Company winding up petition transferred to NCLT as no substantive proceedings taken under Section 433(e) and 439

Delhi HC disposed of a winding up petition filed against a company for non-payment of outstanding dues under Section 433(e) read with Section 439 of the Companies Act, 1956. The court held that since no substantive proceedings or irreversible steps had been taken toward winding up and the petition was at a nascent stage, it should be transferred to the NCLT. The HC directed the Registry to transmit electronic records to NCLT within one week and listed the matter before NCLT for appropriate consideration and orders in accordance with law.

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Issues:
1. Winding up petition under Section 433(e) read with Section 439 of the Companies Act, 1956 for non-payment of outstanding dues.
2. Dishonoured cheques issued by respondent for settling dues.
3. Failure of respondent to repay balance amount despite settlement agreement.
4. Transfer of proceedings to National Company Law Tribunal (NCLT) under Section 434 of the Companies Act, 2013.
5. Application of Supreme Court decision in Action Ispat case regarding transfer of winding up proceedings to NCLT.

Analysis:

1. The petitioner filed a winding up petition under Section 433(e) read with Section 439 of the Companies Act, 1956, seeking winding up of the respondent company due to non-payment of outstanding dues. The petition was based on a work order for M.S. Structural work, with invoices raised and a balance amount of Rs. 26,27,444 remaining unpaid.

2. Respondent issued four cheques to settle the dues, but all were dishonoured due to reasons like "INSTR STALE" and payment stopped by the drawer. Despite reminders and a statutory legal notice, respondent failed to discharge its liabilities, leading to the initiation of winding up proceedings.

3. A settlement agreement was reached between the parties in criminal complaints under Section 138 of the Negotiable Instruments Act, wherein respondent agreed to repay Rs. 12,50,000 in instalments. However, respondent only paid Rs. 6,50,000 and failed to repay the remaining Rs. 6,00,000 despite multiple opportunities.

4. Considering the lack of progress in winding up proceedings and the enactment of the Insolvency and Bankruptcy Code, 2016, the Court decided to transfer the petition to the NCLT as per Section 434 of the Companies Act, 2013. The decision was influenced by the Supreme Court ruling in the Action Ispat case, emphasizing the transfer of winding up proceedings to NCLT at an early stage.

5. The Court cited the Supreme Court's guidance from the Action Ispat case, highlighting the transfer of winding up proceedings to NCLT for resolution under the Insolvency and Bankruptcy Code, 2016. Since no irreversible steps had been taken towards winding up the company, the Court deemed it appropriate to transfer the petition to NCLT for further consideration and appropriate orders.

In conclusion, the High Court transferred the winding up petition to the NCLT for further proceedings, emphasizing the need for timely resolution and adherence to the provisions of the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016. The electronic record was directed to be transmitted to the NCLT, and the parties were instructed to appear before the NCLT on a specified date.

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