TaxTMI 
TaxTMI 
2026 (7) TMI 728
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.... was permitted to publish an advertisement in The Hindu, an English daily newspaper. Thereafter, by order dated 09.01.2012, the petition was allowed, and the Respondent Company was ordered to be wound up. The Official Liquidator was directed to take charge of the assets and liabilities of the Respondent Company, and publication of the winding-up order was directed in The Hindu (English daily) and Vijaya Karnataka (Kannada daily). 4. This Court recorded a finding that a sum of Rs.32,65,401/- was due and payable by the Respondent to the Petitioner and that the said amount had remained unpaid. Pursuant to the aforesaid order, the Petitioner also deposited a sum of Rs.10,000/- with the Official Liquidator. 5. Subsequently, on 13.11.2014, time was sought on behalf of the Respondent Company to ascertain whether the dispute could be amicably settled. Despite several adjournments being granted for this purpose, no settlement was reported. In the meantime, the Official Liquidator submitted various reports under Rule 300 of the Companies (Court) Rules, 1959. 6. Thereafter, the Respondent filed applications seeking the recall of the winding-up order. By order dated 15.11.2017, this C....
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....mpany Ltd. This being the case, it is difficult to comprehend how the High Court could have held that the proceedings before NCLT were without jurisdiction. On this score, therefore, the High Court judgment has to be set aside. NCLT proceedings will now continue from the stage at which they have been left off. Obviously, the company petition pending before the High Court cannot be proceeded with further in view of Section 238 of the Code. The writ petitions that are pending before the High Court have also to be disposed of in light of the fact that proceedings under the Code must run their entire course. We, therefore, allow the appeal and set aside the High Court's judgment 12. Resultantly, the Court thereafter held: "22. This Section is of limited application and only bars a corporate debtor from initiating a petition under Section 10 of the Code in respect of whom a liquidation order has been made. From a reading of this Section, it does not follow that until a liquidation order has been made against the corporate debtor, an Insolvency Petition may be filed under Section 7 or Section 9 as the case may be, as has been held by the Appellate Tribunal. Hence, a....
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....d of asking a party to adopt such a circuitous route and then take recourse to the 5th proviso to section 434(1)(c), it would be better to recognise the right of such a party to seek transfer directly. 44. As observed by this Court in Forech India Limited (supra), the object of IBC will be stultified if parallel proceedings are allowed to go on in different fora. If the Allahabad High Court is allowed to proceed with the winding up and NCLT is allowed to proceed with an enquiry into the application under Section 7 IBC, the entire object of IBC will be thrown to the winds. 45. Therefore, we are of the considered view that the petitioner-herein will come within the definition of the expression "party" appearing in the 5th proviso to Clause (c) of Sub-section (1) of Section 434 of the Companies Act, 2013 and that the Petitioner is entitled to seek a transfer of the pending winding up proceedings against the first Respondent, to the NCLT. It is important to note that the restriction under Rules 5 and 6 of the Companies (Transfer of Pending Proceedings) Rules, 2016 relating to the stage at which a transfer could be ordered, has no application to the case of a transfer ....
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.... a winding up petition and after the assets of the company sought to be wound up become in custodia legis and are taken over by the Company Liquidator, section 290 of the Companies Act, 2013 would indicate that the Company Liquidator may carry on the business of the company, so far as may be necessary, for the beneficial winding up of the company, and may even sell the company as a going concern. So long as no actual sales of the immovable or movable properties have 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. It is only where the winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that the Company Court must proceed with the winding up, instead of transferring the proceedings to the NCLT to now be decided in accordance with the provisions of the Code. Whether this stage is reached would depend upon the facts and circumstances of each case 9.3. By relying on Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited's Supra case, his submission is that the Hon....
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....es in accordance with the provisions of this Act; (b) any person aggrieved by any decision or order of the Company Law Board made before such date may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order: Provided that the High Court may if it is satisfied that the appellant was prevented by sufficient cause from filing an appeal within the said period, allow it to be filed within a further period not exceeding sixty days; (c) all proceedings under the Companies Act, 1956 (1 of 1956), including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer. (d) any appeal preferred to the Appellate Authority for Industrial and Financial Reconstruction or any reference made or inquiry pending to or before the Board of Industrial and Financial Reconstruction o....
