TMI Blog2018 (6) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 of IBC 2016, are similar to that of the OL, the power available to the OL under the Act of 1956 would take into its notice all the provisions contained under IBC 2016 which the interim resolution professional or the resolution professional would be conducting. The legislature clearly intended to transfer the proceedings where no action has been taken by the concerned Court whereas in the present case, the proceedings have been going on since 2002 and the present case is not of such a nature where it can be said that notices have not been issued or the steps under the Act of 1956 have not been undertaken with regard to winding up. Thus, there was no occasion for the applicant ALCHEMIST to have approached the NCLT for invoking the provision of the Rules of 2016. 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 will continue to be dealt with by this court and the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as it decides that revenue realized by the licensee from activities beyond the license will be excluded from Adjusted Gross Revenue dehors the definition of Adjusted Gross Revenue in the license agreement is without jurisdiction and is a nullity and the principle of res judicata will not apply. Accordingly, the State Government is directed not to allow the IRP to function or take over any asset of the Company and ignore the order passed by the NCLT dated 13/04/2018. The Managing Director of Jaipur Metals, who has been appointed by the State to provisionally hold the charge of the Company, has failed to bring to the notice of the NCLT the facts, as noted above. It is also noted that the concerned Managing Director did not inform the State Government about the proceedings and the likelihood of the complications which would arise on account of the same and thus, prima-facie there has been failure on his part to discharge his duties. The State Government is therefore, directed to immediately transfer the said officer and handover the charge to some other responsible officer and also initiate appropriate proceedings against the concerned Managing Director. - S.B. Company Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workmen as well as the counsels appearing for Alchemist Asset Reconstruction Company Ltd. The counsel for Jaipur Metals and Electrical Limited (JMEL) was also heard. 4. Before embarking on the question above, it would be useful to note certain orders which have been passed by this Court in the Company Petition as well as Writ Petitions filed by the workmen. 5. In the Company Petition on 17/08/2017, arguments were heard and order was reserved on the question whether the Company should be wound up. While the judgment was reserved, an application came to be filed by the State for recalling the order dated 17/08/2017 on the ground that the State Government was not able to present its case. It was stated that the State Government has decided to invite revival proposal and written submissions were also filed by the State. This was because in SB Civil Writ Petition No.504/2000 preferred by Jaipur Metals and Electricals Ltd. Majdoor Sangh, this Court had asked the Advocate General to find out the possibilities of reviving the Company as a prayer has been made in the said writ petition for revival of the Jaipur Metals and Electricals Ltd.. It was also stated that a meeting was conven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction Company Ltd, the workers of the company and the Additional Advocate General Mr.G.S.Gill. This Court finds that a minutes of meeting have been placed by the Additional Advocate General stated to have been held for discussing possibility of revival of M/s. Jaipur Metals Electricals Ltd. Under the Chairmanship of Commissioner Industries on 21 22.11.2017. Minutes of meeting dated 1.12.2017 show that the submissions of the M/s Genus Power Infrastructures Ltd, Alchemist Asset Reconstruction Company Ltd and JME employees society have been noted. However, it appears that the State Government has not put up its submissions in the meeting. The minutes refer to the submissions with a view to place the same before the State Government for taking a decision. While noting the written submissions of the State Government, this Court had directed the matter to be heard a fresh its vide order dated 24.10.2017. It was mainly on account of State Government stating in written submissions therein that they have a revival proposal. However, even as on today, no concrete proposal on behalf of the State Government has been put up for revival. This Court would like to kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that till date neither any liquidation nor any admission order has been passed in the winding up proceedings and noting that no provisional liquidator or OL has been appointed, the NCLT has proceeded to pass an order appointing IRP and also has proceeded to declare moratorium in terms of Section 14 of the IBC, 2016. 11. In the aforesaid background, learned counsel appearing for Alchemist Asset Reconstruction Company Ltd. submits that the Alchemist Asset Reconstruction Company Ltd. was entitled to approach the NCLT despite pendency of the present winding up proceedings. It is submitted that it is not a case of transfer of proceedings but is rather a case of fresh initiation of CIRP proceedings before the NCLT. It is submitted that there is no bar for initiating fresh petition before the NCLT despite pendency of the present winding up proceedings. It is submitted that the Companies (Transfer of Pending proceedings) Rules, 2016 would not be applicable as it was not a case of transfer of proceedings. It is submitted that on 29/06/2017, the existing Rule 5 was substituted and the embargo created on petitions arising out of the references made by BIFR was refuted and in terms of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered on 26/09/2002 after the recommendations of BIFR and notices had already been served on all the parties including the applicant-Company namely; ALCHEMIST. After the judgment had been reserved, because other writ petitions were also clubbed, an order was passed in the annexed writ petition i.e. SB Civil Writ Petition No.504/2000 directing the OL to act provisionally and thus, it is submitted that a Provisional Liquidator was already acting and has also performed the work of valuation of the property of Jaipur Metals and has submitted its report. Thus, the OL is actively involved in the proceedings before this Court. 14. Learned Additional Advocate General also submitted that the applicant ALCHEMIST had also admitted that there is no question of pre-notice transfer of the petition for winding up and asserts that the same shall continue to remain with this Court and his application to IBC is only with regard to recovery of the amount. Such an argument is contradictory as per submissions of the respondent-State. 15. In reply to the submission of the Company that they are permitted in terms of Section 5(2) of the Rules of 2016 to file fresh application in terms of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(1) by the BIFR and the proceedings before the IBC are therefore, clearly inconsistent of the Act of 1956 and the same cannot be allowed to be continued. 