TMI Blog2016 (12) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... titions shall not be transferred to NCLT and shall continue to be dealt with by this court in accordance with the provisions of 1956 Act. - COMPANY PETITION NO. 331 OF 2016 & WITH COMPANY APPLICATION (L) NO. 766 OF 2016 & COMPANY PETITION NO.332 OF 2016 With COMPANY APPLICATION (L) NO. 767 OF 2016 - - - Dated:- 23-12-2016 - S.C. GUPTE, J. Mr. Simil Purohit a/w Mr. Gauraj Shah, Mr. Manish Doshi, Mr. Sandip Vimadalal i/b M/s Vimadalal Co. for the Petitioners. Mr. Zal Andhyarujina a/w Ms. Rujuta Patil, Ms. Niyathi Kalra and Mr.Rahul Sabne I/b. Negandhi Shah Himayatullah for Respondent. ORDER : These two company petitions, filed under Section 433(e) read with Section 434 of the Companies Act, 1956, seek winding up of the Respondent company on account of inability to pay its debts. The company petitions, filed in April 2016, are pending admission. Under Notification dated 7 December 2016, issued by the Central Government, all petitions relating to winding up under clause (e) of Section 433 pending before high Courts, and which have not been served on the Respondent as required by Rule 26 of the Companies (Court) Rules, 1959, stand transferred to the appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (ii) scheme of compromise and arrangements, (iii) reconstruction of sick industrial companies, (iv) oppression and mismanagement and (v) winding up, was provided for under different statutes and executed through different for ii. Whereas rectification, schemes, oppression and mismanagement, and winding up came under the 1956 Act, the subject of reconstruction of sick companies was provided for in the Sick Industrial Companies Act, 1985. Even under the 1956 Act, the provisions of rectification, and oppression and mismanagement were administered by the CLB, whilst schemes and winding up were handled by the High Courts. On the other hand, reconstruction of sick companies came before BIFR. One of the objectives sought to be achieved by 2013 Act is to consolidate the entire company law administration and entrust it to a single adjudicatory body as well as appellate forum, namely, the National Company Law Tribunal ( NCLT ) and National Company Law Appellate Tribunal ( NCLAT ). Section 1(3) of 2013 Act provides that its provisions (other than Section 1) shall come into force on such date as the Central Government may, by notification in the Government Gazette, appoint and different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government, in exercise of the powers conferred under subsections (1) and (2) of Section 434 made rules, called the Companies (Transfer of Pending Proceedings) Rules, 2016, which provide for transfer of various proceedings pending before the High Courts to NCLT. Insofar as we are concerned, the relevant rule, which provides for transfer of pending winding up petitions under clause (e) of Section 433 of 1956 Act, namely, Rule 5, is in the following terms : 5.Transfer of pending proceedings of Winding up on the ground of inability to pay debts (1) All petitions relating to winding up under clause (e) of section 433 of the Act on the ground of inability to pay its debts pending before a High Court, and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under subsection (4) of section 419 of the Act, exercising territorial jurisdiction and such petitions shall be treated as applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance with Part II of the Code: Provided that the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition on the Respondent. The service of the petitions, in the premises, effected by the Petitioners' advocates on the Respondent in the present case is service under Rule 26. 6 To appreciate these submissions and decide the controversy, we need to consider Rules 26 to 29, Form No.6, and Rules 96 and 98 of the Companies (Court) Rules, 1959, which are quoted below : 26. Service of petition Every petition shall be served on the respondent, if any, named in the petition and on such other persons as the Act or these rules may require or as the Judge or the Registrar may direct. Unless otherwise ordered, a copy of the petition shall be served along with the notice of the petition. 