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....l sale of the movable or immovable assets of the company in liquidation has taken place and no irreversible steps have been undertaken in the liquidation process. It is only when the winding up proceedings have progressed to a stage where it is impossible to restore the status quo ante that the Company Court would be justified in declining transfer and continuing with the winding-up proceedings. 9.10. Applying the aforesaid principles to the facts of the present case, learned counsel submits that, although an Official Liquidator has been appointed and reports have been submitted from time to time under Rule 300 of the Companies (Court) Rules, 1959, no steps have been taken towards the sale of the assets of the company in liquidation. It is submitted that neither any advertisement inviting bids for the sale of the movable or immovable properties of the company has been issued, nor has any sale been effected. Thus, according to him, the proceedings have not progressed beyond the stage of the winding-up order, and no irreversible consequence has ensued. On this basis, it is contended that the present Company Petition is liable to be transferred to the NCLT for consideration in acco....
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....gs have not progressed to the stage of sale or any other irreversible consequence. 9.14. Applying the said principle to the present case, learned counsel submits that although the Official Liquidator has been appointed and has filed reports before this Court, no sale of any movable or immovable property of the company in liquidation has been undertaken. Hence, according to him, the proceedings have not reached an irreversible stage and the present Company Petition is liable to be transferred to the NCLT in exercise of the powers conferred under Section 434 of the Companies Act, 2013. 9.15. He relies on the decision of the Hon'ble Delhi High Court in the case of Cowi India Private Limited vs Pinnacle Air Private Limited [Manu/DE/0948/2025] more particularly, Paras 6, 7, 8, 9, 13, 14 and 16 thereof, which are reproduced hereunder for easy reference: 6. He submits that the present petition ought to be transferred to NCLT in view of Section 434(c) of the Companies Act. He submits that the present case is squarely covered by the decision in the case of Gurbakhsh Singh BA, Builders P. Ltd. v. Fortis Hospital Ltd. : 2024 SCC OnLine Del 3480, wherein a Coordinate Bench of th....
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.... up of the company, and may even sell the company as a going concern. So long as no actual sales of the immovable or movable properties have 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. It is only where the winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that the company court must proceed with the winding up, instead of transferring the proceedings to the National Company Law Tribunal to now be decided in accordance with the provisions of the Code. Whether this stage is reached would depend upon the facts and circumstances of each case." 14. In the opinion of this Court, the present matter is squarely covered by the decision in Gurbakhsh Singh BA, Builders (P) Ltd. v. Fortis Hospital Ltd., (supra), where this Court extensively considered the applicability of Section 434 of the Companies Act, and the transfer of pending winding-up petitions to the NCL. It was held as under : "13. Thus, what follows is that the entire statutory scheme in respect of winding up of ....
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....h Court, while following its earlier decision in Gurbakhsh Singh BA Builders (P) Ltd. v. Fortis Hospital Ltd., [2024 SCC OnLine Del 3480] held that the question of transfer is essentially one relating to the jurisdiction of the Court and that the power of transfer can be exercised by the Court even suo motu. It was further held that the mere absence of a formal application seeking transfer would not preclude the Court from directing such transfer if the intention of the party seeking transfer is otherwise evident from the record. 9.18. Placing reliance on the aforesaid decision, learned counsel submits that a separate and formal application seeking transfer is not an indispensable requirement under Section 434 of the Companies Act, 2013. According to him, once the intention of a party to seek transfer is brought to the notice of the Court, the Court is empowered to exercise its jurisdiction and direct transfer of the proceedings to the NCLT. 9.19. Learned counsel contends that the present case stands on a stronger footing than the facts considered in Cowi India Private Limited vs Pinnacle Air Private Limited's supra case, inasmuch as the Respondent has not merely expressed it....
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....ord "may" at two places in the provision, would clearly demonstrate that the party has the option to seek transfer and the Company Court may transfer the petition to the National Company Law Tribunal. To put it differently, 5th proviso to Section 434(1)(c) of the Act of 2013 confers the discretion on the Company Court either to retain the Company Petition or to transfer the Company Petition subject to inherent limitations in law on exercise of discretionary jurisdiction. 12. Thus, the transfer of the petition is not mandatory on the application by any of the parties to the proceeding. An element of discretion lies with the Court. Else there was no need to introduce the 5th proviso in the manner in which it is couched. Whenever a discretionary power is conferred to the Court, then the person who seeks such discretionary power to be exercised in his favour has to make out a valid ground for the exercise of such power. 16. The co-ordinate bench of this Court in NITESH HOTELS supra has also considered the effect of the judgment of the Apex Court in ACTION ISPAT supra. The co-ordinate bench of this Court has taken a view that the ACTION ISPAT supra, judgment has to be ....
