The irreversible steps taken for winding up of a company, including the sale of assets and insufficiency of assets to meet liabilities, justify the decision to reject the transfer of winding up proceedings to the National Company Law Tribunal.

JUDGMENT

Vibhu Bakhru, J.

1. The appellant has filed the present intra-court appeal impugning an order dated 20.02.2023 passed by the learned Company Court, whereby the appellant's application, CO.APPL.627/2022 in CO.PET.318/2003, was rejected. The appellant had moved the said application, inter alia, praying that the winding up proceedings relating to Shree Shyam Cotspin Ltd. ( hereftaer 'the company') be transferred to the National Company Law Tribunal for further proceedings under the Insolvency and Bankruptcy Code, 2016 (hereafter 'IBC'). The said application was resisted by respondent no.4, which is an asset reconstruction company.

2. It is claimed that respondent no.3 (Allahabad Bank) had assigned its secured debt as well as security interest relating to the company to respondent no.4.

3. Both the parties rely on the decision of the Supreme Court in Action Ispat and Power Pvt. Ltd. v. Shyam Metallics and Energy Ltd., (2021) 2 SCC 641, whereby the Supreme Court had explained that if no irreversible steps have been taken by the Company Court in winding up of a company; the proceedings may be transferred to the National Company Law Tribunal under IBC. According to the appellant, no irreversible steps have been taken in winding up of the company; therefore, the winding up proceedings are liable to be transferred to the National Company Law Tribunal. This is stoutly contested by respondent no.4

4. The learned Company Court had noted the relevant facts obtaining in the matter to address the aforesaid controversy. It would be apposite to refer to the said facts recorded in the impugned order which read as under:

"4. The Court has considered the aforenoted contentions. Before adverting to the issue at hand, it would be apposite to briefly take note of the preceding proceedings/facts:

4.1 On 10th June, 1999, the Company filed a reference before the Board for Industrial and Financial Reconstruction ["BIFR"] under Section 15(1) of the

4.3 On 24thJanuary, 2005, direction was issued to Allahabad Bank to issue sale proclamation and invite bids from the public. However, since SDM, Sonepat had placed locks on the Company's property, Allahabad Bank was unable to proceed with the sale. Thus, on 14th July, 2005, the Court ordered SDM to remove the said locks and redirected issuance of sale proclamation. Sick Industrial Companies (Special Provisions) Act, 1985 ["SICA"]2. The BIRF declared the Company as a 'sick company' vide order dated 11th November, 1999.

4.2 In light of BIRF's recommendation under Section 20(1) of SICA dated 13th February, 2003, the Court directed winding up of the Company and appointed the Official Liquidator ["OL"] as the Liquidator, vide order dated 08th December, 2004.

4.4 Pursuant to the above-noted, three bids were received by Allahabad Bank and five were received in the Court, of which the bid of PP Homes and Infrastructure Private Limited [hereinafter, "Auction Purchaser"] was accepted on 29th September, 2005.

4.5 Despite acceptance of the bid, Allahabad Bank Could not hand over physical possession of the Company's assets to Auction Purchaser in view of notification dated 28th November, 2002 under Section 6 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 issued by the Government of Haryana. Subsequently, on an application filed by the Auction Purchaser, the Court directed Allahabad Bank to refund the entire money deposited with interest, to Auction Purchaser vide order dated 05th December, 2014.3

4.6 The acquisition of the Company's land has not been challenged by Applicant and Allahabad Bank continued to pursue alternative remedies of recovery. In OA No. 398A/98, the DRT vide order dated 20th April, 2012, issued a recovery certificate in favour of Allahabad Bank and against the Company, including Applicant herein, for recovery of Rs. 6,51,54,168/- with interest.

4.7 By way of Assignment Deed dated 27th September, 2013, Allahabad Bank assigned debt of