The Supreme Court on Thursday held that the transfer of the winding up proceedings of a company from the High Court (company court) to the National Company Law Tribunal (NCLT) can be ordered at the instance of any creditor of a company in liquidation.
The judgment came on an appeal filed by M/s Kaledonia Jute and Fibres Pvt Ltd. challenging the Allahabad High Court which had declined to transfer to the NCLT a pending winding up petition against M/s Axis Nirman and Industries Ltd.
The Apex Court set aside the high court order and transferred the winding up proceedings to the NCLT.
A three-judge bench comprising Chief Justice S.A. Bobde, Justice A.S. Bopanna and Justice V. Ramasubramanian said, “The petitioner is entitled to seek a transfer of the pending winding up proceedings against the first respondent to the NCLT.”
The bench held that the winding up proceedings is a continuous legal process and under the Company law, any creditor of the firm in liquidation may become a party to the proceedings and seek transfer of the case from a high court to the NCLT to be dealt under the Insolvency and Bankruptcy Code (IBC) 2016.
“Therefore, the word ‘party’ appearing in the 5th proviso to Clause (c) of Sub section (1) of Section 434 cannot be construed to mean only the single petitioning creditor or the company or the official liquidator. The words ‘party or parties’ appearing would take within their fold any creditor of the company in liquidation.” read the judgment.
“Therefore, the appeal is allowed, the impugned order is set aside and the proceedings for winding up pending before the Company Court (Allahabad High Court) against the first respondent herein, is ordered to be transferred to the NCLT, entitled to seek a transfer of the pending winding up proceedings against the first respondent, to the NCLT.” the court ruled.