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.... that the Coordinate Bench recognized that the fifth proviso to Section 434(1)(c) confers a discretion upon the Company Court either to retain a winding-up petition or to transfer it to the NCLT. The judgment further clarifies that transfer is not automatic merely because an application seeking transfer has been filed and that the applicant must establish grounds warranting the exercise of such discretion. The Coordinate Bench also took note of the observations in Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited supra that even after admission of a winding-up petition, transfer to the NCLT remains permissible provided no irreversible steps have been taken in the winding-up proceedings. 9.23. Relying upon the aforesaid decision, learned counsel submits that the Coordinate Bench of this Court has expressly applied the principles laid down in Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited supra while considering applications under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013. According to him, the decision reinforces the proposition that the Company Court retains the jurisdiction to transfer a winding-up....
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....rity check report merely indicates instances where Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd.,1 has been cited, referred to, followed, distinguished, or otherwise considered. The report does not furnish the factual background of those cases, the issues involved, or the reasoning adopted by the respective Courts while applying the decision. In the absence of the underlying judgments being placed on record, it is not possible to ascertain whether the cases referred to therein bear any factual or legal similarity to the present matter. Hence, the authority-check report, by itself, cannot constitute a substantive basis for determining the issues arising for consideration in the present proceedings. 9.29. He relies on Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, which is reproduced hereunder for easy reference: 5. Transfer of pending proceedings of Winding up on the ground of inability to pay debts.- (1) All petitions relating to winding up of a company under Clause (e) of section 433 of the Act on the grour@ inability to pay its debts pending before a High Court, and, where the petition has not been served on the Re....
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.... 9.32. It is further submitted that Rule 5, when read in conjunction with Section 434 of the Companies Act, 2013 and the principles laid down by the Hon'ble Supreme Court in Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited supra demonstrates a clear legislative preference for adjudication of insolvency matters by the NCLT. Learned counsel therefore contends that, where the proceedings have not attained an irreversible stage, the Company Court ought to exercise its discretion in favour of transfer so as to further the object underlying the Insolvency and Bankruptcy Code, 2016. 9.33. He relies on Rule 6 of the Companies (Transfer of Pending Proceedings) Rules, 2016, which is reproduced hereunder for easy reference: 6. Transfer of pending proceedings of Winding up matters on the grounds other than inability to pay debts. -All petitions filed under clauses (a) and (f) of section 433 of the Companies Act, 1956 pending before a High Court and where the petition has not been served on the Respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal exercising territorial jurisdictio....
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....escribes the manner of service of a company petition. The Rule mandates that every petition shall be served on the respondent named therein and on such other persons as may be required under the Act or the Rules, or as may be directed by the Company Court. The Rule further provides that, unless otherwise ordered, a copy of the petition shall accompany the notice served upon the respondent. 9.39. Referring to Rule 26, learned counsel submits that the Companies (Transfer of Pending Proceedings) Rules, 2016 make service of notice under Rule 26 the determinative factor for deciding whether a winding-up petition is liable to be transferred automatically to the NCLT. According to him, the distinction drawn under Rules 5 and 6 of the Transfer Rules is between petitions in which service under Rule 26 has been effected and those in which such service has not been effected. 9.40. It is therefore contended that the scheme of the Transfer Rules recognises service under Rule 26 as a significant procedural milestone in winding-up proceedings. Learned counsel submits that the principles underlying Rule 26, when read with Section 434 of the Companies Act, 2013 and the judgments relied upon b....
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.... the term "including proceedings" was absent. In such a situation, all proceedings relating to only arbitration, compromise, arrangement and reconstruction and winding up of companies would have stood transferred. Therefore, what follows suit is that the interpretation of the term "including" in the second sentence becomes paramount. 39. In relation to the meaning to be given to the word "including", the appellants have cited various judgments that need to be examined in greater detail. In South Gujarat Roofing Tiles Manufacturing Association and Another (supra), the Apex Court examined the explanation to entry 22 to part I of the Schedule to the Minimum Wages Act, 1948. The explanation to entry 22 stated that for the purpose of this entry potteries industry "includes" the manufacture of the nine articles of pottery specified therein. The Apex Court on an examination of the said provision held that the word "include" has been used in the explanation in an exhaustive and restrictive manner. Paragraphs 3 to 5 are delineated below for a proper understanding: "3. The question turns on a true construction of the Explanation to entry 22 which says that for the purpose o....
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....ve been mentioned out of abundant caution to emphasise the comprehensive character of the entry, to indicate that all varieties of pottery are included therein. This argument, though more plausible, does not also seem acceptable. It is possible that one might have doubts whether things like refractories or electrical or textile accessories would pass under the description pottery as that word is used in common parlance, but the explanation also mentions crockery and toys regarding which there could be hardly any doubt. The inclusion in the list of objects which are well-recognised articles of pottery makes it plain that the Explanation was added to the entry not by way of abundant caution. 5. The contention of Mr. Tarkunde for the appellants is that the articles mentioned in the Explanation were intended to be exhaustive of the objects covered by entry 22. According to Mr. Tarkunde if the legislature wanted to bring within the entry all possible articles of pottery, then there was hardly any point in mentioning only a few of them by way of Explanation. To this Mr. patel's reply is that it is well-known that where the legislature wants to exhaust the significance of the....
