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2016 (12) TMI 1253 - HC - Insolvency and BankruptcyNCLT territorial jurisdiction over the Winding up petition - what amounts to a notice under Rule 26 of the Companies (Court) Rules, 1959 for the purposes of transfer of pending winding up petitions under Clause (e) of Section 433 of the Companies Act, 1956 to NCLT within the meaning of the relevant transfer provisions? - Held that - Every winding up petition under clause (e) of Section 433 which is pending before the High Court and which is not served by the petitioner on the respondent company shall stand transferred to NCLT under Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. If such pending petition is served by the petitioner on the respondent, the petition will continue to be dealt with by this court and the applicable provisions will be the provisions of 1956 Act. As noticed above, these petitions, which have been served by the Petitioners on the Respondent in pursuance of the acceptance order, are to be treated as served as required under Rule 26 of the Companies (Court) Rules 1959. Accordingly, these petitions shall not be transferred to NCLT and shall continue to be dealt with by this court in accordance with the provisions of 1956 Act.
Issues Involved:
1. Jurisdiction over pending winding-up petitions 2. Interpretation of Rule 26 of the Companies (Court) Rules, 1959 3. Application of transfer provisions under the Companies (Transfer of Pending Proceedings) Rules, 2016 Detailed Analysis: Jurisdiction over Pending Winding-Up Petitions: The petitions were filed under Section 433(e) read with Section 434 of the Companies Act, 1956, seeking the winding up of the Respondent company on account of its inability to pay its debts. The core issue was whether these petitions should be transferred to the National Company Law Tribunal (NCLT) as per the Notification dated 7 December 2016, which mandated the transfer of all pending winding-up petitions under clause (e) of Section 433 to NCLT unless served on the respondent as required by Rule 26 of the Companies (Court) Rules, 1959. Interpretation of Rule 26 of the Companies (Court) Rules, 1959: The crucial question was what constitutes a notice under Rule 26 for the purposes of transferring pending winding-up petitions to NCLT. Rule 26 mandates that every petition shall be served on the respondent named in the petition and on such other persons as required by the Act or Rules or as directed by the Judge or Registrar. The Respondent argued that service under Rule 26 is a post-admission service, implying that the petition must be served after the court admits it. Conversely, the Petitioners argued that service under Rule 26 and notice under Rule 27 are distinct, with Rule 26 not being contingent on the petition's admission. Application of Transfer Provisions under the Companies (Transfer of Pending Proceedings) Rules, 2016: Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, stipulates that all pending winding-up petitions under clause (e) of Section 433, which have not been served on the respondent as required under Rule 26, shall be transferred to NCLT. The court had to determine whether the pending petitions had been served in accordance with Rule 26 to decide if they should be transferred. The court concluded that Rule 26 requires service of the petition on the respondent irrespective of the petition's admission status. Therefore, if a petition had been served on the respondent as required by Rule 26, it would not be transferred to NCLT and would continue to be dealt with by the High Court under the 1956 Act. Conclusion: The court held that the petitions in question, having been served on the Respondent in compliance with Rule 26, would not be transferred to NCLT. They would continue to be dealt with by the High Court in accordance with the provisions of the Companies Act, 1956. This interpretation ensures that only those petitions that have not been served as per Rule 26 are transferred to NCLT, maintaining the jurisdiction of the High Court over properly served petitions.
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