Court transfers proceedings to NCLT Kolkata due to lack of irreversible situations, grants liberty to raise grievances

The Court transferred the pending proceedings to the National Company Law Tribunal, Kolkata, based on the absence of irreversible situations justifying the Court to retain jurisdiction. It granted liberty to raise grievances before the Tribunal and disposed of the case insofar as the records of the Court were concerned.

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Issues:
1. Jurisdiction of the Court to exercise powers in view of the 5th proviso of Section 434(1)(c) of the Companies Act, 2013.
2. Interpretation of the Supreme Court judgment in Action Ispat & Power (P) Ltd. vs. Shyam Metalics & Energy Ltd. (2021) 2 SCC 641 regarding the transferability of winding-up proceedings to NCLT.
3. Discretion of the Company Court in transferring proceedings to NCLT based on the presence of irreversible situations.
4. Requirement of a formal application for the transfer of proceedings to NCLT under the relevant section.

Analysis:

Issue 1:
The Court deliberated on its jurisdiction under the 5th proviso of Section 434(1)(c) of the Companies Act, 2013, regarding the transfer of pending proceedings to the Tribunal. The Court emphasized the legislative intent to transfer proceedings to the Tribunal, except in limited cases where an irreversible situation justifies the Court to retain jurisdiction. The discretion of the Company Court in transferring proceedings was highlighted, subject to the presence of irreversible circumstances.

Issue 2:
Referring to the Supreme Court judgment in Action Ispat & Power (P) Ltd., the Court analyzed the transferability of winding-up proceedings to NCLT. The judgment emphasized that the Company Court must transfer proceedings to NCLT if irreversible steps towards winding up have not occurred, especially when assets have not been sold. The Court noted the importance of examining each case's facts to determine the need for transfer.

Issue 3:
The Court addressed the discretion of the Company Court in transferring proceedings to NCLT based on the presence of irreversible situations. It emphasized that the Court must assess whether irreversible circumstances have arisen, warranting the retention of proceedings. The Court highlighted the necessity of preventing manifest jurisdictional errors by transferring proceedings when conditions for transfer are met, even without a formal application.

Issue 4:
Regarding the requirement of a formal application for the transfer of proceedings to NCLT, the Court rejected the argument that a formal application is mandatory. It emphasized that the Court, after examining relevant facts, can transfer proceedings to NCLT even without a formal application if conditions for transfer are satisfied. The Court highlighted that continuing winding-up proceedings solely due to the absence of a formal application would be a jurisdictional error.

In conclusion, the Court transferred the pending proceedings to the National Company Law Tribunal, Kolkata, based on the absence of irreversible situations justifying the Court to retain jurisdiction. It granted liberty to raise grievances before the Tribunal and disposed of the case insofar as the records of the Court were concerned.

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