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.... industry for the purpose of entry 22. The use of the word 'includes' in the restrictive sense is not unknown. The observation of Lord Watson in Dilworth v. Commr. Of Stamps, 1899 AC 99 which is usually referred to on the use of 'include' as a word of extension is followed by these lines: "But the word 'includes' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to 'mean and include' and in that case it may afford an exhaustive explanation of the meaning which for the purpose of the Act, must invariably be attached to these words or expressions." It must therefore be held that the manufacture of Mangalore pattern roofing tiles is outside the purview of entry 22." 40. Next we need to examine the judgment of the Andhra Pradesh High Court in Hakim and Co. (supra) wherein it was held that the definition of forest produce though uses the term "includes", it is to be read as "means" or "includes and means". The Andhra Pradesh High Court hel....
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....y way of rules can also come under the definition of 'forest produce'. It appears to us that in this context the definition of "forest produce" though it uses the expression "includes", is exhaustive. It is the common case that the item in dispute is not covered by sub-clause (2) or sub-clause (3) of S. 2(g) of the Act, that is to say, it is not covered by the 2nd and 3rd categories." 41. N.D.P. Namboodripad (Dead) By Lrs. (supra) was referred to by both the parties to interpret the meaning of the word "includes". The proposition of law discussed therein in paragraphs 18 to 20 are delineated below: "18. The word "includes" has different meanings in different contexts. Standard dictionaries assign more than one meaning to the word "include". Webster's Dictionary defines the word "include" as synonymous with "comprise" or "contain". Illustrated Oxford Dictionary defines the word "include" as: (i) comprise or reckon in as a part of a whole; (ii) treat or regard as so included. Collins Dictionary of English Language defines the word "includes" as: (i) to have as contents or part of the contents; be made up of or....
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....s of calculating pension. The words "and includes" have been used in Rule 62, as meaning "comprises" or "consists of." 42. For a proper comprehension of the term "includes" and "including", one should also examine the view taken by courts in different jurisdictions. In Thompson West's, Words and Phrases, Permanent Edition, Vol 20A, the different ways the phrase "includes" has been interpreted by the courts in the United States of America has been provided. Some of the illustrations are provided below: "Ill. 2007. Pursuant to statutory definition of the words "includes" or "including," either of these words, when followed by a listing of items, means that the preceding general term encompasses the listed items, but the list is not exhaustive; the preceding general term is to be construed as a general description of the listed items and other similar items. S.H.A. 720 ILCS 5/2- 10.-People v. Perry, 309 Ill.Dec. 330, 864 N.E.2d 196, 224 Ill.2d 312.-Statut 194, 199. Ill.App. 2 Dist. 1943. The word "includes" as used in Policemen's Minimum Wage Act defining policemen to mean any member of a regularly constituted police department of a city and....
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....nt in property "including the purchase of freehold property in England or Wales" means for the income to be obtained and not for the occupation by the trustee or his nominee (Re Powers' Will Trusts [1947] Ch. 572). (5) "Including fruit Juices" (Purchase Tax Act 1963 (c. 9), Sched. 1, Pt. 1, Group 35 (a)). These words are to be construed in the context of the words preceding them ("manufactured beverages"), and do not include nonmanufactured fruit juice (Customs and Excise Commissioners v. Savoy Hotel [1966] 1 W.L.R. 948)." 44. Finally, one should well remember the potent and vivid words of Justice Oliver Wendell Holmes Jr., in Towne vs. Eisner, 245 U.S. 418: - "A word is not a crystal, transparent and unchanging, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used." 45. On a careful analysis of the above judgments and the authorities on interpretation of statues, it is clear that where a word defined is declared to "include" such and such, the definition is prima facie extensive but the word "include" when used while defining a word or expression, may als....
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....nd declaring implications in words used by the legislator, or by regarding the breadth or other obscurity of the express language as conferring a delegated legislative power to elaborate its meaning in accordance with the public policy (including legal policy) and the purpose of legislation. Whichever course is adopted, in accordance with the doctrine of precedent the Court's operation influences the future legal of the enactment by producing what may be called sub-rules, which are implied or expressed in the Court's judgement." 47. In view of the above, only when the Parliament does not convey its intention clearly, expressly and completely in a statute can the courts embark on a mission to spell out the intention of the Parliament, and not in any other situation. In the present case, I see no such predicament before me as the word "including" has been used specifically to connote the meaning it normally does. The fact that the word "including" has not been used to define a word, leads me to the conclusion that the same has been used in an expansive and extensive manner. Furthermore, as pointed above the very fact that the legislature added the words "including pr....
