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of <h1>Court transfers Company Petition to NCLT for insolvency resolution under IBC, winding-up order recalled</h1> <h3>Shyam B. Ghia Versus Futura Polyesters Ltd. and Ors.</h3> Shyam B. Ghia Versus Futura Polyesters Ltd. and Ors. - TMI Issues Involved:1. Application for transfer of Company Petition to NCLT under Section 434 of the Companies Act, 2013.2. Conduct of ex-directors in disposing of company assets post-winding up order.3. Irreversibility of actions taken by the Official Liquidator.4. Consideration of revival of the company under IBC.Detailed Analysis:1. Application for Transfer to NCLT:The Applicant, a former Managing Director of Futura Polyesters Limited (Futura), sought the transfer of the Company Petition to the National Company Law Tribunal (NCLT) under Section 434 of the Companies Act, 2013. The goal was to explore the revival of the company under the Insolvency and Bankruptcy Code (IBC), 2016. The Applicant argued that the NCLT has broader powers under IBC to revive the company, which the Company Court lacks in a winding-up petition.2. Conduct of Ex-Directors:The Official Liquidator opposed the transfer, highlighting the malafide conduct of the ex-directors of Futura. Despite knowing the winding-up process was in effect, the ex-directors disposed of company assets without informing the Official Liquidator, violating Section 436(2) of the Companies Act, 1956. The Official Liquidator emphasized discrepancies in disclosures about the number of plots sold and misuse of sale proceeds, leading to a complaint with the CBI and registration of an FIR against the ex-directors.3. Irreversibility of Actions by Official Liquidator:The Applicant contended that the steps taken by the Official Liquidator, such as taking symbolic and physical possession of the office premises, did not constitute irreversible actions. The Official Liquidator argued that the transfer should be declined due to irreversible steps and the Applicant's conduct. However, the Court noted that no actual sale of assets had occurred, and the Official Liquidator had not invited claims from creditors or workers, implying that irreversible actions had not been taken.4. Revival of the Company under IBC:The Court acknowledged the Supreme Court's judgment in Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd., which allows the transfer of proceedings to NCLT even post-admission of a winding-up petition, provided no irreversible actions have been taken. The Court emphasized the beneficial objective of IBC to revive corporate entities and considered the substantial assets still held by Futura, which could facilitate a successful resolution process under IBC.Conclusion:The Court allowed the transfer of the Company Petition to NCLT, Mumbai, to be treated as an application for initiation of the corporate insolvency resolution process under IBC. The winding-up order dated 22nd June 2018 was recalled but would continue to operate until NCLT passed an effective order under Section 13 of IBC. The Official Liquidator would be discharged only after such an order. The Court clarified that the transfer order would not affect ongoing criminal proceedings against the ex-directors or the rights and liabilities of the parties involved.
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