2025 (10) TMI 184 - HC - Companies Law

Winding-up petitions against company transferred to NCLT under Section 434(1)(c) to consolidate creditor claims and ensure effective adjudication

Sh. Bharat Singh, Smt. Rajwati & Ors, Ms. Dharamwati, Shri. Vishal G. Verma, Rama Rai & Anr., Ranjit Kapoor & Anr., Versus M/s Vigneshwara Developers Pvt. Ltd.

HC directed transfer of winding-up petitions against the respondent company to the NCLT under Section 434(1)(c) of the Companies Act, 2013, noting ... Seeking the winding up of the Respondent Company - inability to pay debts to the Petitioner - Sections 433(e), 434 and 439 of the Companies Act, 1956 - HELD THAT:- Section 434(1)(c) of the Companies Act, 2013 provides that all proceedings under the 1956 Act shall stand transferred to the NCLT. The first proviso to this Section sets out that only proceedings relating to winding up of the Company that are at the stage as may be prescribed by the Central Government shall stand transferred. The fifth proviso to this Section sets out that a party may file an application for such transfer. This Court has, on an Application made by a party, passed a judgment in Sh. Naresh Chand Gupta & Anr. v. Vigneshwara Developers Pvt. Ltd. [2025 (10) TMI 127 - DELHI HIGH COURT] directing that the winding up proceedings in respect of the Respondent Company – Vigneshwara Developers Pvt. Ltd. be transferred to the NCLT for further proceedings. The directions of transfer are in respect of the Respondent Company and these Petitions have also been filed against the Respondent Company. In view of the order in Sh. Naresh Chand Gupta & Anr. v. Vigneshwara Developers Pvt. Ltd., this Court deems it apposite to direct the transfer of these Petitions to the National Company Law Tribunal to enable an effective adjudication of all similarly situated parties - petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether proceedings for winding up pending before the High Court under the Companies Act, 1956 are to be transferred to the National Company Law Tribunal pursuant to Section 434(1)(c) of the Companies Act, 2013. 2. Whether the provisos to Section 434(1)(c) limiting transfer of winding up proceedings to those 'at the stage as may be prescribed by the Central Government' prevent transfer in the present petitions. 3. The procedural consequences of transfer: what directions should be given regarding further proceedings, liberty of parties to take steps before the Tribunal, and the fate of pending applications before the High Court. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Transfer of winding up proceedings under Section 434(1)(c) Legal framework: Section 434(1)(c) of the Companies Act, 2013 provides for transfer of all proceedings under the Companies Act, 1956, including winding up, pending before High Courts or District Courts, to the National Company Law Tribunal, and contemplates that the Tribunal may proceed from the stage before their transfer. Precedent treatment: The Court applied the statutory scheme embodied in Section 434(1)(c) and the related provisions of the 2013 Act to the petitions before it. No decision of a superior court was invoked to displace the statutory mandate; the Court acted in accordance with the transfer mechanism provided by the statute. Interpretation and reasoning: The Court interpreted Section 434(1)(c) as mandating transfer of pending company proceedings to the Tribunal where the statutory conditions are met, permitting the Tribunal to continue proceedings from the stage at which they stood. The Court treated the statutory language as operative to effect the transfer of these winding up petitions to the NCLT to enable adjudication under the new scheme. Ratio vs. Obiter: Ratio - proceedings under the 1956 Act pending before the High Court that fall within the scope of Section 434(1)(c) are to be transferred to the Tribunal and the Tribunal may proceed from the stage before transfer. Obiter - general observations about effective adjudication of similarly situated parties and administrative convenience. Conclusions: The Court directed transfer of the petitions to the National Company Law Tribunal under the authority of Section 434(1)(c), permitting the Tribunal to proceed with adjudication. Issue 2 - Effect of provisos to Section 434(1)(c) limiting transfer of winding up matters Legal framework: Section 434 contains provisos which qualify the general transfer provision, notably that 'only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government,' and additional provisos addressing other categories of proceedings and transitional situations. Precedent treatment: The Court considered the provisos as part of the statutory scheme and applied them to determine the propriety of transfer. The decision did not seek to override the provisos but found them not to preclude transfer in the present circumstances. Interpretation and reasoning: The Court treated the provisos as limiting transfer only where proceedings are not at the prescribed stage or otherwise fall into categories excluded by the provisos. Where the statutory conditions for transfer are satisfied (including any stage-related prescription by competent authority), the provisos do not prevent transfer. The Court concluded that transfer was appropriate in the present matters because the petitions met the statutory criteria for transfer. Ratio vs. Obiter: Ratio - provisos to Section 434 must be read in the context of the overall transfer scheme; they restrict transfer only in the specific circumstances set out, and do not bar transfer where statutory conditions are met. Obiter - no extensive pronouncement on the precise content of the stage-related prescription was made beyond applying it to the facts before the Court. Conclusions: The provisos did not prevent transfer of the present winding up petitions; the Court ordered transfer to the Tribunal consistent with Section 434 and its provisos. Issue 3 - Procedural consequences of transfer, liberty to parties, and status of pending applications Legal framework: Section 434 permits the Tribunal to proceed with transferred matters from the stage existing at transfer. The statutory scheme anticipates continuity of adjudication before the new forum and leaves parties free to take steps in accordance with law before the Tribunal. Precedent treatment: The Court followed the statutory directive and provided practical directions to give effect to transfer, rather than remitting matters or leaving parties in procedural limbo. Interpretation and reasoning: The Court directed transfer of the petitions to enable effective adjudication of all similarly situated parties before the Tribunal, and expressly granted petitioners liberty to take appropriate steps before the Tribunal in accordance with law. The Court also disposed of the petitions before it by effecting transfer and closed all pending applications to avoid duplication of proceedings in the High Court. Ratio vs. Obiter: Ratio - upon transfer under Section 434, the High Court may direct matters to be transferred and close pending applications; transferred matters are to be pursued before the Tribunal and parties have liberty to take appropriate steps there. Obiter - observations promoting administrative efficiency and effective adjudication of similar claims. Conclusions: The Court directed transfer of the petitions to the Tribunal, granted parties liberty to proceed before the Tribunal in accordance with law, and closed all pending applications before the High Court; parties were authorized to act on the digitally signed order. Cross-references and interrelationship of issues The Court's order on transfer (Issue 1) was applied subject to the provisos (Issue 2) and carried practical consequences for pending proceedings and parties' procedural rights (Issue 3). The three issues are interdependent: the statutory mandate to transfer, the provisos that qualify transfer, and the procedural directions necessary to effectuate transfer and ensure continuity of adjudication.