https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770312 https://www.taxtmi.com/caselaws?id=770312 Transfer of winding up petition from the High Court to the National Company Law Tribunal (NCLT) under Section 434(1)(c) of the Companies Act - HELD THAT:- As would appear from the substituted sub section 434(1)(c), the original sub section has undergone several changes between 7th December, 2016 and 17th August, 2018. The first proviso to Section 434(1)(c) after the substitution in 2016 clarified transfer of pending proceedings by the phrase "only such proceedings relating to winding up the companies" as may be prescribed by the Central Government - The stage at which such pending proceeding relating to the winding up of companies needs to be transferred has been prescribed and laid down by the Companies (Transfer of Pending Proceedings) Rules, 2016. The facts in Action Ispat and Power Pvt. Ltd. [2020 (12) TMI 535 - SUPREME COURT] were that winding up application was filed under Section 433(e) and (f), 434 and 439 of the Companies Act against the company seeking winding up and it was alleged that for the goods supply Action Ispat had failed to pay a sum of Rs. 4.55 crores. The Company Judge in Delhi High Court passed an order on 27th August, 2018 admitting the winding up petition and appointed the official liquidator attached to the Supreme Court as the liquidator of the Company with further direction to take over all the assets, books of accounts and records of the Company forthwith. An application was then filed before the Company Judge by SBI being the secured creditor of Action Ispat seeking transfer of the winding up petition to the NCLT in view of the fact that the SBI had filed an application under Section 7 of the IBC Code 2016 which was pending before NCLT. The issue before the Hon'ble Supreme Court was whether the discretion exercised by the Company Court in transferring the winding up proceeding to NCLT was liable to be set aside - The Hon'ble Supreme Court observed that prime focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting it from its own management and from a corporate death by liquidation. The IBC Code was held to be a beneficial piece of legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. Adverting to the facts in the present case, there is nothing that can be said to have irretrievable in the instant case in the sense mentioned in para 25 of the Action Ispat Judgment, wherein it was clarified that So long as no actual sales of the immovable or movable properties had taken place, nothing irreversible is done which would warrant a Company Court staying its hands on a transfer application made to it by a creditor or any party to the proceedings - only where a company is winding up or near corporate death and no transfer or winding up proceedings would then take place to the NCLT to be tried as a proceedings under IBC. Short of an irresistible conclusion that corporate death is inevitable, every effort should be made to resuscitate the corporate debtor in the larger public interest, which includes not only the workmen of the corporate debtor, but also its creditors and the goods it produces in the larger interest of the economy of the country. Conclusion - The Court is convinced that the companies to suffer inevitable corporate death, the first choice would be to make an all out attempts to revive the company and this procedure has been elaborately laid in the IBC. The Companies Act, 2013 is clearly not suited for such situation and this is clearly reflected in amended and substituted Section 434 of the Act read with Sections 7 and 8 of the IBC and objects and reasons of both the statutes. Moreover there is no conflict between the two proceedings. Appeal dismissed. Case-Laws Companies Law Fri, 25 Apr 2025 00:00:00 +0530