Full Text
HIGH COURT OF DELHI
Date of Decision: 16th May, 2024
56/2018 A.R. CONSTRUCTION ..... Petitioner
Through: Mr. Arun Upadhyay, Adv.
Through:
JUDGMENT
1. The present company petition has been instituted under Section 433 (e) read with Section 439 of the Companies Act, 1956[1], seeking winding up of the respondent company on the ground of non-payment of outstanding dues.
2. Briefly stated, the present petition for winding up is predicated on a work order dated 29.09.2014 issued by the respondent company upon the petitioner, for carrying out M.S. Structural work which was to be done at the agreed rate of Rs. 74 per kg for the work stated therein. It is the case of the petitioner that on carrying out the work
1 The Act stipulated, invoices dated 27.10.2014, 01.12.2014 and 27.12.2014 were raised, amounting to Rs. 49,54,382/-. It is brought forth that an amount of Rs. 23,26,500/- stood paid by the respondent thereby leaving a balance amount of Rs. 26,27,444/-.
3. To settle the remaining dues, the respondent issued four cheques dated 16.01.2015 for Rs. 9,90,000/-; 01.05.2015 for Rs. 7,64,444/-; 15.05.2015 for Rs. 3,00,000/-; and 19.05.2015 for Rs. 8,91,000/-, all of which stood dishonoured on being present on the ground of “INSTR STALE”/payment stopped by the drawer.
4. Despite repeated reminders, the respondent company did not discharge its liabilities, therefore, the petitioner was constrained to serve a statutory legal notice dated 03.06.2015 upon the respondent, which too was not replied to despite being received on 03.06.2015. Hence, the petitioner instituted the present winding up petition after the lapse of the statutory period of 3 weeks.
5. On a perusal of the record, and as per the submissions made, it is borne out that the petition was admitted vide order of this Court dated 24.07.2017 whereby the Official Liquidator attached with this Court was appointed as the Provisional Liquidator and it was further directed that relevant citations be published in newspapers as provided for under the Companies (Court) Rules, 1959. However, the said directions were deferred, and the respondent was afforded a last opportunity to make good the amount found due and payable. Such opportunity was granted on the basis of a settlement arrived at between the parties in proceedings related to two criminal complaints filed against the respondent company under Section 138 of the Negotiable Instruments Act, 1881, wherein as agreed, the respondent company undertook to repay an amount of Rs. 12,50,000/- in instalments as full and final settlement of the dues owed to the petitioner.
6. Thereafter, what has transpired is that the respondent company only paid Rs. 6,50,000/- and has since failed to repay the remaining amount of Rs. 6,00,000/- despite being given several opportunities. The said position has been recorded in the order dated 28.08.2023, and it was further stated therein that in case the respondent company fails to repay the balance amount be the next date, the Court would be constrained to direct the publication of the winding up citations and thereafter set in motion the liquidation proceedings.
7. It is but evident that the respondent company is unable to pay its debt and has failed to discharge its liability towards the petitioner, despite undertaking to do so per the settlement arrived at between the parties and has further neglected to repay the balance amount even after being afforded multiple opportunities by this Court.
8. However, these proceedings have been a complete non-starter and no effective orders have been passed towards winding up of the respondent company. It would be apposite to note that during the pendency of these proceedings, the Insolvency and Bankruptcy Code, 2016 as well as the Companies Act, 2013 have since been enacted. In view of the same, it is the opinion of this Court that it would be appropriate for the present petition to be transferred to the National Company Law Tribunal[2].
9. In this regard, it is but necessary to consider Section 434 of the Companies Act, 2013 which provides for the transfer of proceedings relating to winding up, pending before High Courts, to the NCLT, and reads as under:
434. Transfer of certain pending proceedings. (1) On such date as may be notified by the Central Government in this behalf,— (a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in this section referred to as the Company Law Board) constituted under sub-section (1) of section 10E of the Companies Act, 1956 (1 of 1956), immediately before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings 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;
(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 only such proceedings relating to cases other than winding-up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Court shall be transferred to the Tribunal: [Provided also that-]
(i) all proceedings under the Companies Act, 1956 other than the
2 NCLT cases relating to winding-up of companies that are reserved for orders for allowing or otherwise such proceedings; or
(ii) the proceedings relating to winding-up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959: [Provided also that proceedings relating to cases of voluntary winding up of a company where notice of the resolution by advertisement has been given under sub-section (1) of section 485 of the Companies Act, 1956 but the company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.] Provided further that any party or parties to any proceedings relating to the winding up of companies pending before the any Court immediately before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, may file an application for transfer of such proceedings and the Court may by order transfer such proceedings to the Tribunal and the proceedings so transferred shall be dealt with by the Tribunal as an application for initiation of corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (31 of 2016). (2) The Central Government may make rules consistent with the provisions of this Act to ensure timely transfer of all matters, proceedings or cases pending before the Company Law Board or the courts, to the Tribunal under this section.]
10. It would also be expedient to place reliance on the decision of the Supreme Court in the case titled Action Ispat (supra), whereby it was held that those winding up proceedings pending before High Courts, which have not progressed to an advanced stage, ought to be transferred to the NCLT. The relevant extract of the said decision is as follows:
to the NCLT to be resolved under the Code. Even post issue of notice and pre admission, the same result would ensue. However, post admission of a winding up petition and after the assets of the company sought to be wound up become in custodia legis and are taken over by the Company Liquidator, section 290 of the Companies Act, 2013 would indicate that the Company Liquidator may carry on the business of the company, so far as may be necessary, for the beneficial winding up of the company, and may even sell the company as a going concern. So long as no actual sales of the immovable or movable properties have 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 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.”
11. In view of the foregoing discussion, it is the opinion of this Court, that since no substantive proceedings have been undertaken towards winding up of the company, the present petition does not deserve to be continued before this Court. Although this company petition has been admitted by this Court, it is at a nascent stage and no effective orders as such have been passed towards the winding up of the company. In other words, given the prevailing facts and circumstances, it is but evident that no irreversible steps have been taken pursuant to the winding up of the respondent company.
12. Hence, the instant petitions is transferred to the NCLT. It is left to the NCLT to consider the matter and pass appropriate orders in accordance with law.
13. The electronic record of the instant petition be transmitted to the NCLT within a period of one week by the Registry.
14. List before the NCLT on 04.07.2024. The parties herein are directed to appear before the NCLT on the said date. The interim orders passed by this Court in these petitions, if any, shall continue till the said date.
15. In view of the aforesaid, the instant company petitions as well as pending applications, if any, are accordingly disposed of.
DHARMESH SHARMA, J. MAY 16, 2024