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2024 DIGILAW 526 (CAL)

Re : Bells Control Limited v. .

2024-03-12

RAVI KRISHAN KAPUR

body2024
JUDGMENT : Ravi Krishan Kapur, J. 1. CA/12/2022 is an application for transfer of the winding up proceedings being CP/808/2016 to the National Company Law Tribunal (NCLT). 2. It is submitted on behalf of the applicant that in view of the amended provisions of section 434 of the Companies Act, 2013, the winding up proceedings alongwith all connected applications cannot be proceeded with any further before this Court and should be transferred to the NCLT. 3. Section 434 of the Act as amended is as follows:- “434. Transfer of certain pending proceedings. 3. Section 434 of the Act as amended is as follows:- “434. Transfer of certain pending proceedings. – (1) On such date as may be notified by the Central Government in this behalf, – (a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in this section referred to as the Company Law Board) constituted under sub-section (1) of Section 10-E of the Companies Act, 1956, immediately before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases 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; and (c) all proceedings under the Companies Act, 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: Provided that only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government: [Provided further that only such proceedings relating to cases other than winding up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal: [Provided also that—] (i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959:] [Provided also that proceedings relating to cases of voluntary winding up of a company where notice of the resolution by advertisement has been given under sub-section (1) of Section 485 of the Companies Act, 1956 but the company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959:] [Provided further that any party or parties to any proceedings relating to the winding up of companies pending before any Court immediately before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, may file an application for transfer of such proceedings and the Court may by order transfer such proceedings to the Tribunal and the proceedings so transferred shall be dealt with by the Tribunal as an application for initiation of corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (31 of 2016).] (2) The Central Government may make rules consistent with the provisions of this Act to ensure timely transfer of all matters, proceedings or cases pending before the Company Law Board or the courts, to the Tribunal under this section]. 4. In Action Ispat & Power (P) Ltd. vs. Shyam Metalics & Energy Ltd. (2021) 2 SCC 641 , it has been held as follows:- 25. Given the aforesaid scheme of winding up under Chapter XX of the Companies Act, 2013, it is clear that several stages are contemplated, with the Tribunal retaining the power to control the proceedings in a winding-up petition even after it is admitted. Thus, in a winding-up proceeding where the petition has not been served in terms of Rule 26 of the Companies (Court) Rules, 1959 at a preadmission stage, given the beneficial result of the application of the Code, such winding-up proceeding is compulsorily transferable to NCLT to be resolved under the Code. Even post issue of notice and pre-admission, the same result would ensue. However, post admission of 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 sale 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 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. (emphasis supplied) 5. By an order dated 16 January 2017, the company Bells Control Limited was directed to be wound up and the Official Liquidator attached to this Court was directed to take possession of the assets of the company (in liquidation). The order dated 16 January, 2017 was passed pursuant to a reference made before the Board for Industrial and Financial Reconstruction (BIFR). The order dated 16 January, 2017 was passed pursuant to a reference made before the Board for Industrial and Financial Reconstruction (BIFR). Thereafter, on 16 May, 2007 the BIFR had recommended winding up of the company which was ultimately confirmed by an order dated 13 April, 2011 passed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). 6. The applicant claims to be a creditor of the company (in liquidation) and submits that pursuant to an invitation dated March 3, 2020 by the Official Liquidator, the applicant has lodged its claim but there has been no adjudication of the same. Admittedly, the Official Liquidator has also been unable to sell any of the assets of the company (in liquidation). There are also serious allegations of third party interests being created in respect of the immovable properties of the company (in liquidation) and huge sums of money being collected in cash by the erstwhile management. The proceedings have been pending before this Court since 2016 and have procrastinated since 2003. It is also evident that no effective steps have been taken by the Official Liquidator and there has been no progress in the liquidation proceedings. In such circumstances, in view of the stalemate in the liquidation proceedings no irreversible situation could have possibly arisen which warrants this Court in exercising jurisdiction in this winding up proceeding. 7. In view of the fact that an expert body has examined the question of revival of the company (in liquidation) and the order dated 16 January, 2017 passed by a Co-ordinate Bench, there is no question of re-opening orders which have become final and binding. Section 434(1)(c) of the Companies Act, 2013 provides that “all proceedings shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer”. The plea of the applicant to set the clock back by directing the NCLT to re-examine the viability of the opinion given by the BIFR is a dilatory tactic and is outrightly rejected. The decision in Ultratech Cement Ltd. vs. Manout Infrastructures (P) Ltd. [2023] 153 Taxman.Com (Delhi) is inapplicable. For the above reasons, NCLT is directed to deal with this proceeding from the post admission stage of liquidation. In view of the order of transfer, all other connected proceedings shall also stand transferred to the NCLT. The decision in Ultratech Cement Ltd. vs. Manout Infrastructures (P) Ltd. [2023] 153 Taxman.Com (Delhi) is inapplicable. For the above reasons, NCLT is directed to deal with this proceeding from the post admission stage of liquidation. In view of the order of transfer, all other connected proceedings shall also stand transferred to the NCLT. There shall be an order in terms of prayer (b) of the Judge’s Summons. With the aforesaid directions, CA 12 of 2022 stands allowed. 8. CA 5 of 2018 and CA 6 of 2018 are applications inter alia seeking declarations that the leases in respect of the properties of the company (in liquidation) situated at premises no.21, Camac Street be declared null, void and cancelled. CA 11 of 2018 is an application by a secured creditor of the company (in liquidation) inter alia seeking directions on the Official Liquidator to take actual physical possession of an immovable property situated at premises no.21, Camac Street, Kolkata – 700016 belonging to the company (in liquidation). All these applications being IA NO. CA/5/2018 (Old No: CA/166/2018), IA NO. CA/6/2018 (Old No: CA/168/2018) and IA NO. CA/11/2020 also stand transferred to the NCLT. 9. The Department shall treat CP 808 of 2016 alongwith all connected applications as disposed of insofar as the records of this Court are concerned.