TMI Blog2022 (7) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... . [ 2021 (3) TMI 38 - SUPREME COURT ] is whether an irreversible situation has arisen warranting the Court to stay its hands and not transfer the proceeding to the NCLT. There are no facts whatsoever which justify the conclusion of an irreversible situation having arisen in the facts of the case. The company was directed to be wound-up on the 6th March, 2017. Thereafter, one of the contributories, namely Indo Wagon Engineering Ltd. had obtained diverse orders from Court whereby they continued to be in possession of the assets of the company (in liquidation). Admittedly, till date there is no scheme for repayment of the outstanding dues of the creditors which has been framed. There are no merit in the objection raised by the contributory that a petition under Section 7 and Section 9 of the Insolvency and Bankruptcy Code 2016 (the Code) should be pending before the NCLT, prior to directing transfer of the winding-up proceedings to the NCLT. Neither is this legislative intent nor is this pre-condition borne out from the language of the newly amended section. Accordingly, there are no merit in this submission and the same is rejected - also there are no merit in the submission tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its new avatar contemplates a party applying to the Court, to seek transfer of proceedings relating to winding-up of a company to the NCLT. 2. It is submitted on behalf of the applicant that by a Deed of Assignment dated 28th March, 2014, the applicant had become a secured creditor of the company (in liquidation). The current dues of the applicant are approximately Rs. 424 crores. The order of winding-up was passed on 6th March, 2017. Thereafter, one of the contributories of the company (in liquidation) had filed an application, inter alia, for framing a scheme of repayment. By an order dated 18th May, 2017, the contributory was permitted to take physical possession of the assets of the company (in liquidation) and the Official Liquidator was directed to be in symbolic possession. The order also provided that the expenses incurred for providing security guards in respect of the assets of the company (in liquidation) shall be borne by the contributory. By an order dated 17th August, 2017, the contributory was also directed to bring a scheme for payment of the dues of the creditors of the company (in liquidation). However, admittedly till date, no scheme has been framed. Signific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace in the form of payments having been made to security agencies and the pendency of an application under Section 466 of the Act filed by the contributory and the pending application for framing of a scheme in respect of the company (in liquidation). All these steps are irreversible in nature and would severely prejudice the rights of the contributory. Reliance is also placed on the judgment reported in Union of India Vs. Amrit Lal Manchanda and Anr (2004) 3 SCC 75 to contend that, the peculiar facts of a case would make a world of difference between the conclusions in two cases. Thus, the decision reported in Action Ispat (Supra) and A. Navinchandra Steels (P) Ltd. (Supra) are distinguishable. Pursuant to directions by this Court, a Status Report has also been filed by the Official Liquidator which confirms that none of the assets of the company (in liquidation) have been sold. 5. By an amendment dated 7th August, 2018 the 5th proviso to Section 434 (1) (c) of the Act was added which provided as follows:- 434. Transfer of certain pending proceedings. (1) On such date as may be notified by the Central Government in this behalf (a)-(b) * * * (c) all pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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). Significantly, in the facts of the aforesaid decision, the concurrent finding of the Company Judge and the Division Bench was that despite the fact that in the liquidation proceedings, the Official Liquidator had taken possession and control of the registered office and the factory premises, records and books no irreversible steps towards winding upon of the company had otherwise taken place. The ratio in Action Ispat Power (P) Ltd. (supra) has subsequently been followed in A. Navinchandra Steels (P) Ltd. vs. SREI Equipment Finance Ltd. (2021) 4 SCC 435. 7. In Maheswary Ispat Ltd. And Alaknanda Sponge Private Limited vs. Official Liquidator, High Court, Calcutta (Unreported decision of the High Court at Calcutta dated 17.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidation). Admittedly, till date there is no scheme for repayment of the outstanding dues of the creditors which has been framed. No other steps have taken place by the Official Liquidator in aid of winding-up of the company. The aggregate dues of the applicant are in excess of Rs. 400 crores. Notwithstanding orders of this Court, the security agencies have also not been paid by the contributory. The Official Liquidator is not in possession of any of the assets company (in liquidation) far less having made any attempt to sell them. The stalemate or impasse which has been created by the contributory and the inaction of the Official Liquidator only strengthens the case of the applicant in seeking transfer of the proceedings to the NCLT on the ground that no irreversible situation has arisen justifying this Court to retain jurisdiction. 10. Section 434 (1)(c) provides that any party to any proceeding relating to the winding up of a company may file an application for transfer to the NCLT. A proceeding for winding-up is a proceeding in rem which enures to the benefit of all creditors, such a proceeding may be initiated by one or more creditors but is treated as a joint peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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