NDLI: Forech India Ltd. Vs. Edelweiss Assets Reconstruction Co. Ltd.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	11 ss.7 winding up 238 9 IBC parallel proceedings 255
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Companies Act, 1956 (1 of 1956) Insolvency and Bankruptcy Code, 2016 (31 of 2016) Companies Act, 2013 (18 of 2013)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	Insolvency & Bankruptcy Code, 2016 – ss.7, 9, 11, 238, 255 and The Eleventh Schedule – Proceedings u/ss.7 and 9, if independent of winding up process pending in High Court – Winding up petition filed by the appellant before High Court, against Respondent No.2-Company, alleging inability to pay dues – Respondent No.1, financial creditor of the self-same corporate debtor, filed insolvency petition u/s.7 of the 2016 Code before National Company Law Tribunal (NCLT) – Petition admitted – Appeal filed by the appellant against the order – Dismissed by Appellate Tribunal – Plea of appellant inter alia that notice u/r.26 of the 1959 Rules was served much prior to the commencement of the Code, hence, the winding up petition should be allowed to carry on and not proceedings filed by other creditors under the Code – Held: When the Code was enacted, only winding up petitions, where no notice u/r.26 of the 1959 Rules was served, were to be transferred to the NCLT and treated as petitions under the Code – However, on working of the Code, the Government realized that parallel proceedings in the High Courts and before the adjudicating authority in the Code would stultify the objective sought to be achieved by the Code, i.e. to resuscitate the corporate debtors who are in the red – Accordingly, the Rules kept being amended, until finally s.434, 2013 Act was itself substituted in 2018, adding a proviso by which even in winding up petitions where notice was served and pending in the High Courts, any person could apply for transfer of such petitions to the NCLT, which would then be transferred by the High Court to the adjudicating authority and treated as insolvency petition under the Code – Appellate Tribunal’s reasoning is not correct as reference to s.11 of the Code in the context of the present problem is wholly irrelevant – However, the ultimate order passed by the Appellate Tribunal is not interfered with because Respondent No.1’s application admitted by the Tribunal is an independent proceeding to be decided in accordance with the provisions of the Code – However, the appellant is granted liberty to apply under the proviso to s.434 of the 2013 Act (added in 2018), to transfer the winding up proceeding pending before the High Court to the NCLT, which can then be treated as proceeding u/s.9 of the Code – Companies Act, 1956 – s.433(e) – Companies Act, 2013 – s.434 – Companies (Transfer of Pending Proceedings) Rules, 2016 – r.5 – Companies(Transfer of Pending Proceedings) Second Amendment Rules, 2017 – Companies (Court) Rules, 1959– rr.26 and 27.Companies (Court) Rules, 1959 – rr.26 and 27 – Notice under – Pre-admission or post-admission – Held: Rules 26 and 27 clearly refer to a pre-admission scenario making it clear that the notice contained in Form No. 6 appended to r.27 has to be served in not less than 14 days before the date of hearing – Hence, the expression “was admitted” in Form No. 6 only means that notice has been issued in the winding up petition which is then “fixed for hearing before the Company Judge” on a certain day.
Judge	Hon'ble Mr. Justice R.F. Nariman
Neutral Citation	2019 INSC 77
Petitioner	Forech India Ltd.
Respondent	Edelweiss Assets Reconstruction Co. Ltd.
SCR	[2019] 2 S.C.R. 477
Judgement Date	2019-01-22
Case Number	818

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Forech India Ltd. Vs. Edelweiss Assets Reconstruction Co. Ltd.

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