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TMI Blog2025 (5) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... ble by the respondent-Company to the petitioner-Company. It was averred that the respondent- company has lost its substratum and has become commercially insolvent and is unable to make payment of the amount due to the petitioner-company and it is just and equitable that the respondent-company is ordered to be wound-up under the provisions of the Companies Act. 3. During the pendency of the company-petition, the respondent moved an application under Section 434(1)(c) of the Companies Act (for short 'Act') for transferring the case to the NCLT at Chandigarh, which as observed above, came to be allowed by the learned Company Judge. 4. It is vehemently argued by Shri V. D. Khidtta, learned Advocate duly assisted by Shri Nishant Khidtta, Advocate, that the findings recorded by the learned Company Judge, is not only wrong and contrary to law but the same are perverse inasmuch as much reliance has been placed on the judgment passed by three-Judge Bench of the Hon'ble Supreme Court in Action Ispat and Power Pvt. Ltd. vs. Shyam Metalics and Energy Limited 2021 (2) SCC 641, which judgment in fact though forms the basis of the decision of the case but was not at all applicable. He has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings 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 (1 of 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 any party or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies (Transfer of Pending Proceedings) Rules, 2016 (for short 'Rules'). 12. Rule 5 of the aforesaid Rules, reads as under:- "5. Transfer of pending proceedings of Winding up on the ground of inability to pay debts.- (1) All petitions relating to winding up of a company 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 under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under sub-section (4) of section 419 of the Companies Act, 2013 exercising territorial jurisdiction to be dealt with in accordance 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 within sixty days from date of this notification, failing which the petition shall abate. (2) All cases where opinion has been forwarded by Board for I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the corporate debtor by protecting it from its own management and from a corporate death by liquidation. The IBC Code was held to be a beneficial piece of legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The Hon'ble Supreme Court also noticed that after the introduction of the transfer Rules 2016, only those proceedings which are at the stage of pre-service of notice of the winding up petition stand compulsorily transferred to NCLT. The Hon'ble Supreme Court noticed that by reason of Rules 5 and 6 of the transfer rules which would result in parallel proceedings to continue before the Company Law Tribunal and pre admission proceeding would be compulsorily transferred to NCLT. 16. The learned Company Judge has relied upon paras 14 and 25 of the aforesaid judgment in Action Ispat and Power Pvt. Ltd. (Supra), to transfer the proceedings, which read as under:- "14. What becomes clear upon a reading of the three judgments of this Court is the following: 14.1 So far as transfer of winding up proceedings is concerned, the Code began tentatively by leaving proceedings relating to winding up of companies to be tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the 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. 17. It is vehemently argued by Mr. V. D. Khidtta, learned Advocate that the judgment passed by the Hon'ble Supreme Court in Action Ispat and Power Pvt. Ltd. (supra) was essentially passed in the background that there were parallel proceedings going on before the IBC as well as before the learned Company Judge and that is precisely why winding up petition was transferred to NCLT. 18. We, however, cannot agree with such submission as Action Ispat and Power Pvt. Ltd. (supra) judgment itself came up for consideration subsequently before the Hon'ble Supreme Court in A. Navinchandra Steels Pvt. Ltd. vs. Srei Equipment Finance Ltd. and Ors. (2021) 4 SCC 435, wherein it was held as under:- "25. A conspectus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection is that a compromise or arrangement can also be entered into in an IBC proceeding if liquidation is ordered. However, what is of importance is that under the Companies Act, it is only winding up that can be ordered, whereas under the IBC, the primary emphasis is on revival of the corporate debtor through infusion of a new management." 19. Adverting to the facts in the present case, there is nothing that can be said to have irretrievable in the instant case in the sense mentioned in para 25 of the Action Ispat Judgment (supra), wherein it was clarified that So long as no actual sales of the immovable or movable properties had 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 the NCLT now to be decided in accordance with the provisions of the Code. It has clearly been mentioned in the aforesaid paragraphs that on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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