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....the same was initiated or have to bow down to the wishes to the legislature for transfer of the said jurisdiction to another forum? Change of forum is not a choice of parties, but is the choice of the legislature. The parties cannot contend that they have a vested right to continue in the forum the lis was initiated. The legislature can always change the forum. Forum is a matter of procedure and change of the same does not result in change of substantive rights of parties. (c) Whether the term "all" and "including" in Section 434(1)(c) of the 2013 Act are expansive in nature or the same is to be read in a restrictive manner? The term 'including' in Section 434(1)(c) of the 2013 Act is extensive and expansive and not restrictive in nature. Accordingly, Section 434(1)(c) of the 2013 Act that states "all proceedings under the Companies Act 2013 including proceedings relating to...." would include all matters, without any exception, pending before the District Courts and High Court and all such matters would have to be transferred to the NCLT. (d) Whether Section 68 of the Amendment Act, 1988 continues to subsist regardless of the coming into force of....
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....their disputes continue before the forum in which they were originally instituted. It was consequently held that proceedings pending before the High Courts and District Courts could be transferred to the NCLT in terms of the legislative scheme embodied in Section 434 of the Companies Act, 2013. 9.45. Relying upon Prasanta Kumar Mitra and ors., vs. V.S.Indian Steam Laundry supra, learned counsel submits that Section 434(1)(c) of the Companies Act, 2013 must receive a broad and purposive construction. According to him, the expressions "all proceedings" and "including" employed therein are indicative of the legislative intent to bring within the fold of the NCLT every proceeding arising under the Companies Act, 1956 that remains pending before the High Courts. 9.46. It is therefore contended that the jurisdiction vested in the Company Courts under the Companies Act, 1956 has substantially been shifted to the NCLT and that the legislative policy underlying the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016 favours adjudication of such matters by the specialised Tribunal. Learned counsel submits that, viewed in the light of the principles enunciated in Prasanta K....
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....this appeal are: (i) what are the circumstances under which a winding up proceeding pending on the file of a High court could be transferred to the NCLT and (ii) at whose instance, such transfer could be ordered. 19. Be that as it may, clause (c) of Subsection (1) is the provision that actually provides for the transfer of all the proceedings under the Companies Act, 1956 pending before any District Court or High Court, to the Tribunal. Broadly Clause (c) makes a mention about proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up. But Clause (c) is not limited in its application to proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up. This is due to the usage of the words "All proceedings......including" in Clause (c). 20. However, the first proviso to Clause (c) which was not there in the original Section 434, but which was inserted only under IBC Act of 2016 when Section 434 was substituted, circumscribes what is contained in the main part of Clause (c). The first proviso to Clause (c) restricts the transferability of proceedings for winding up from the High Co....
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....man and Industries Limited and others supra, learned counsel submits that the Hon'ble Supreme Court examined, inter alia, the circumstances in which winding-up proceedings pending before a High Court could be transferred to the NCLT and the category of persons at whose instance such transfer could be sought. The Hon'ble Supreme Court, while interpreting Section 434(1)(c) of the Companies Act, 2013, held that though the provision is couched in broad language and encompasses all proceedings under the Companies Act, 1956, the transferability of winding-up proceedings is nevertheless regulated by the statutory framework and the Companies (Transfer of Pending Proceedings) Rules, 2016 framed thereunder. 10.6. Learned counsel further submits that the Hon'ble Supreme Court recognised that winding-up proceedings are proceedings in rem and that the Official Liquidator acts on behalf of the entire body of creditors. It was in that context that the Court held that the expression "party or parties" occurring in the fifth proviso to Section 434(1)(c) ought not to receive a narrow construction and would include creditors of the company in liquidation, thereby enabling such creditor....
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.... liquidation proceedings were actively progressing before this Court. The conduct of the applicant, according to learned counsel, clearly demonstrates acquiescence in the winding-up proceedings and acceptance of the jurisdiction of this Court. Having remained silent for over a decade, the applicant cannot now seek to reopen settled proceedings and seek transfer at a stage when multiple proceedings connected with the liquidation are pending consideration before this Court. 10.11. Learned counsel therefore submits that the application is liable to be dismissed on the principles of delay, laches and acquiescence, apart from the other objections raised by the Official Liquidator. 10.12. Learned counsel further submits that the entire foundation of the applicant's case proceeds on an erroneous assumption that transfer under Section 434 of the Companies Act, 2013 is automatic. According to her, neither the statutory provision nor the judgments relied upon by the applicant support such a proposition. 10.13. Referring to the language employed in the fifth proviso to Section 434(1)(c), learned counsel submits that the Legislature has consciously used the expression that the Com....