19. Learned Addl. Advocate General has also asserted that in the instant case, the provisions of Rule 6 of the Rules of 2016 would be applicable and therefore, the argument regarding amendment of Rule 5 bears no relevance in the instance cases. It is submitted that the case of winding up on recommendations of BIFR was covered by the provisions of Rule 6 and therefore, the same would remain with the High Court as notice under Section 26 of the Act of 1956 had already been served. 20. Continuing with the said submissions, the counsel submits that Part 2 of the IBC Code 2017 applies to the matters relating to insolvency and liquidation of corporate debtors where the minimum amount of default is Rs.One Lac. The word defaulter has been defined to mean non-payment of debt. Since the cases before this Court are not relating to non-payment of debt, the IBC Code 2016 would have no application to the present case before this Court. Thus, Rule 5 would have no application. 21. It is further urged that the reliance upon provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and in cases where transfer has been made under Rule 5 and the same has been abated under first proviso to the said rule. 25. The law does not contemplate liquidation by two parallel forums under two different provisions of law. It is further submitted that the process of resolution in liquidation under the Scheme of IBC, being not severable, the law could not have contemplated pendency of winding up proceedings with one forum. A petition under Section 7 is ultimately a petition for liquidation and as winding up proceedings were already continuing before this Court, there was no reason that the applicant, which is party to the proceedings, to have filed a petition under IBC. 26. It is further submitted by learned Addl. Advocate General that the Company as well as the NCLT in its order has misread the provisions of Section 11 (d) of IBC. It is submitted that Section 11 excludes certain persons from making an application for initiating corporate insolvency resolution process and they are all with regard to corporate debtor. The definition of corporate debtor include corporate applicant and from the reading of provision of Section 5(5), it would be clear that it does not incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (4) of section 419 of the Companies Act, 2013 exercising territorial jurisdiction to be dealt with Part II of the Code: Provided that the petitioner shall submit all information, other than information forming part of the records transferred in accordance with Rule 7, required for admission of the petition under sections 7, 8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the Tribunal upto 15th July, 2017, failing which the petition shall stand abated: Provided also that where a petition relating to winding up of a company is not transferred to the Tribunal under this rule and remains in the High Court and where there is another petition under clause (e) of section 433 of the Act for winding up against the same company pending as on 15th December, 2016, such other petition shall not be transferred to the Tribunal, even if the petition has not been served on the respondent. 6. Transfer of pending proceedings of Winding up matters on the grounds other than inability to pay debts.-All petitions filed under clauses (a) and (f) of section 433 of the Companies Act, 1956 pending before a High Court and where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The Adjudicating Authority shall communicate- (a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor; (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be. 11. Persons not entitled to make application : The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely:- (a)... (b)... (c)... (d) a corporate debtor in respect of whom a liquidation order has been made. 14. Moratorium :- (1) Subject to provisions of sub- sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 53; (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub- section (2). (4) The committee of creditors may approve a resolution plan by a vote of not less than seventy five per cent of voting share of the financial creditors. (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. 238. Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court and contrary to law. If any other interpretation is taken, it would result into multiplicity of the proceedings and would defeat the very purpose of framing of Rules of 2016. Even at the stage when the Companies Act of 2013 came into force, the pending cases before the High Court relating to winding up were not transferred to the NCLT and after coming into force of the IBC 2016, the basic rule of not having multiplicity of the proceedings shall continue to be the guiding principle. It would be a dangerous situation if the applicant ALCHEMIST is allowed to proceed before IBC while the other creditors are before this Court and say after six months that is the maximum period during which the proceedings can continue under the IBC, this Court also appoints an OL to examine the claims of other parties. However, as the present petition is not a petition by creditors alone and is a case referred to this Court under Section 20(1) of the erstwhile SICA Act, the order passed by the NCLT relating to only one creditor treating the present petition as the petition under Section 433(e) is wholly misconceived. A look at third proviso to Rule 5 also clarifies the picture further as it s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Sat 15/15 CP 331-2016, 332- 2016.doc 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 will continue to be dealt with by this court and the applicable provisions will be the provisions of 1956 Act. 14. As I have noticed above, these peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd proviso to Rule 5 and the provisions of Rule 6 of the Rules of 2016 have also not been examined. In the considered view of this Court, it is a judgment per incuriam The case in hand falls squarely under Rule 6 of the Rules of 2016 and as the notice under Section 26 of the Companies (Court) Rules, 1959 had already been served, the present proceedings in the High Court shall not be transferred to the NCLT 42. Another aspect in the present case is in relation to the clubbed cases filed by the workmen under Article 226 of the Constitution of India which are to be heard commonly with this Company Petition. Since such petitions cannot be transferred or even examined by the NCLT, the present application moved by the applicant Alchemist was against the provisions of the Companies Act and the Rules as well as have to be treated as non-est. 43. Further, it is also noted that this Court while examining the present Company Petition is also examining three Company Appeals whereby the order passed by the NCLT in favour of the applicant is under challenge. The NCLT has held the ALCHEMIST to be possessing 51% shares which is a subject matter of examination before this Court. 44. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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