NDLI: M/s Kaledonia Jute and Fibres Pvt. Ltd. Vs. M/s Axis Nirman and Industries Ltd. & Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Companies (Transfer of Pending Proceedings) Rules 2016: rr.5 and 6 –
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Companies (Transfer of Pending Proceedings) Rules 2016:rr.5 and 6 – Application seeking transfer of the winding up petitionpending before High Court to the National Company Law Tribunal(NCLT) – Refusal by Company Court (High Court) – Correctnessof – Second respondent filed a company petition against the firstrespondent for winding up on the ground that first respondent wasnot able to pay its debts – Winding up order – Thereafter firstrespondent sought for recalling the order of winding up and inorder to prove bonafides paid the entire amount due to the petitioningcreditor (second respondent) – Petitioning creditor had no objectionto recall the order – But the official liquidator opposed to recall theorder on the ground that the first respondent owed money to variousother creditors to the tune of Rs.27 Crores and that unless the saidamount was paid, the order of winding up could not be recalled –The Official Liquidator also submitted that he had already takenover charge of the assets of the Company – Company Court passedan order keeping the winding up in abeyance, however, directedthe Official Liquidator to continue to be in custody of the assets ofthe Company – Appellant claiming to be a creditor of the firstrespondent moved an application before the NCLT under s.7 of theIBC, 2016 on the ground that the first respondent was due andliable to pay a sum of Rs.32 lakhs and that it failed to pay despiterepeated demands – Thereafter, the appellant moved an applicationbefore the Company Court seeking transfer of the winding up petitionto the NCLT – Company Court refused transfer on the sole groundthat the requirement of r.24 had already been complied with andthat a winding up order had already been passed – Instant appealfiled by appellant-financial creditor – The main issues that arosefor consideration were: (i) what are the circumstances under whicha winding up proceeding pending on the file of a High Court couldbe transferred to the NCLT and (ii) at whose instance, such transfercould be ordered – Held: If the winding up petition has alreadybeen served on the respondent in terms of r.26 of the 1959 Rules,the proceedings are not liable to be transferred – But if service ofthe winding up petition on the respondent in terms of r.26 had notbeen completed, such winding up proceedings, whether they areunder Clause (c) of s.433 or under Clauses (a) and (f) of s.433,shall peremptorily be transferred to the NCLT – In other words, rr.5and 6 of the Companies (Transfer of Pending Proceedings) Rules2016, fix the stage of service of notice under r.26, as the stage atwhich a winding up proceeding can be transferred – This is becausethe first proviso under Clause (c) of Sub-section (1) of s.434 enablesthe Central Government to prescribe the stage at which proceedingsfor winding up can be transferred and sub-section (2) of s.434confers rule making power on the Central Government – As regardsthe second question as to who are the parties to the winding upproceedings, the proceedings for winding up of a company areactually proceedings in rem to which the entire body of creditors isa party – The proceeding might have been initiated by one or morecreditors, but by a deeming fiction the petition is treated as a jointpetition – The official liquidator acts for and on behalf of the entirebody of creditors – The word “party” appearing in the fifth provisoto Clause (c) of Sub-section (1) of s.434 cannot be construed tomean only the single petitioning creditor or the company or theofficial liquidator and would take within its fold any creditor of thecompany in liquidation – Therefore, appellant will come within thedefinition of the expression “party” appearing in the 5 th proviso toClause (c) of Sub-section (1) of s.434 of the Companies Act, 2013and that the petitioner is entitled to seek a transfer of the pendingwinding up proceedings against the first respondent, to the NCLT –Thus, proceedings for winding up pending before the CompanyCourt against the first respondent is ordered to be transferred tothe NCLT, to be taken up along with the application of the appellantunder s.7 of the IBC – Companies (Court) Rules, 1959 – r.26 –Companies Act, 2013 – s.434(1)(c), fifth proviso, s.447.
Judge	Hon'ble Mr. Justice V. Ramasubramanian
Neutral Citation	2020 INSC 648
Petitioner	M/s Kaledonia Jute And Fibres Pvt. Ltd.
Respondent	M/s Axis Nirman And Industries Ltd. & Ors.
SCR	[2020] 11 S.C.R. 800
Judgement Date	2020-11-19
Case Number	3735

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