27. Notice of petition and time of service Notice of every petition required to be served upon any person shall be in Form No. 6, and shall, unless otherwise ordered by Court or provided by these Rules, be served not less than 14 days before the date of hearing. Provided always that such notice when by the Act or under these Rules is required to be served on the Central Government, the same shall, unless otherwise ordered by the court, be served not less than 28 clear days befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany presented by .......... the Petitioner on / / 200 is admitted pursuant to Order dated / / 200 and the same is now fixed for hearing before the Company Judge on / / 200 at 11:00 O'Clock in the forenoon or soon thereafter. If you desire to support or to oppose the said Petition at the hearing, you should give notice thereof in writing to the Advocates for the Petitioners mentioned below so as to reach the Advocate for the Petitioner/s not later than five days before the date fixed for hearing of the said Petition and appear at the hearing in person or by an Advocate/s, who is entitled to practice in this Hon'ble Court. If you wish to oppose the said Petition, the grounds of opposition or a copy of your Affidavit, should be furnished with your notice to the Advocate/s for the Petitioner/s mentioned below. Copies of the Petition and the Affidavit-in Support thereof are enclosed. Dated this ... day of .. 200.. For Registrar (O.S.)/ Prothonotary and Senior Master S E A L E R This .. day of .., 200.. Encl : Copies of the Petition and Affidavit-in support thereof. (Name and Address of the Advocate/s for the Petitioner/s) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s treat the two subjects, namely, service of petition and notice of petition, differently. Service of petition implies service on the respondent or other person, as the case may be, of a copy of the petition, whereas notice of the petition connotes notice of the hearing of the petition before the court. Rule 26 provides for service of petition, whilst Rule 27 provides for notice of petition. Rule 28 provides for the manner in which service is to be effected on the company, whereas Rule 29 casts the responsibility for all services required to be effected by the Rules or by orders of court or registrar on the petitioner. 9 Mr. Andhyarujina submitted that the mandate of Rule 26 is that a petition has to be served on the respondent and other persons only if the Act or Rules may require or if the Judge or Registrar may direct and that in default, every service of the petition must be accompanied by service of the notice of the petition. He then follows it up with his next submission that such notice of the petition is required to be in Form No.6, which clearly provides for a notice post-admission. He finally sums it up by submitting that every service of the petition under Rule 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such other person/s, whereas notice of the petition on the respondent is obligatory only in the event of admission of the petition. So also, other persons are entitled to notice of the petition only if the Act or the Rules require or the Judge or the Registrar directs. In case of any service, whether service of the petition or of the notice of the petition, it is the petitioner who must execute it. 10 As a matter of fact, as held by our court in the case of Modern Dekor Painting Contracts (supra) as well as the earlier case of Extrusion Processes Pvt.Ltd. vs. Jivabhai Marghabhai Patel 1966 Company Cases (Vol.XXXVI) 60, there is no right in a company to be issued a notice before a petition is admitted or the court fixes the date of hearing. The Companies (Court) Rules do not provide for any such notice, though it is permissible for the Judge or the Registrar to require such notice to be given to the company. In fact, as the Supreme Court in the case of National Conduits (P.) Ltd. vs. S.S. Arora 1967 Company Cases (Vol.XXXVII) 786 has observed, when a petition is filed before a High Court for winding up of a company under the orders of the court, the High Court has three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 8 or 9 of the Code by, NCLT. That clearly appears to be the mandate of the transfer notification, particularly, Rule 5 thereof. 12 In fact, if anything, the argument that Rule 26 contemplates a post-admission notice and only in the event such notice is actually served on the respondent that the petition shall stand transferred to NCLT, will lead to a peculiar situation. It will mean that those petitions, which are admitted and where notice of the petition is not served on the respondent pursuant to the order of admission, will stand transferred to NCLT and will be taken up for admission once again by requiring the petitioners in those petitions to furnish information for admission of the petitions under Section 7, 8 or 9 of the Code, as the case may be. That would be clearly anomalous. 13 In the premises, it follows that every winding up petition under clause (e) of Section 433 which is pending before the High Court and which is not served by the petitioner on the respondent company shall stand transferred to NCLT under Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. If such pending petition is served by the petitioner on the respondent, the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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