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2020 (11) TMI 126 - HC - Companies LawTransfer of the captioned company petition under the substituted Section 434 in Companies Act, 2013 - According to the learned Counsel for the opponent, the cases which have not been transferred from the High Court as contemplated in (ii) of third proviso to Section 434 (1)(c) cannot be transferred. - HELD THAT - Initially only those matters where the petition was not served upon the company, could be transferred; by subsequent amendment, all the petitions pending with the High Court irrespective of the stages, could be transferred. On plain reading of third proviso to Section 434 (1)(c) with fifth proviso which commences with provided further persuades this Court to say that the proviso 3(ii) to Section 434 (1)(c) is subject to fifth proviso; and thus on application under the fifth proviso, pending case can be transferred - In the instant case, concededly the financial creditors i.e. bank(secured creditor) has moved the application under Section 7 of the code and the party who would otherwise be treated as operational creditor (unsecured creditors) has invoked the jurisdiction of this Court. In the opinion of this Court, transfer would be in alignment with the object of the amendment and therefore, the application is required to be accepted and the petition being Company Petition No.353 of 2016 is ordered to be transferred to the Tribunal under the Insolvency bankruptcy Code, 2016. The transfer shall be effected. Oral application by the learned Counsel for the original petitioner to stay this order cannot be accepted having regard to the reasons already assigned by this Court.
Issues Involved:
Transfer of company petition under Section 434 in Companies Act, 2013; Interpretation of legal provisions including Insolvency & Bankruptcy Code, 2016; Application for transfer relying on Forech India Ltd. case; Applicability of Rules 26 and 27 of Companies (Court) Rules, 1959; Judicial discretion for transfer under fifth proviso of Section 434(1)(c). Analysis: The judgment dealt with the application seeking the transfer of a company petition under the substituted Section 434 in the Companies Act, 2013. The court considered the legal provisions, including the Insolvency & Bankruptcy Code, 2016, and Rules 26 and 27 of the Companies (Court) Rules, 1959. The court referred to the Forech India Ltd. case to analyze the transfer of proceedings and the subsequent amendments to Section 434. It was noted that only winding up petitions without notice served were initially to be transferred to the NCLT under the Code, but later, all pending petitions with the High Court could be transferred, aligning with the objective of the Code to resuscitate corporate debtors. The court emphasized the statutory scheme and the importance of Section 238 of the Code overriding other laws. The judgment clarified that the amended Section 434 of the Companies Act, 2013, must be read as part of the Act, and any inconsistency with the Code would require the latter to prevail. The court held that the NCLT proceedings must continue, and the High Court's judgment had to be set aside. The transfer of cases from the High Court was discussed, highlighting the discretion vested with the company court under the fifth proviso of Section 434(1)(c). Regarding the application for transfer in the present case, the court observed that the transfer would align with the objective of the amendment and ordered the company petition to be transferred to the Tribunal under the Insolvency & Bankruptcy Code, 2016. The court emphasized that the judicial discretion for transfer should consider the object sought to be achieved by the 2018 Amendment. The oral application for a stay on the order was rejected by the court, considering the reasons already provided in the judgment. The detailed analysis of legal provisions, precedents, and the objective of the Code guided the court's decision in ordering the transfer of the company petition.
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