Winding up transfer to NCLT can be ordered without a party application unless the case has reached an irreversible stage.
A pending winding up proceeding could be transferred from the HC to the NCLT on judicial consideration even without a formal party application, because Section 434(1)(c) and Rule 5 did not make such an application an inflexible precondition. The transfer was also proper because the proceeding had not reached an irreversible or irretrievable stage: although the Official Liquidator had taken possession, the immovable assets remained unsold and no final step had been completed. The HC therefore upheld the transfer order and rejected the appeal.
Issues: (i) whether a winding up proceeding pending before the High Court could be transferred to the National Company Law Tribunal without a formal application by a party; and (ii) whether the winding up proceeding had reached an irreversible or irretrievable stage so as to preclude transfer.
Issue (i): whether a winding up proceeding pending before the High Court could be transferred to the National Company Law Tribunal without a formal application by a party.
Analysis: Section 434(1)(c) of the Companies Act, 2013 contemplates transfer of pending winding up proceedings, while its last proviso permits a party to seek transfer where the proceeding has not already been transferred. Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016 regulates the transfer of pending winding up matters, but does not exclude transfer by the Company Court where the issue is before it. The earlier authorities on transfer of winding up proceedings were read as recognising judicial discretion and did not make a party application an inflexible precondition in every case.
Conclusion: transfer was not dependent on a mandatory party application and could be directed by the Company Court.
Issue (ii): whether the winding up proceeding had reached an irreversible or irretrievable stage so as to preclude transfer.
Analysis: The record showed that the Official Liquidator had taken possession, but the immovable properties remained unsold and no irreversible step had been completed. The Company Court had called for and considered the status report before directing transfer. On those facts, the proceeding had not reached the stage at which transfer would be impermissible under the governing principles relating to transfer of admitted winding up proceedings.
Conclusion: the proceeding had not reached an irreversible or irretrievable stage, and the transfer order was sustainable.
Final Conclusion: the transfer of the winding up proceeding to the National Company Law Tribunal was upheld and the appeal failed.
Ratio Decidendi: a pending winding up proceeding may be transferred to the National Company Law Tribunal on judicial consideration even without a prior application by a party, unless the proceeding has progressed to an irreversible or irretrievable stage.
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