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IN THE HIGH COURT OF ALLAHABAD
SURYA PRAKASH KESARWANI, J.
Jagriti Upbhogta Kalyan Parishad Thru Its Joint Secretary – Appellant
Versus
Union Of India And Others – Respondents
Company Petition No.16 of 2019
Decided on : 16-03-2022
Companies Act 2013 - Jurisdiction of High Court - Section 434(1)(c) - Transfer of Pending Proceedings Rules 2016 - The court rejected the applications to transfer the winding up petition to the NCLT, as irreversible steps towards winding up had already taken place.
Fact of the Case:
The petitioners filed a writ petition before the Supreme Court under Article 32 of the Constitution, alleging fraud by M/s. S.B. Petroleum Ltd. The Supreme Court disposed of the writ petition with directions, leading to the registration of a PIL in the High Court. The PIL was later converted into a company petition with the consent of the parties.
Finding of the Court:
The court rejected the applications to transfer the winding up petition to the NCLT, as irreversible steps towards winding up had already taken place. The court emphasized that the present case was not winding up proceedings under the Companies Act, 1956, but a petition registered under the orders of the Division Bench in the PIL, which itself was the result of the Supreme Court's order.
Issues: Whether the winding up petition should be transferred to the NCLT under Section 434(1)(c) of the Companies Act 2013 and the Transfer of Pending Proceedings Rules 2016.
Ratio Decidendi: The court held that the transfer applications should be rejected as irreversible steps towards winding up had already taken place, and the present company petition need not be transferred to the NCLT.
Final Decision: The court rejected the applications to transfer the winding up petition to the NCLT and released the matter for further proceedings before the appropriate court.
JUDGMENT :
1. Heard Sri W.H. Khan, learned senior advocate assisted by Sri Gulrez Khan, learned counsel for the applicant/ respondent No.12 and Sri Vivek Saran holding brief of Sri Vikas Pathak, learned counsel for the petitioner on Civil Misc. Application No.48 of 2019, dated 09.09.2019, Civil Misc. Application No. 49 of 2019 dated 30.11.2019 and Civil Misc. Application No.52 of 2020 dated 30.07.2020, filed by the respondent No.12 and objections thereto filed by the petitioner being objection Nos. 54 of 2020, 55 of 2020 and 56 of 2020, dated 20.10.2020, 20.10.2020 and 03.11.2020 respectively.
| Civil Misc. Application No. 48, dated 09.09.2019 | Civil Misc. Application No. 49, dated 09.09.2019 | Civil Misc. Application No.52, dated 09.09.2019 |
| "1. That the Winding up Petition may be dismissed. | "1. That the winding up petition may be dismissed. | "1. further appointment of Special Commissioner may be dispensed off with. |
| 2. That the Company be permitted to restart its business with the assets it possessed and prosecute the objects for which it was incorporated. 3. That the claims made against the Company S.B. Petroleum Ltd. Is denied by the Company and is disputed and the claim requires evidence oral and documentary for which remedy lies in the common court/appropriate court of law. " | 2. That the claimants (if any) against the Company S.B. Petroleum Ltd may be directed to file their claims before the NCLT." | 2. the winding up petition may be dismissed. 3. the claimants if any, against the Company S.B. Petroleum Ltd may be directed to file their claims before the NCLT." |
3. The main contention of learned counsel for the applicant/respondent no.12 is that since the Company's Act, 1956 has been repealed by the new Act i.e. The Company’s Act, 2013 (hereinafter referred to as “the Act 2013”) and the Insolvency and Bankruptcy Code 2016 (hereinafter referred to as “the IBC”) has been enacted, therefore, by virtue of Section 434(1)(c) of the Act, 2013 read with Rule 5 of the Companies (Transfer of pending proceedings) Rules, 2016 (hereinafter referred to as “the Transfer Rules, 2016”), the present Company petition is not maintainable before this Court and it has to be transferred to the National Company Law Tribunal (for short “NCLT”) constituted under Section 408 read with Section 410 of the Act 2013.
4. This petition was heard on several occasions and detailed orders including the orders dated 29.09.2020, 02.12.02020 and 20.01.2021 were passed incorporating the submissions of learned counsels for the parties.
5. By order dated 02.12.2020, following questions were framed for consideration :-
(i) Whether in view of Section 434(1)(c) of the Companies Act 2013 read with Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, the present Company petition which by order dated 28.5.2019 passed by the Division Bench converted the PIL No.12324 of 2003 into the present Company Petition, can be proceeded with by the High Court or it has to be transferred to the NCLT" ?
(ii) Whether after the enactment of the Companies Act 2013, the present petition could have been registered as Company Petition by converting PIL No.12324 of 2003 by order dated 28.05.2019 whereas after enactment of the Act 2013 and constitution of the Tribunal NCLT under Section 408 read with Section 410 of the Act 2013, no Company Petition would lie to the High Court ?
6. Learned counsel for the applicant/respondent no.12 has submitted as under :-
(A) In view of Section 408, 410 and 434(1)(c) of the Companies Act, read with the 5th proviso, the High Court has no jurisdiction to entertain or proceed with a Company Petition inasmuch as the jurisdiction in Company Petition for winding up on the ground of inability to pay tax is maintainable only before the NCLT. Reliance is place on the judgment of Hon'ble Supreme Court dated 22.01.2019 in Civil Appeal No.818 of 2018 (Forech India Ltd. Vs. Edelweiss Assets Reconst
AI
The court emphasized that irreversible steps towards winding up had already taken place, and therefore, the transfer of the winding up petition to the NCLT was not necessary.
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