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....9. Despite the issuance of notices, the former Directors failed to submit the Statement of Affairs. Such failure compelled the Official Liquidator to initiate appropriate proceedings before this Court. Consequently, Company Application No.944/2012 came to be filed and criminal proceedings arising therefrom are presently pending consideration. 10.20. Learned counsel submits that the applicant has, therefore, not approached this Court with clean hands. Rather than complying with statutory obligations cast upon him as a former Director, he has consistently resisted the liquidation process and has failed to extend cooperation to the Official Liquidator. 10.21. She further points out that the applicant had earlier approached the appellate forum by filing OSA No.3/2025 seeking substantially similar relief. The said appeal came to be disposed of on the ground that the issue was already under consideration before this Court. Thus, according to her, the applicant has unsuccessfully attempted to secure the same relief through different proceedings. 10.22. Learned counsel submits that the timing of the present application is particularly significant. The application has been filed on....
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.... at this stage would seriously prejudice the liquidation proceedings and disrupt the statutory mechanism that has been functioning under the supervision of this Court for more than thirteen years. 10.28. She further contends that the Companies Act, 1956 contains specific provisions such as Sections 454, 468 and 543 which empower the Company Court and the Official Liquidator to investigate the conduct of former management, compel disclosure of assets and information, and recover losses caused to the company. These proceedings have already been invoked and are pending before this Court. According to her, the NCLT, while exercising jurisdiction under the Insolvency and Bankruptcy Code, does not function within the same statutory framework as a Company Court conducting winding-up proceedings under the Companies Act, 1956. Consequently, transfer at this stage may result in serious procedural complications and may even render the pending proceedings ineffective. 10.29. Learned counsel therefore submits that the present application has not been filed with the object of facilitating any genuine insolvency resolution. Rather, it has been filed as a tactical device to delay the liquida....
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....ansfer. No contributory has supported the application. No stakeholder has suggested that transfer would be beneficial to the liquidation estate. 10.36. On the contrary, learned counsel submits that transfer at this stage may seriously prejudice the interests of creditors whose claims are required to be adjudicated and satisfied through the ongoing liquidation proceedings. The creditors and contributories, who constitute the real beneficiaries of the winding-up process, have not even been impleaded as parties to the present application. 10.37. It is therefore submitted that the applicant seeks a discretionary relief while ignoring the interests of those whose rights are directly affected by the outcome of the proceedings. Such an application, according to learned counsel, cannot be entertained. 10.38. For all the aforesaid reasons, learned counsel submits that Company Application No.39/2025 is wholly misconceived, suffers from lack of locus standi, is vitiated by delay and ulterior motives, seeks to disrupt long-pending liquidation proceedings, and therefore deserves to be dismissed with exemplary costs. 11. Heard Sri.Anirudh Suresh, learned counsel for the applicant and....
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....ifth proviso to Section 434(1)(c) is available at the instance of a party to the winding-up proceedings and that the expression is not to be read narrowly. He relies principally upon Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd., supra (Para 25); State Bank of India v. Shakti Bhog Foods Ltd., supra (Para 1 relies on Para 25 of Action Ispat); Cowi India Private Limited v. Pinnacle Air Private Limited supra, (Para 13 relies on Para 25 of Action Ispat); Magnifico Minerals Private Limited v. Saravana Alloys Steels Private Limited supra(Para 17); and Prasanta Kumar Mitra v. V.S. Indian Steam Laundry supra (Para 49) to submit that the law after insertion of the proviso favours transfer of pending winding-up matters wherever the proceedings have not passed into an irreversible stage. 14.2. The submission of learned counsel is that the applicant, though described as an erstwhile Director, has a sufficient nexus with the company ordered to be wound up and is therefore competent to move an application requesting change of forum. According to him, the application does not seek restoration of management to the former Director, nor does it ask this Court to revive the co....
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.... to any proceedings relating to winding up to file an application for transfer and provides that the Court may, by order, transfer such proceedings to the Tribunal. The provision itself does not define the expression "party" exhaustively. 14.9. The applicant relies on Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd. supra(Para 25) to show that the proviso is not confined to any one stage of the winding-up proceedings and that even after admission and appointment of the Company Liquidator, transfer jurisdiction survives. That proposition is well borne out by the passages extracted above, particularly the discussion that discretion remains with the Company Court even post-admission and after assets come into custodia legis, subject to the stage of proceedings and the possibility of setting the clock back. 14.10. The applicant also draws support from the discussion in Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd supra (Para 13) regarding Kaledonia Jute and Fibres Private Limited v. Axis Nirman and Industries Limited and others supra. The extracted passages show that the Hon'ble Supreme Court described winding-up proceedings as proceedings i....
