Transfer of winding up proceedings upheld where no irreversible stage was reached and expense claims could still be pursued

The Calcutta HC applied the test for transfer of admitted winding up proceedings by asking whether the process had reached an irreversible or irretrievable stage, or whether any step had made it impossible to restore the position. It held that unpaid expenses claimed by a security agency appointed by the Official Liquidator did not, by itself, prevent transfer, and that earlier authorities did not require liquidation expenses to be paid as a precondition. The Court also held that section 529 of the Companies Act, 1956 did not bar transfer, as the claimant could pursue its expense claim before the National Company Law Tribunal. In the absence of any sale of assets or other irreversible step, transfer to the NCLT was upheld.

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Issues: Whether the winding up petitions were liable to be transferred to the National Company Law Tribunal notwithstanding the appellant's claim for unpaid expenses incurred in protecting the assets of the company in liquidation, and whether any irreversible or irretrievable stage had been reached so as to prevent transfer.

Analysis: The governing test for transfer of admitted winding up proceedings is whether, on the facts of the case, the proceedings have reached an irreversible or irretrievable stage, or whether any act has occurred that would make it impossible to set the clock back. The pendency of claims for unpaid expenses incurred by a security agency appointed by the Official Liquidator does not, by itself, create such a stage. The Court held that the earlier authorities did not lay down a rule that liquidation expenses must be paid as a condition precedent to transfer. It further held that Section 529 of the Companies Act, 1956 did not assist the appellant in resisting transfer, because the appellant could pursue its claim before the National Company Law Tribunal. No fact was shown to demonstrate that sale of movable or immovable assets had taken place, or that any irreversible step had occurred in the winding up process.

Conclusion: The transfer of the winding up proceedings to the National Company Law Tribunal was upheld, and the appellant's challenge failed.

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