2024 (5) TMI 942 - HC - Companies Law

Winding up proceedings against unregistered foreign company for unpaid dues maintainable under Section 583 Companies Act 1956

Delhi HC held that winding up proceedings against an unregistered foreign company for non-payment of outstanding dues are maintainable under Section 583 ... Winding up of the respondent (unregistered foreign) company - non-payment of outstanding dues with interest - Section 433 (e) and (f) read with Sections 434 and 439 of the Companies Act of 1956 - Transfer of proceedings to the National Company Law Tribunal (NCLT) - HELD THAT:- A careful perusal of Section 583 of the Companies Act, 1956 would clearly bring out that the respondent company is an unregistered company and the circumstances under which an unregistered company may be wound up are indicated vide sub-clause (4) to Section 583 of the Companies Act. A fortiori, since the respondent company has been unable to pay its debts, winding up proceedings against the company are clearly maintainable. Incidentally, even an unregistered company is amenable or subject to winding up proceedings under Part-II comprising of Section 375 of the newly enacted Companies Act, 2013 and sub-Clause 3(b) is pari materia to Section 583 of the old Companies Act, 1956. Reference can be invited to the decision of the Supreme Court in the case of Rajah of Vizianagram v. Official Receiver and Official Liquidator [1961 (11) TMI 34 - SUPREME COURT] wherein Section 270 of the Companies Act, 1930 came up for consideration, which defines “unregistered company”, as also Section 271 of the said Act which provides for winding up of an unregistered company. Suffice to state that Section 270 and 271 of the 1930 Act are in pari materia as the provisions of Section 582 and 583 of the 1956 Act respectively. The decision of the Supreme Court in Action Ispat [2020 (12) TMI 535 - SUPREME COURT] has been relied upon by this court in Citicorp International Limited v. Shiv-Vani Oil & Gas Exploration Services Limited [2023 (7) TMI 1188 - DELHI HIGH COURT] wherein it was held that winding up proceedings pending before High Courts, which are at a nascent stage and have not progressed to an advanced stage, ought to be transferred to the NCLT. It is but evident that the present company petition has not yet reached an advanced stage and no substantive orders have been passed towards the winding up of the respondent company. The present winding up proceedings are transferred to the NCLT - Petition disposed off. Issues Involved:1. Maintainability of the winding-up petition against a foreign company.2. Compliance with Section 583 of the Companies Act, 1956.3. Transfer of proceedings to the National Company Law Tribunal (NCLT).Issue-Wise Detailed Analysis:1. Maintainability of the Winding-Up Petition Against a Foreign Company:The petitioner filed for the winding-up of the respondent company under Sections 433(e) and (f) read with Sections 434 and 439 of the Companies Act, 1956, due to non-payment of outstanding dues amounting to US$ 723,193.03 along with interest. The respondent company, incorporated as a foreign company under the Companies Act, 1956, argued that winding-up proceedings against it were not maintainable. However, the court determined that the respondent company is an unregistered company as per Section 582 of the Companies Act, 1956, and thus, winding-up proceedings are maintainable under Section 583.2. Compliance with Section 583 of the Companies Act, 1956:Section 583 outlines the conditions under which unregistered companies can be wound up. The court noted that the respondent company had ceased to pay its debts, fulfilling the criteria under Section 583(4)(b). The court also referenced the Supreme Court's decision in Rajah of Vizianagram v. Official Receiver and Official Liquidator, which supports the winding-up of foreign companies under similar provisions. The court concluded that the respondent company, being unable to pay its debts, is subject to winding-up proceedings under the Companies Act, 1956, and the newly enacted Companies Act, 2013.3. Transfer of Proceedings to the National Company Law Tribunal (NCLT):Given the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC) and the Companies Act, 2013, Section 434 of the latter Act mandates the transfer of pending winding-up proceedings to the NCLT. The court referred to the Supreme Court's decision in Action Ispat and Power Private Limited v. Shyam Metalics and Energy Limited, which clarified that winding-up proceedings at a nascent stage should be transferred to the NCLT. The court observed that the current proceedings had not reached an advanced stage, with no substantive orders passed towards the winding-up of the respondent company. Consequently, the court ordered the transfer of the winding-up proceedings to the NCLT.Conclusion:The court concluded that the winding-up petition against the respondent company is maintainable and that the proceedings should be transferred to the NCLT. The parties were directed to appear before the NCLT on 09.07.2024, and the electronic records were to be transmitted to the Registrar NCLT within one week. The company petition, along with any pending applications, was disposed of accordingly.