Gurbakhsh Singh Ba Builders Private Limited v. Fortis Hospital Limited

1. The present company petitions have been preferred under Section 433 of the Companies Act, 1956[1] read with Sections 434 and 439 of the Act by the petitioner company, seeking winding up of the respondent company on the grounds of non-payment of outstanding dues amounting to Rs. 2,48,39,128/- in CO.PET. 299/2015 and Rs. 2,34,53,258/- in CO.PET. 354/2015, along with due interest. CO.PET. 299/2015

2. Briefly stated, the respondent company issued a work order dated 15.05.2014, bearing No. LDH-1/Addl Work/0101/R-1, in favour of the petitioner company for the purposes of carrying out certain work at Fortis Hospital, Ludhiana; and said work was completed by the petitioner to the satisfaction of the respondent company within the time stipulated in the work order.

3. Pursuant to the work done, the petitioner company raised bills dated 14.08.2014 and 20.08.2014, for a sum of Rs. 2,52,59,522/- and delivered the same to the office of the respondent company for payment. It is the case of the petitioner that vide email dated 21.08.2014, the respondent company confirmed the quantity of the work executed, and assured the petitioner that the amount due will be paid duly. However, despite repeated reminders, the respondent company failed to release the amount due, and therefore, the petitioner

1 The Act was constrained to serve a legal demand notice dated 16.10.2014 upon the respondent company. Thereafter, the petitioner company served a statutory legal notice dated 13.11.2014, under Section 271 (1)(a) read with Section 271 (2) (a) & (c) of the Companies Act, 2013, upon the respondent company.

4. The above-noted legal notices dated 16.10.2014 and 13.11.2014, were replied to by the respondent company through its counsel on 11.12.2014 and 26.12.2014 respectively, and suffice to state that although the respondent company admitted issuance of the Work Order, however, they denied any further liability to make payment to the petitioner stating that the payment had already been made under the MoU[2] dated 22.05.2014, and that the Work Order in question was an internal adjustment issued for the purpose of accounting. In this regard, it is stated on behalf of the petitioner that the MoU dated 22.05.2014 was with respect to other Agreements dated 03.12.2010 and 03.03.2011, and that the same had no relation to the work executed by the petitioner under the Work Order dated 14.05.2014. CO.PET. 354/2015

5. This petition constitutes similar facts as in the CO.PET. 299/2015, except that it is in respect of a Work Order dated 12.05.2014 issued in favour of the petitioner. Thereafter, the work is stated to have been executed by the petitioner and a bill for a sum of Rs. 2,34,53,258/- was raised. However, the said amount due to the petitioner remained unpaid. Since the respondent company Memorandum of Understanding failed/neglected to discharge its liability, the petitioner was constrained to serve a statutory legal notice dated 03.02.2015, calling upon the respondent company to repay the amount due. The respondent company in its reply dated 18.02.2015, stated that the Work Order dated 12.05.2014 had been cancelled and a fresh Work Order dated 14.05.2014 was thereafter issued, which too was issued for the purposes of internal accounting, and adjusting the amount already paid under the MoU dated 22.05.2015.

ANALYSIS & DECISION:

6. On a perusal of the record, it is borne out that the present winding up petitions are a complete non-starter. These proceedings are at a nascent stage, so much so that neither a Provisional Liquidator nor an Official Liquidator has been appointed to wrest charge over the properties and affairs of the respondent company. As such, no substantive orders have been passed in these company petitions.

7. In view of the same, vide order dated 22.07.2022, this Court called upon the petitioner to make submissions as to why these petitions should not be transferred to the National Company Law Tribunal[3].

8. In this regard, submissions have been advanced by the learned Counsels for the parties. It has been urged on behalf of the learned Counsel for the Petitioner that the objective sought to be achieved by the provisions relating to the transfer of pending winding up proceedings, specially the fifth proviso to Section 434, is to ensure that parallel proceedings do not ensue; and that as regards the present case, no proceedings have been instituted before the NCLT as yet. Further, it is submitted that the present company petitions are at a stage which is pre-admission but post-notice, and that a petition at such a stage is not mandated to be compulsorily transferred to the NCLT but at the discretion of the Court, which discretion could only be exercised in case an appropriate application has been moved seeking transfer of the petition. It is thus urged that since no such application seeking transfer has been moved in the present petition, the matter should continue before this Court and not be transferred to the NCLT. Learned counsel for the petitioner has placed reliance on the decisions in: (i) Kaledonia Jute and Fibres Private Limited v. Axis Nirman and Industries Limited & Ors.4; and (ii) Action Ispat and Power Private Limited v. Shyam Metalics and Energy Limited[5].

9. Per contra, it is submitted on behalf of the respondent company that in the decision of the Supreme Court in Action Ispat (supra), it has been clearly spelled out that at any stage, even subsequent to the admission of a winding up petition, a company petition pending before the High Court can be transferred to the NCLT, till such time no irreversible steps have been taken towards the winding up of the company against who liquidation is sought. Further, as regards the requirement of moving an application for transfer of proceedings, it is submitted that the relevant provision of the statute itself uses the word „may‟, and further that in the present petitions, this Court itself posed a question to the petitioners as to why the present proceedings should not be transferred to the NCLT, and therefore, there arises no need for an application to be moved for the same.

10. I have heard the learned Counsels for the parties and have also perused the record.

11. At the outset, it would be apposite to reproduce 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-]