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....inary sense. 14.15. Yet, the materials placed on record do not justify an absolute proposition that an erstwhile Director can never maintain any application touching the winding-up proceedings. The broader language noticed in Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited supra (Para 13 relies on Para 42 of Kaledonia) and Kaledonia Jute and Fibres Private Limited vs. Axis Nirman and Industries Limited and others supra (Para 42) persuades this Court that the safer course is not to non-suit the applicant solely on a rigid technical objection, but to test the request on a strict merits-and-discretion standard. 14.16. This approach is also consistent with judicial discipline in writ-like supervisory scrutiny. Where the application can be dismissed on clear discretionary grounds after full consideration of the cited law, it is neither necessary nor desirable to adopt the broadest possible threshold bar unless the statute or binding precedent compels it. 14.17. Accordingly, this Court answers point No.(i) by holding that the applicant cannot claim an affirmative right to represent the company merely because he is an erstwhile Director. At the same t....
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....t and the former management. She points out that notices under Section 454 were allegedly not complied with, Company Application No.944/2012 and criminal proceedings have arisen therefrom, Company Application No.945/2012 has been filed for delivery of possession of assets, earlier attempts were made through recall proceedings and also OSA No.3/2025, and the present application has been moved only after several proceedings initiated by the Official Liquidator have reached advanced stages. 15.6. On that basis, she submits that the application is not a bona fide attempt at insolvency resolution but a tactical device to delay liquidation, obstruct the Official Liquidator and avoid the consequences flowing from the defaults of the former Directors. 15.7. This Point goes to the heart of the present application. Even where transfer is legally permissible, the Court is not bound to ignore conduct, delay and acquiescence, especially when the relief sought is discretionary. 15.8. The factual chronology, is significant. The company petition was admitted by order dated 11.11.2011; a final winding-up order was passed on 09.01.2012; the Official Liquidator was directed to take charge of....
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....ited supra (Paras 16, 17 and 19) is not enough where the applicant fails to make out a case for discretion. 15.14. This Court finds that principle directly applicable here. The present applicant does not explain why, if transfer was truly sought to advance insolvency resolution, no such request was made at a reasonable point after the statutory changes took effect or even after the dismissal of earlier recall efforts. 15.15. There is another important feature. The respondent has specifically asserted that the former management did not comply with the statutory duty to submit the Statement of Affairs under Section 454, that proceedings were initiated on that account, that possession related proceedings have also been instituted, and that the timing of the present application suggests a desire to derail those proceedings. These assertions are not peripheral; they bear directly on bona fides. 15.16. When a former Director, after years of silence, seeks transfer at a stage when proceedings initiated by the Official Liquidator may have civil or criminal consequences for former management, the Court cannot assess the application in isolation from that background. Delay in such a....
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....h) to submit that the question is one of jurisdiction, that excessive formalism should be avoided, and that the Court ought to advance the object of avoiding parallel fora. 16.4. Smt. Krutika Raghavan submits that the applicant proceeds on an erroneous assumption that a transfer is automatic. Referring to the language of the fifth proviso to Section 434(1)(c), she submits that the Legislature has consciously used the word "may", which shows that the power is discretionary and not mandatory. 16.5. She further submits that the Transfer Rules create automatic transfer only in limited categories, particularly where the petition had not been served under Rule 26 on the relevant date. Since the present winding-up petition had long since been admitted and a winding-up order had already been passed, learned counsel submits that the present case does not fall within any category of compulsory transfer under Rules 5 or 6. 16.6. She also relies on Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited1 (Para 25) and Magnifico Minerals Private Limited vs Saravana Alloys Steels Private Limited5 (Paras 11, 12 and 19) to submit that all these decisions recognise jud....
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....fer, it provided a specific scheme through the Rules tied to the stage of service under Rule 26; where it intended post-stage transfer upon application, it used language of permission and judicial choice. 16.15. This understanding is confirmed by Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd. supra (Para 25). Far from holding that all post-admission matters must be transferred, the Hon'ble Supreme Court expressly framed the question as one of how discretion is to be exercised and then stated that whether the irreversible stage has been reached depends upon the facts and circumstances of each case. 16.16. Magnifico Minerals Private Limited v. Saravana Alloys Steels Private Limited5 (Paras 11, 12, 16, 17 and 19) is even more direct. The Coordinate Bench held that the fifth proviso confers discretion on the Company Court either to retain the petition or to transfer it and that the person seeking discretion must make out a valid ground for its exercise. The judgment also states that transfer is not mandatory on the filing of an application. 16.17. The applicant's reliance on Prasanta Kumar Mitra v. V.S. Indian Steam Laundry6 [Paras 45, 47, 49, 59(b) and 59(....
