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2018 (12) TMI 1744 - HC - Companies LawRejection of prayer to transfer the creditor’s winding-up proceedings to the adjudicating authority - admissibility of creditor’s petition by disregarding the defence sought to be set up by the company - whether the mere filing of a petition by a financial creditor under Section 7 of the IBC in respect of a company should prompt the company Court in seisin of a creditor’s petition against the same company to transfer such pending proceedings to the adjudicating authority under the IBC? HELD THAT:- There are several situations which can arise. Either party – meaning the creditor or the company – may apply in such a situation or, in the post-admission stage, any other creditor may apply and assert that since the matter has partaken a representative character, any other creditor of the company would be deemed to be a party within the meaning of that word first used in the second proviso to Section 434(1)(c) of the Act of 2013. It could also be that at a pre-admission stage both the company and the creditor jointly apply or one of them applies and the other consents. Even in such a scenario, the Court has to apply its mind to see whether any other is sought to be prejudiced by such consent. It is possible that the very admission of a financial creditor’s petition by the adjudicating authority under the IBC simultaneously triggers off of a moratorium of all other proceedings pertaining to the same company including the pending proceedings before the company Court. But the company Court should be sure that the proceedings before the tribunal or adjudicating authority are firmly in place before transferring the proceedings pending before it when the transfer is resisted by the creditor who has brought the petition before the company Court. It is possible that by virtue of the related provisions of the IBC, an order of admission would imply the immediate appointment of interim resolution professionals and the consequential suspension of authority of other adjudicating fora in respect of matters pertaining to the concerned company; but so be it. Once the proceedings under the IBC have been admitted, the company Court should yield to the more modern mechanism under the IBC in view of the obvious legislative intent apparent. It was because the liquidation proceedings envisaged by the 1956 Act were found to be less than ideal, that an entirely different scheme has been put in place by the IBC in 2016. Thus, once proceedings pertaining to a company have been admitted by the IBC and the merits of such proceedings are to be gone into for the purpose of the preparation of a resolution plan, the proceedings pending before the company Court should ordinarily be transferred to the tribunal or adjudicating authority. It is true that such transfer, according to the appellant herein, makes no difference since the company Court would already have lost its jurisdiction, by virtue of the moratorium envisaged in the IBC, to adjudicate on the creditor’s claim; but the company Court would be well within its rights to decline a transfer till the proceedings before the adjudicating authority under the IBC stand admitted. There is no ground to disagree with the order impugned dated August 9, 2018 by which the company’s petition for transfer of the respondent’s winding-up proceedings to the National Company Law Tribunal has been declined by the company Court here - neither appeal holds and the orders impugned dated August 9, 2018 and August 10, 2018 are affirmed - Appeal dismissed.
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