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2018 (12) TMI 395 - HC - Companies LawTransfer of proceedings pending in the Company Court to the National Company Law Tribunal (NCLT) - winding up proceedings - Held that - Except for the Appellant, there is no opposition by the OL or any of the parties to the winding up proceedings to the transfer of the proceedings to the NCLT. The OL was certainly a party to the winding up proceedings and this was sufficient, in terms of the proviso to Section 434(1) (c) of the 2013 Act, for the Company Court to proceed to exercise its discretion in the matter. With the prospect of recovery of dues being brighter in the NCLT, the two other claimants can also have no objection to the transfer of the proceedings to the NCLT. The fact of the matter is that despite pendency of the winding up petition for more than four years, no money has been able to be recovered by any of the creditors. At this juncture it is necessary for this Court to clarify that it is not expressing any view on the plea of the Appellant regarding the conduct of Respondent No.1 since that is not the subject matter of the present appeal. That will have to be pursued separately by the Appellant in accordance with law. Thus this Court concurs with the Company Court that it was in the best interest of all the creditors that the matter should be transferred to NCLT.
Issues Involved:
1. Transfer of proceedings from Company Court to NCLT under Section 434 of the Companies Act, 1956. 2. Locus standi of UCO Bank to seek transfer of proceedings. 3. Conduct of Respondent No.1 in disclosing material facts. 4. Involvement of other claimants (M/s. Magma Fincap Ltd. and Arjun Chemicals Pvt. Ltd.). Detailed Analysis: 1. Transfer of proceedings from Company Court to NCLT under Section 434 of the Companies Act, 1956: The primary issue in this case was the transfer of the winding-up proceedings from the Company Court to the National Company Law Tribunal (NCLT) under Section 434 of the Companies Act, 1956. The Company Court had initially appointed the Official Liquidator (OL) as the Provisional Liquidator (PL) and had taken steps to secure the assets of the appellant. However, due to the lack of substantial progress in recovering dues, UCO Bank filed an application for transferring the proceedings to NCLT. The Company Court observed that it would be in the best interest of all creditors to transfer the proceedings to NCLT for the initiation of corporate insolvency resolution. The Court noted that the winding-up petition was at an initial stage, and the OL had already taken steps to secure the assets. Consequently, the Company Court transferred the proceedings to NCLT and revoked the order appointing the OL as PL, subject to UCO Bank paying the expenses incurred by the OL. 2. Locus standi of UCO Bank to seek transfer of proceedings: The appellant contended that UCO Bank did not have the locus standi to seek the transfer of proceedings as it was not a party to the winding-up proceedings before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. However, the Court noted that the OL was a party to the winding-up proceedings and had initially not opposed UCO Bank's prayer for transfer. The OL's attempt to withdraw its consent to the transfer was negatived by the Company Court, and the OL accepted the order. The Court held that the OL being a party to the winding-up proceedings was sufficient for the Company Court to exercise its discretion to transfer the proceedings to NCLT. 3. Conduct of Respondent No.1 in disclosing material facts: The appellant argued that Respondent No.1 had acted unfairly by not disclosing certain material facts before the Company Court. However, the Court clarified that it was not expressing any view on this plea as it was not the subject matter of the present appeal. The appellant was advised to pursue this issue separately in accordance with the law. 4. Involvement of other claimants (M/s. Magma Fincap Ltd. and Arjun Chemicals Pvt. Ltd.): The appellant pointed out that there were other claimants, namely M/s. Magma Fincap Ltd. and Arjun Chemicals Pvt. Ltd., whose winding-up petitions were disposed of by the Company Court, permitting them to file their claims before the OL. The appellant argued that the Company Court should have heard these claimants before passing the impugned order. However, the Court noted that with the prospect of recovery of dues being brighter in the NCLT, these claimants could also have no objection to the transfer of the proceedings to NCLT. Conclusion: The Court concurred with the Company Court's decision to transfer the proceedings to NCLT, stating that it was in the best interest of all creditors. The appeal was dismissed, and the pending applications were disposed of.
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