2017 (3) TMI 1272 - HC - Insolvency and Bankruptcy

Revival of the Company in provisional liquidation - Winding up petition - Held that - Nothing that has been brought to the notice of this Court that requires proceedings in relation to a company that has been admitted to be wound up, and revival applications in relation thereto, to be transferred to the National Company Law Tribunal. In my view, it could not have been the intention of the Legislature in its infinite wisdom, to create a situation where, the scheme relating to the revival of company in provisional liquidation, pending consideration before the Company Court would be required to be transferred to and dealt with by the National Company Law Tribunal; leading to multiplicity of proceedings with the real possibility of conflicting decisions on the dissolution/winding up and/or revival of the respondent company. In view of the foregoing, the issue that arose for consideration before this Court, is answered in the affirmative. The Company Court would exercise exclusive jurisdiction for adjudicating applications, in relation to the revival of the Company in provisional liquidation.

Issues Involved:
1. Jurisdiction of the Company Court post the notification dated 07.12.2016.
2. Applicability of Section 391 of the Companies Act, 1956 in the context of a company in provisional liquidation.
3. Interpretation of the expression "proceedings relating to winding up" under the Companies Act, 1956.
4. Transfer of pending proceedings to the National Company Law Tribunal (NCLT).

Detailed Analysis:

1. Jurisdiction of the Company Court Post the Notification Dated 07.12.2016:
The primary issue addressed is whether the Company Court retains exclusive jurisdiction to adjudicate applications under Section 391 of the Companies Act, 1956, for the revival of a company in provisional liquidation, following the notification dated 07.12.2016 by the Ministry of Corporate Affairs. The notification, effective from 15.12.2016, stipulates the transfer of pending proceedings, other than those related to winding up, to the NCLT.

2. Applicability of Section 391 of the Companies Act, 1956:
The judgment clarifies that Section 391 of the Companies Act, 1956, applies to companies in provisional liquidation. The Company Court retains the power to sanction a scheme of compromise or arrangement for a company that is being wound up. This is supported by the provisions of Section 446(2)(c) of the Companies Act, 1956, which grants the Company Court exclusive jurisdiction over such applications.

3. Interpretation of the Expression "Proceedings Relating to Winding Up":
The term "proceedings relating to winding up" is interpreted broadly. The expression is of the widest amplitude and includes applications for the revival of a company in provisional liquidation. The judgment emphasizes that the proceedings for the revival of the respondent company are inextricably linked to the winding up proceedings and should be considered as "proceedings relating to winding up."

4. Transfer of Pending Proceedings to the NCLT:
The judgment concludes that the applications for the revival of the respondent company do not fall under the category of independent proceedings that should be transferred to the NCLT. The Company Court retains jurisdiction over these applications. The notification's clause 3, which excludes "proceedings relating to winding up," supports this conclusion. The Company Court is deemed to have the exclusive jurisdiction to adjudicate revival applications for companies in provisional liquidation.

Conclusion:
The High Court of Delhi ruled that the Company Court retains exclusive jurisdiction to adjudicate applications under Section 391 of the Companies Act, 1956, for the revival of a company in provisional liquidation, despite the notification dated 07.12.2016. The applications for the revival of the respondent company will not be transferred to the NCLT and will continue to be dealt with by the Company Court. The proceedings for the revival of the respondent company are considered "proceedings relating to winding up" and fall within the exclusive purview of the Company Court.

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