High Court Jurisdiction in Winding-up Petition

The High Court retains jurisdiction over the winding-up petition and connected applications under the Companies Act, 1956, and the Companies (Court) Rules, 1959. The Provisional Liquidator will not be discharged and will assist the Interim Resolution Professional (IRP). The winding-up proceedings will be stayed until the National Company Law Tribunal (NCLT) concludes the resolution process. If the resolution plan is rejected, the winding-up petition will proceed in the High Court. The NCLT should not interfere with the High Court's jurisdiction over the saved petition.

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Issues Involved:
1. Jurisdiction of the High Court to hear the winding-up petition.
2. Applicability of the Companies Act, 1956 and the Companies (Court) Rules, 1959.
3. Validity of the order passed by the National Company Law Tribunal (NCLT).
4. Role and discharge of the Provisional Liquidator.
5. Interaction between Insolvency and Bankruptcy Code (IBC) proceedings and winding-up proceedings.
6. Transfer of winding-up proceedings to NCLT.
7. Role of creditors and their applications in the winding-up process.

Detailed Analysis:

Jurisdiction of the High Court and Applicable Provisions of Law:
The winding-up petition was filed on January 4, 2016, and served between January 14, 2016, and February 24, 2016, under Rule 26 of the Companies (Court) Rules, 1959. This was before the Insolvency and Bankruptcy Code (IBC) came into effect on May 28, 2016, and before the Companies (Transfer of Pending Proceedings) Rules, 2016, came into operation on December 7, 2016. Thus, the petition falls under the category of "saved petitions," which are not required to be transferred to the NCLT. The High Court retains jurisdiction over these petitions, and the applicable law remains the Companies Act, 1956, and the Companies (Court) Rules, 1959.

Validity of the NCLT Order:
The NCLT order dated March 13, 2019, was passed on an application filed by Devi Trading under Section 7 of the IBC on March 14, 2018, before the appointment of the Provisional Liquidator on September 7, 2018. Although the NCLT was within its rights to entertain the application, it should have been cautious, given the appointment of the Provisional Liquidator by the High Court. The NCLT’s order, while valid, should not interfere with the High Court’s jurisdiction over the saved petition.

Role and Discharge of the Provisional Liquidator:
The Provisional Liquidator, appointed by the High Court, should not be discharged or directed to hand over possession of the company's assets and books to the Interim Resolution Professional (IRP). The Provisional Liquidator will remain in place, and the IRP can inspect and obtain copies of necessary documents for preparing the resolution plan. The Provisional Liquidator will assist the IRP but retain control over the original documents and assets.

Interaction Between IBC and Winding-Up Proceedings:
The High Court retains jurisdiction over the winding-up petition, but the proceedings should be stayed until the NCLT concludes whether a resolution plan for the company is approved or rejected. If the resolution plan is approved, further orders regarding the revival of the company may be sought. If the plan is rejected and the order achieves finality, the High Court will proceed with the winding-up process under the Companies Act, 1956.

Transfer of Winding-Up Proceedings to NCLT:
Given the High Court's retained jurisdiction and the specific category of saved petitions, there is no need to transfer the winding-up petition and connected applications to the NCLT. The applications filed by intending purchasers of the flats/units developed by the company require declaratory orders and directions for conveyance and possession, which are beyond the NCLT’s jurisdiction under the IBC.

Role of Creditors:
Creditors, including Devi Trading, are required to join the winding-up proceedings before the High Court once the petition assumes a representative character after advertisement. The High Court retains jurisdiction over the saved petition, and creditors must participate in the proceedings under the Companies Act, 1956, and the Companies (Court) Rules, 1959.

Conclusion:
The High Court retains jurisdiction to hear the winding-up petition and connected applications under the Companies Act, 1956, and the Companies (Court) Rules, 1959. The Provisional Liquidator will not be discharged and will assist the IRP. The winding-up proceedings will be stayed until the NCLT concludes the resolution process. The winding-up petition will proceed in the High Court if the resolution plan is rejected. The NCLT should not interfere with the High Court’s jurisdiction over the saved petition.

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