Transfer of winding up proceedings to insolvency framework allowed; enforcement by secured creditors not automatically fatal to CIRP application.

Transfer under Section 434(1)(c) was granted because the court found the threshold of irreversible corporate death was not met; sales by secured creditors enforcing security do not by themselves constitute irreversible steps and therefore do not bar transfer, so transferable to NCLT for CIRP. The IBC's primacy and legislative focus on resolution over liquidation was applied, and exclusive jurisdiction to assess feasibility of resolution lies with the NCLT. Perceived prejudice to workmen or altered distributive outcomes under the IBC are not valid grounds to refuse transfer. Directions issued to file CIRP and for workmen to claim before NCLT.

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Issues: Whether Company Application seeking transfer of winding-up proceedings to the National Company Law Tribunal under Section 434(1)(c) of the Companies Act, 2013 should be allowed.

Analysis: The statutory framework gives primacy to the Insolvency and Bankruptcy Code, 2016 as a later special enactment for time bound corporate insolvency resolution (Section 238, IBC). The settled test for refusing transfer under Section 434(1)(c) is whether the winding up has reached an irreversible stage of "corporate death" making revival impossible; mere appointment of receivers or sale of some assets by secured creditors does not, by itself, constitute such an irreversible stage. The material showed that some assets were in possession of DRT receivers or secured creditors and that limited sales had occurred, while the Official Liquidator retained possession of other assets and substantial funds and the claims verification process remained ongoing. The objections based on potential prejudice to workmen arising from prioritisation under the IBC engage legislative policy (waterfall) and do not, by themselves, justify refusal of transfer. The determinative question of whether revival is possible falls within the exclusive remit of the NCLT under the IBC framework.

Conclusion: Company Application allowed; transfer to the NCLT to enable initiation of corporate insolvency resolution in terms of Section 434(1)(c) of the Companies Act, 2013. The Applicant to file application in the NCLT within seven days; workmen permitted to file claims before the NCLT; actions by secured creditors and prior orders preserved for appropriate application to the NCLT.

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