2024 (5) TMI 1672 - Tri - IBC

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 ... Transfer of pending winding up proceedings u/s 434 - Treatment of transferred winding up petition as an application under the Insolvency and Bankruptcy Code - Computation of limitation and exclusion of period during transfer - Admission of debt crystallised by High Court winding up order - Pre-existing dispute defence requiring supporting evidence - Authorisation of representative to institute proceedings - Admission into Corporate Insolvency Resolution Process - HELD THAT:- In the instant matter, it is seen that the Hon’ble High Court at Calcutta, vide order [Annexure “K”] dated 10.08.2018, had already admitted the winding up application for a sum of Rs. 1,74,65,867/- with interest thereon at the rate of 7% per annum from the dated of receipt of the statutory notice dated 15.03.2016. The Corporate Debtor herein was directed by the Hon’ble High Court to pay the sum of 1,74,65,867/- with interest thereon in eight equal monthly installments. The Hon’ble Court had further directed that in case of any failure on part of the Corporate Debtor herein in regard to the repayment of the aforesaid amount, the Petitioner was free to publish advertisements in two newspapers namely ‘Bartaman’& ‘The Statesman’. It is seen that publication [Annexure “L”] in pursuance of such direction was made on 10.09.2018 in the aforesaid newspapers. The same is clearly indicative of the failure on part of the Corporate Debtor in repayment of the sums directed by the Hon’ble High Court in CP. 613 of 2016 on 10.08.2018. Further, it is seen from the orders [Annexure “O”] dated 21.03.2022, 23.03.2022 and 05.04.2022 that the Corporate Debtor herein had sought for more time to settle the matter. Subsequently, vide order dated 20.04.2022, the Hon’ble High Court passed an order transferring the said matter to this Adjudicating Authority. In the said order, the Hon’ble High Court had again noted that the company i.e the Corporate Debtor herein was attempting settlement. Hence it is clear that the Corporate Debtor had failed to make the payment of the sum awarded by the High Court. Keeping in mind that the transfer of the company petition was made owing to the inability of the Respondent Company in clearing its dues, we find it fit to conjointly apply the provisions being section 434 of the Companies Act 2013 read with Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016 as well as the precedent set by the Apex Court to the Forechcase (supra). As such, the transferred company petition will have to be treated as a petition filed to initiate insolvency resolution process under the sections 7,9 or 10 of the Code. After the transfer of the said application, the Operational Creditor has made the compliance of the provisions under section 8 of the Code by issuing a demand notice [Annexure “Q”] dated 09.07.2022 to the Corporate Debtor. In reply [Annexure “R”] dated 22.07.2022 to the said demand notice, while the Corporate Debtor has denied and disputed the claim made by the Operational Creditor, the same is not supported by any proof. Limitation - HELD THAT:- Since the last purchase order [Annexure “C”] was issued on 01.04.2013. Coupled with the various demands [Annexure “G”] made by the Operational Creditor between 16.08.2013 and 02.05.2015 as well as the demand notice [Annexure 'H”] dated 15.03.2016 issued under section 434 of the Companies Act, 1956, the limitation period for filing the instant petition under IBC would come to an end on 15.03.2019 in light of section 18 of the Limitation Act, 1963. Since the matter was transferred from the Hon’ble High Court to this Adjudicating Authority due to the lack of jurisdiction, the entire period from 10.08.2018 till 20.04.2022 will be excluded from the computation of limitation. As such the limitation period would end on 25.10.2022. Since the petition was filed on 07.06.2022, the same is within limitation. Keeping in mind the aforesaid facts and circumstances, we are of the considered opinion that the Respondent Company needs to be admitted into Corporate Insolvency Resolution Process (CIRP). 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.