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Supreme Court to Examine if Transferred Winding-Up Petitions Must Meet IBC Threshold
The has agreed to adjudicate a critical question that could affect hundreds of pending insolvency proceedings: whether originally filed before a High Court must satisfy the ₹1 crore under the after they are transferred to the . The issue arises because the threshold was introduced only after the petitions were instituted, and the Court must now determine whether the as of the or as of the date the NCLT takes up the matter.
A Bench comprising Justice JB Pardiwala and Justice K. Vinod Chandran issued notice in an appeal filed by , which had its against three companies dismissed by the NCLT and the NCLAT on the ground that the claims fell below the IBC threshold. The Court observed that the principal question “requires consideration” and directed that the be impleaded as a respondent in all connected matters.
Background: The Dispute Between and Its Channel Partners
The underlying dispute stems from agreements entered into in , under which was appointed the exclusive advertising representative for three television channels owned by , , and claimed unpaid commissions of ₹43.71 lakh, ₹8.69 lakh, and ₹23.08 lakh respectively—amounts well below the current IBC threshold of ₹1 crore.
In , before the IBC came into force, filed before the under the . Those proceedings remained pending for a decade. In , following the statutory transfer mechanism under , the matters were transferred to the NCLT’s Principal Bench in New Delhi. then filed fresh applications in Form 5, the prescribed format under the IBC.
The NCLT and NCLAT Decisions
The NCLT dismissed the petitions on two alternative grounds: first, that there existed a between the parties, and second, that the claims did not meet the ₹1 crore applicable under the IBC. The tribunal treated the transferred proceedings as fresh applications, thereby subjecting them to the in force at the time of its consideration.
Aggrieved, appealed to the . The NCLAT upheld the NCLT’s decision, holding that the winding‑up proceedings transferred from the High Court must satisfy the insolvency threshold applicable when the matter is taken up by the NCLT. The appellate tribunal reasoned that the transfer effectively converts the nature of the proceeding from a winding‑up petition to an , and the procedural law in force at the time of that conversion must govern.
The Core Legal Question Before the Supreme Court
The Supreme Court has now framed the central issue in precise terms. In its order, the Bench stated:
“The principal question that falls for our consideration, in the present appeal, is whether the proceedings instituted in the year and as existing proceedings under Section 434(1)(c) of the Companies Act can be treated as a , instituted only upon filing of Form 5 after transfer so as to attract a introduced later in point of time after the original institution.”
This language suggests that the Court is alive to the potential injustice of retrospectively applying a higher threshold to proceedings that were validly initiated under the old regime. , arguing for , contended that the threshold applicable at the time of the original filing should continue to govern the case, as the transfer is merely a and not a . On the other side, appeared for the respondent companies, arguing that the NCLT’s jurisdiction under the IBC is distinct from the High Court’s winding‑up jurisdiction, and therefore the procedural requirements of the IBC should apply from the date of transfer.
Why This Case Matters for the Insolvency Ecosystem
The Supreme Court’s ruling will have far‑reaching implications. Since the introduction of the IBC in , a large number of pending were transferred to the NCLT under the statutory scheme. Many of those claims involve sums smaller than the current IBC threshold, and the NCLT has adopted varying approaches to the applicability of the monetary limit. Some benches have applied the threshold strictly, dismissing low‑value claims, while others have taken a more pragmatic view, considering the .
If the Supreme Court holds that the original filing date controls, it will revive many low‑value claims that were otherwise dismissed, potentially flooding the NCLT with cases. Conversely, if it upholds the NCLAT’s approach, creditors with claims below ₹1 crore who filed before the IBC will have to pursue alternative remedies, such as civil suits or arbitration, which are often slower and less effective for debt recovery.
The Court has also directed the impleadment of the , indicating that the government’s policy perspective on the of the threshold will be considered. This suggests that the Court may weigh the legislative intent behind the IBC’s threshold—designed to prevent the system from being clogged with small claims—against the legitimate expectations of creditors who acted under the earlier legal framework.
Conclusion: A Decision That Will Shape Insolvency Practice
The Supreme Court’s decision to examine this issue comes at a time when the insolvency regime is under constant judicial scrutiny. The outcome will clarify the interplay between the pre‑IBC winding‑up regime and the new insolvency framework, particularly for transfers that occur years after the original filing. Legal professionals should closely follow this case, as it will set a precedent for how other historical are treated.
The matter is now pending before the Supreme Court, with the slated to file its response. Until then, creditors with low‑value transferred claims remain in a state of uncertainty, awaiting a ruling that could either breathe life into their decade‑old petitions or finally shut the door on recovery under the IBC.
