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2018 (6) TMI 1167 - HC - Companies Law


Issues Involved:
1. Jurisdiction of NCLT vs. High Court in insolvency proceedings.
2. Applicability of the Insolvency and Bankruptcy Code (IBC), 2016.
3. Continuation of winding-up proceedings under the Companies Act, 1956.
4. Role and appointment of Interim Resolution Professional (IRP).
5. Provisions of the Companies (Transfer of Pending Proceedings) Rules, 2016.
6. Rights and claims of workmen.
7. Actions and responsibilities of the State Government and its officers.

Detailed Analysis:

1. Jurisdiction of NCLT vs. High Court in Insolvency Proceedings:
The primary issue was whether the proceedings before the High Court could continue or if the NCLT order appointing the IRP under the IBC, 2016 should take precedence. The court observed that the NCLT intervened without issuing notice to the State Government or giving the workmen an opportunity to be heard. The High Court stayed the NCLT's order, emphasizing that the IBC, 2016 does not override ongoing proceedings in the High Court.

2. Applicability of the Insolvency and Bankruptcy Code (IBC), 2016:
The court noted that the IBC, 2016 provides a mechanism for considering claims of all employees and creditors. However, it concluded that the IBC's provisions do not apply to the current winding-up proceedings initiated under the Companies Act, 1956, especially since the case was not based on the company's inability to pay debts (Section 433(e)) but rather under clauses (a) and (f) of Section 433.

3. Continuation of Winding-up Proceedings under the Companies Act, 1956:
The court highlighted that the winding-up proceedings were initiated based on BIFR's recommendation under Section 20 of the erstwhile SICA Act. The proceedings were ongoing since 2002, and notices had already been served under Rule 26 of the Companies (Court) Rules, 1959. Therefore, the case was not transferable under Rule 6 of the Companies (Transfer of Pending Proceedings) Rules, 2016.

4. Role and Appointment of Interim Resolution Professional (IRP):
The court found that the appointment of the IRP by the NCLT was without jurisdiction. It emphasized that the duties of the IRP under the IBC are similar to those of the Official Liquidator (OL) already appointed by the High Court. The court directed the State Government not to allow the IRP to take over any asset of the company.

5. Provisions of the Companies (Transfer of Pending Proceedings) Rules, 2016:
The court analyzed Rules 1, 5, and 6 of the Companies (Transfer of Pending Proceedings) Rules, 2016. It concluded that Rule 5, which deals with the transfer of winding-up proceedings based on the inability to pay debts, was not applicable. Instead, Rule 6 applied, which ensures that petitions under clauses (a) and (f) of Section 433 remain with the High Court.

6. Rights and Claims of Workmen:
The court acknowledged the claims of the workmen for their dues and the revival of the company. It directed the Official Liquidator to conduct a thorough evaluation of the goods lying in the factory premises and submit a report to facilitate the payment of the workers' dues.

7. Actions and Responsibilities of the State Government and its Officers:
The court criticized the Managing Director of Jaipur Metals for failing to inform the NCLT about the ongoing proceedings in the High Court and the complications arising from parallel proceedings. The court directed the State Government to transfer the concerned officer and initiate appropriate proceedings against him.

Conclusion:
The High Court held that the NCLT's order was without jurisdiction and directed the State Government to ignore the NCLT's order appointing the IRP. The court emphasized the need to avoid multiplicity of proceedings and upheld the continuation of the winding-up proceedings under the Companies Act, 1956. The case was listed for further orders and disposal on 05/07/2018.

 

 

 

 

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