adjudicated by the NCLT under the provisions of the Code, this Court deems it appropriate to transfer the pending Company Petition No.125/2014 to the NCLT. Petition transferred - application allowed. Issues: Transfer of Company Petition to NCLT under Companies Act, 2013Analysis:1. Issue 1: Transfer of Company Petition to NCLT- The applicant sought the transfer of Company Petition No.125/2014 to the NCLT under Section 434[1][c] of the Companies Act, 2013.- The respondent argued that the applicant had already filed another petition before the NCLT invoking the provisions of the Insolvency and Bankruptcy Code, 2016 (the Code), making the transfer unnecessary at this stage.- The Court examined Section 434 of the Act, 2013, which deals with the transfer of pending proceedings, and noted the provisions regarding the transfer of winding up proceedings to the Tribunal as prescribed by the Central Government.- The Ministry of Corporate Affairs issued rules in 2016 concerning the transfer of winding up proceedings to the NCLT, emphasizing the need for submission of required information within a specified timeframe to avoid abatement of the petition.- A second proviso to Section 434[1][c], inserted by the Code [Second Amendment Act, 2018], allowed parties to apply for the transfer of winding up proceedings to the Tribunal for resolution under the Code.- The Court concluded that the present case fell under the second proviso, enabling the transfer of the pending Company Petition to the NCLT for resolution under the Code.2. Issue 2: Application for Transfer and Withdrawal of Another Petition- The applicant's senior counsel informed the Court that the petition pending before the NCLT under Section 7 of the Code would be withdrawn to facilitate the transfer of the Company Petition to the NCLT under Section 434[1][c] of the Act, 2013.- The Court accepted the submission and allowed the transfer of the pending Company Petition to the NCLT to enable the applicant to pursue remedies under the Code.- The decision aimed to align with the objectives of the new rules to provide opportunities for arrangements, reconstruction, and rehabilitation under the NCLT's jurisdiction as per the provisions of the Code.3. Conclusion:- The Court disposed of the application, transferring Company Petition No.125/2014 to the NCLT for further proceedings in accordance with the law.- The respondent was directed to appear before the NCLT on a specified date without expecting further notice, and the NCLT was instructed to proceed accordingly.This detailed analysis of the judgment highlights the legal provisions, procedural aspects, and the Court's rationale behind transferring the Company Petition to the NCLT under the Companies Act, 2013, and the Insolvency and Bankruptcy Code, 2016.