2018 (11) TMI 558 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - default in repayment of loan advanced to the corporate debtor - winding up petition filed against the Corporate Debtor has been admitted - Held that - If a winding up petition filed against the Corporate Debtor has been admitted by Hon ble High Court and notice under rule 26 of the Companies (Court) Rules, 1959 was issued and such Company petition has not been transferred after the commencement of Insolvency and Bankruptcy Code, 2016 and winding up proceedings has been initiated and pending before the Hon ble High court the remedy if any available to the creditors who has not joined in the said winding up proceedings is not to approach to the Tribunal under the provisions of the Code but to submit its claim before the Hon ble high Court. Here in the case in hand, the Applicant Lakhotia transport Co. Pvt. Ltd. has moved the winding up petition long before the filing of this application by the Financial Creditor before this Tribunal. The winding up petition was filed before the Hon ble High Court at Calcutta on 16-09-2014 and it was admitted on 17-08-2015 and notice was issued and advertisement of winding up petition was caused in the newspaper in terms of the winding up order on 14-09-2015. That order of admission of winding up proceedings is still in force. Truly the Financial Creditor has got an order referred to earlier from the Hon ble High Court for reissuing publication of advertisement relating to winding up in the newspaper. It is incorrect to say that the order of admission was recalled as submitted by the Ld. Counsel for the Financial Creditor. In view of the above said discussion, it is considered view that applicable filed by the Financial Creditor (SBI) under section 7 of the I&B Code is not maintainable

Summary

Issues Involved:
1. Maintainability of CP(IB) No. 767/KB/2017 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I & B Code) in the presence of an ongoing winding up proceeding.
2. Jurisdictional conflict between National Company Law Tribunal (NCLT) and High Court in handling insolvency and winding up proceedings.
3. Rights of various creditors and workers in the context of ongoing insolvency and winding up proceedings.

Issue-wise Detailed Analysis:

1. Maintainability of CP(IB) No. 767/KB/2017 under Section 7 of the I & B Code:
The primary issue was whether the application filed by the State Bank of India (SBI) under Section 7 of the I & B Code for initiating Corporate Insolvency Resolution Process (CIRP) against Jai Balaji Industries Ltd. was maintainable given the existing winding up proceedings against the same corporate debtor. The Tribunal noted that the winding up petition (CP No. 822 of 2014) filed by Lakhotia Transport Company Pvt. Ltd. was admitted by the High Court of Calcutta on 17/08/2015 and was still in force. The Tribunal emphasized that once a winding up petition is admitted and advertised, it takes precedence, and any subsequent insolvency proceedings under the I & B Code are not maintainable. The Tribunal referred to multiple judgments, including the Hon'ble NCLAT's decision in Unigreen Global Pvt. Ltd. and Birender Kumar Vs. M/s Adel Landmarks Ltd., which supported the view that ongoing winding up proceedings bar the initiation of CIRP under the I & B Code.

2. Jurisdictional Conflict:
The Tribunal addressed the jurisdictional conflict between the NCLT and the High Court. It was argued that the High Court's jurisdiction in the winding up proceedings should take precedence, and the NCLT should not entertain parallel insolvency proceedings. The Tribunal cited several judgments from various High Courts, including the Rajasthan High Court in Jaipur Metals Electricals Ltd. and the Bombay High Court in West Hills Realty (P.) Ltd. v. Neelkamal Realtors Tower (P.) Ltd., which held that once a winding up petition is admitted and advertised, the High Court retains jurisdiction, and the NCLT should not initiate CIRP. The Tribunal concluded that the ongoing winding up proceedings before the High Court at Calcutta should continue to handle the corporate debtor's affairs.

3. Rights of Various Creditors and Workers:
The Tribunal considered the rights and interests of various creditors and workers involved in the proceedings. The workers of Jai Balaji Industries Ltd., represented by their union, argued that their livelihoods were at stake and opposed the insolvency petition filed by SBI. Similarly, other creditors, including Lakhotia Transport Company Pvt. Ltd. and Dynamic Hard Coke Manufacturing Company, argued that the winding up proceedings should take precedence and that the insolvency petition should be dismissed or stayed. The Tribunal acknowledged these concerns and emphasized that all creditors, both secured and unsecured, should participate in the ongoing winding up proceedings before the High Court to ensure a fair and comprehensive resolution of claims.

Conclusion:
The Tribunal held that the application filed by SBI under Section 7 of the I & B Code was not maintainable due to the ongoing winding up proceedings before the High Court at Calcutta. The Tribunal allowed the interim applications filed by the workers, Lakhotia Transport Company Pvt. Ltd., and Dynamic Hard Coke Manufacturing Company, and dismissed the insolvency petition filed by SBI. The Tribunal directed all parties to bear their respective costs and emphasized the importance of avoiding multiplicity of proceedings to ensure an orderly resolution of the corporate debtor's affairs.