Transferred winding up petitions treated as insolvency petitions; admitted operational creditor claims can lead to CIRP initiation.

Winding up petitions transferred from a higher court under the transfer rules are to be treated as insolvency petitions where the transferred record demonstrates a crystallized admitted debt; in such cases the transferred proceeding falls within the Companies Act transfer scheme and the Insolvency and Bankruptcy Code. Operational creditor procedural compliance, including issuance of demand notice, and absence of documentary proof of bona fide dispute support admission under the Code. Time during which the matter remained pending before the High Court is excluded for limitation calculation. Resultantly an admissible Section 9 petition leads to initiation of CIRP with moratorium and appointment of an IRP.

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Issues: Whether the winding up petition transferred from the High Court is to be treated as a petition under the Insolvency and Bankruptcy Code, 2016 and whether the Operational Creditor's petition under Section 9 of the Code is admissible, leading to initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.

Analysis: The transferred proceeding falls within the scope of Section 434 of the Companies Act, 2013 and Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016 such that winding up petitions transferred by the High Court are to be treated as applications under the Code. The admitted debt recorded by the High Court in the earlier winding up order crystallizes the claim for the purposes of admission under the Code. The Operational Creditor complied with the procedural requirements under Section 8 and issued the demand notice; the Corporate Debtor's denials and allegations of preexisting disputes and counterclaims were unsupported by documentary evidence. Limitation was computed having regard to Section 18 of the Limitation Act, 1963 and the period during which winding up proceedings remained before the High Court was excluded from computation; on that basis the petition filed on 07.06.2022 is within limitation. The material on record therefore satisfies the statutory tests for admission under Section 9 of the Code.

Conclusion: The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by the Operational Creditor is admissible and the Corporate Debtor is to be admitted into the Corporate Insolvency Resolution Process (CIRP); interim reliefs including moratorium and appointment of an Interim Resolution Professional are directed.

Ratio Decidendi: A winding up petition transferred by the High Court under Section 434 of the Companies Act, 2013 read with Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016 is to be treated as a petition under the Insolvency and Bankruptcy Code, 2016 and, where the transferred record shows a crystallized debt and procedural compliance under the Code, the adjudicating authority must admit the petition and initiate CIRP subject to fulfillment of statutory requirements.

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