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 of Companies Act, 1956. The court found the respondent company unable to pay debts, making winding up proceedings valid. Since the petition was at nascent stage without substantive orders, proceedings were transferred to NCLT following SC precedent in Action Ispat case. The petition was disposed of with transfer to NCLT.

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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.

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