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SUPREME COURT OF INDIA
ROHINTON FALI NARIMAN, K.M. JOSEPH, KRISHNA MURARI, JJ.
Action Ispat and Power Pvt. Ltd. – Appellant
Versus
Shyam Metalics and Energy Ltd. – Respondent
Civil Appeal No. 4041, 4042, 4043 of 2020, SLP (Civil) No. 26415 of 2019, 2033-2034 of 2020
Decided On : 15-12-2020
Companies Act, 2013 – Section 434 read with Sections 273, 278, 279 and 290] – Insolvency and Bankruptcy Code, 2016 – Section 7 – Winding-up petition – Transfer of – To National Company Law Tribunal [NCLT] – When a petition to wind up a company is presented before Tribunal, Tribunal is given power under Section 273 to dismiss it; to make any interim order as it thinks fit; to appoint a provisional liquidator of company till making of a winding up order; to make an order for the winding up of company; or to pass any other order as it thinks fit – Several stages are contemplated, with Tribunal retaining power to control proceedings in a winding up petition even after it is admitted – In a winding up proceeding where petition has not been served in terms of Rule 26 of Companies (Court) Rules, 1959 at a pre-admission stage, given beneficial result of application of Code, such winding up proceeding is compulsorily transferable to NCLT to be resolved under the Code – Even post issue of notice and pre-admission, same result would ensue – However, post-admission of a winding up petition and after assets of company sought to be wound up become in custodia legis and are taken over by Company Liquidator – So long as no actual sales of 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 proceedings – It is only where winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that Company Court must proceed with winding up, instead of transferring proceedings to NCLT to now be decided in accordance with provisions of Code – Whether this stage is reached would depend upon facts and circumstances of each case – Company Court has correctly exercised discretion vested in it by 5th proviso to Section 434(1)(c) – Civil appeal dismissed. (Paras 11, 12, 22 and 23)
Facts of the case:
Present appeals arise out of a judgment of the Division Bench of Delhi High Court dated 10.10.2019 by which a Single Judge’s order dated 14.01.2019 transferring a winding up proceeding pending before the High Court to National Company Law Tribunal [NCLT] was upheld.
Findings of Court:
Even post admission of a winding up petition, and after the appointment of a Company Liquidator to take over the assets of a company sought to be wound up, discretion is vested in the Company Court to transfer such petition to NCLT.
Result : Appeal dismissed.
JUDGMENT :
ROHINTON FALI NARIMAN, J.
1. Leave granted.
2. These appeals arise out of a judgment of the Division Bench of the Delhi High Court dated 10.10.2019 by which a Single Judge’s order dated 14.01.2019 transferring a winding up proceeding pending before the High Court to the National Company Law Tribunal [“NCLT”] was upheld. The brief facts necessary to appreciate the controversy involved in these appeals are as follows:
“ORDER
27.08.2018
1. This petition is filed under sections 433(e) and (f), 434 and 439 of the Company Act, 1956 (hereinafter referred to as ‘the Act’) seeking winding up of the respondent company.
2. It has been pleaded in the petition that the respondent company had approached the petitioner company for supply of Iron Pellets. A specified quantity of 11612.34 MTs of the goods was supplied to the respondent company. After making partial payment, a sum of Rs. 4,55,00,000/- is due and payable by the respondent company to the petitioner. The respondent company from time to time issued 17 post-dated cheques. However, 13 of the cheques when presented with its bankers, were returned by the bankers unpaid. Statutory notice was issued on 15.06.2016 but no payments have been received by the petitioner.
3. No reply has been filed by the respondent. On the last date of hearing, the learned counsel for the respondent had taken time to settle the matter with the petitioner.
4. Today, the learned counsel for the respondent company submits that the respondent is not in a position to settle the matter on account of the fact that the unit of the respondent is shut.
5. In these circumstances, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers ‘Statesman’ (English) and ‘Veer Arjun’ (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing. The cost of publication is to be borne by the petitioner who shall deposit a sum Rs. 75,000/- with the Official Liquidator within 2 weeks, subject to any further amounts that may be called for by the liquidator for this purpose, if required. The Official Liquidator shall also endeavour to prepare a complete inventory of all the assets of the respondent-company when the same are taken over and the premises in which they are kept shall be sealed by him. At the same time, he may also seek the assistance of a valuer to value all assets to facilitate the process of winding up. It will also be open to the Official Liquidator to seek police help in the discharge of his duties, if he considers it appropriate to do so. The Official Liquidator to take all further steps that may be necessary in this regard to protect the premises and assets of the respondent-company.
6. List on 09.01.2019.
7. A copy of this order be given dasti under the signatures of the court master.”
2.2. An application was then filed before the learned Company Judge by the State Bank of India [“SBI”] (Respondent No. 2 herein), being a secured creditor of the appellant company, seeking transfer of the winding up petition to the NCLT in view of the fact that SBI had filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016 [“Code”] which was pending before the NCLT. By order dated 14.01.2019, the learned Company Judge transferred the winding up petition as prayed for as follows:
“ORDER
14.01.2019
C.A.
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