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....ceedings have not gone beyond the stage where the status quo ante can be restored and that the matter should therefore be transferred to the Hon'ble NCLT. 17.3. Smt. Krutika Raghavan submits that the applicant wrongly reduces the concept of irreversibility to a single factual event, namely, the sale of assets. She contends that the winding-up order has remained in force since 09.01.2012, that the company has not carried on business since the year 2010, that the Official Liquidator has been acting under orders of this Court for more than a decade, and that multiple consequential proceedings have arisen out of the winding-up order. 17.4. She further submits that there is no material on record to indicate that the company has an operational business, workforce, commercial activity, proposed resolution plan or any realistic prospect of revival. According to her, transfer would serve no meaningful purpose and would only defer the completion of liquidation. 17.5. The Court now turns to the meaning of the expression "irreversible steps" in the context of the present case. This expression must be understood in the light of the authorities cited by the parties and not in abstractio....
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....e applicant's emphasis on the absence of sale is too narrow. Irreversibility in law is not always identical with physical alienation of an asset. It may also arise when a court-supervised liquidation has matured into a structured process involving possession, investigation, statutory defaults, recovery steps, compliance proceedings and stakeholder positions that cannot be rolled back without disorder, duplication or prejudice. 17.12. This understanding does not contradict Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited supra (Para 25); rather, it gives full meaning to its direction that the matter depends on all facts and circumstances. The Court must therefore ask whether transfer at this stage would, in practical and legal effect, simply shift the forum, or whether it would unsettle a longstanding liquidation structure already built under the supervision of this Court. 17.13. In the opinion of this Court, the latter is true. The liquidation here is not at a nascent stage awaiting first action; it is a long-standing proceeding in which the Court has already passed the final winding-up order, the Official Liquidator has undertaken duties under tha....
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..../2012 has also been filed seeking delivery of possession of the assets and properties of the company in liquidation. 18.3. She further submits that these proceedings show that the liquidation process is active, not dormant. According to her, a transfer at this stage would create serious procedural complications because the framework of a Company Court winding-up under the Companies Act, 1956, and that of proceedings under the IBC are not identical in object or machinery. 18.4. Section 454 of the Companies Act, 1956, casts a statutory obligation upon former Directors and officers to submit the Statement of Affairs after the winding-up order. The object of the provision, as rightly pointed out by learned counsel for the Official Liquidator, is to enable the Official Liquidator and the Company Court to ascertain the company's assets, liabilities, books, affairs and financial position so that liquidation can proceed in an orderly and informed manner. 18.5. The record shows the respondent's specific contention that notices under Section 454 were issued, that the former Directors failed to comply, and that Company Application No.944/2012 and criminal proceedings have arisen in c....
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....at this stage may prejudice their interests. In the absence of material showing corresponding benefit to the liquidation estate, it would be unsafe to displace the present framework merely on the request of a former Director whose own compliance is in question. 18.12. Accordingly, this Court answers point No. (v) by holding that the pendency of proceedings under Sections 454, 468 and 543, together with connected proceedings such as those for possession and compliance, is a weighty and independent factor justifying retention of the matter before this Court. 19. Answer to Point No. (vi): Whether any case has been made out for exercise of the discretionary jurisdiction vested in this Court under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013 for transfer of Company Petition No.236/2010 to the National Company Law Tribunal? 19.1. Sri Anirudh Suresh submits that the cumulative effect of Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd.,supra (Para 25); State Bank of India v. Shakti Bhog Foods Ltd.,supra (Para 1 relies on Para 25 of Action Ispat); Cowi India Private Limited v. Pinnacle Air Private Limited supra (Para 16); and Prasanta Kumar Mi....
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.... the absence of any material indicating real revival potential, and the presence of active liquidation-linked proceedings together show that transfer would not advance the interests of justice. 19.9. Fifthly, as held under Point No. v, there are pending proceedings under Sections 454, 468 and 543 and related proceedings arising from non-compliance and possession issues. The applicant has not shown that the transfer would preserve those proceedings without complication or prejudice. 19.10. Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd. supra (Para 25) supports the proposition that post-admission transfer is legally permissible and that the Court must examine whether the proceedings have become irreversible. Applying that very judgment to the present facts, this Court finds that the matter has progressed too far, in time and in substance, for transfer to be judicially appropriate. 19.11. State Bank of India v. Shakti Bhog Foods Ltd. supra (Para 1) turned on a Status Report which showed a much narrower degree of liquidator action and led the Hon'ble Supreme Court to conclude that nothing irreversible had taken place. The present case, involving more than a....