2017 (9) TMI 1129 - Tri - Insolvency and Bankruptcy

Corporate insolvency procedure - Insolvency and Bankruptcy Code - Held that - According to learned counsel the provisions of Insolvency and Bankruptcy Code are not retrospective and cannot take away the rights of the petitioner which has emerged from the provisions of the erstwhile Companies Act, 1956. The aforesaid argument is wholly misplaced because the Companies Act, 2013 has been enforced amending the provisions concerning winding up and substituting it by Section 271 of 2013 Act. It is further appropriate to mention that Section 255 of the Insolvency and Bankruptcy Code, 2016 provides that the Companies Act, 2013 was amended in the manner specified in the Schedule XI. It is pertinent to mention that in Chapter XXII of 2013, Act the provisions of the 1956 Act have not been incorporated in 2013 Act and schedule XI of the Code which had come into force has substituted Section 271 by limiting the grounds of winding up and the ground for inability to pay has been taken away by the schedule XI. It is thus patent that the jurisdiction concerning inability to pay debt w.e.f. 15.11.2015 has been taken over by the provisions of Insolvency and Bankruptcy Code, 2016. Therefore, it is not possible to accept that the petitioner would not comply with the Rules of 2016 namely Adjudicating Authority/Transfer of Pending Proceeding Rules (supra). Accordingly, we conclude that the petition is liable to be dismissed.

Issues:
1. Transfer of winding up petition from High Court to National Company Law Tribunal.
2. Compliance with Companies (Transfer of Pending Proceedings) Rules, 2016 and Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
3. Abatement of petition due to non-compliance with rules.
4. Argument regarding retrospective application of Insolvency and Bankruptcy Code.

Transfer of Winding Up Petition:
The petitioner initially filed a Company Petition in the Delhi High Court seeking the winding up of a company. However, as the respondent could not be served, the High Court transferred the matter to the National Company Law Tribunal (NCLT) in accordance with a notification issued by the Central Government. The NCLT required compliance with specific rules for further proceedings.

Compliance with Rules:
Despite multiple opportunities, the petitioner failed to file the necessary affidavit of service and complete the required paperwork as per the Companies (Transfer of Pending Proceedings) Rules, 2016 and the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The rules mandated submission of all information for admission of the petition under the Insolvency and Bankruptcy Code, 2016 within a specified timeline.

Abatement of Petition:
Due to the petitioner's non-compliance with the rules, the tribunal dismissed the petition, leading to its abatement. The dismissal was based on the failure to adhere to the procedural requirements outlined in the rules, resulting in the petition becoming invalid and liable for dismissal.

Argument on Retrospective Application:
The petitioner argued against the application of the Insolvency and Bankruptcy Code, citing that the rights derived from the Companies Act, 1956 should not be affected. However, the tribunal noted that the Companies Act, 2013 had replaced the provisions for winding up, and the Insolvency and Bankruptcy Code, 2016 now governs matters concerning inability to pay debts. The tribunal emphasized that the petitioner must comply with the rules of 2016, as the jurisdiction regarding inability to pay debts had shifted to the new code.

In conclusion, the petition was dismissed due to non-compliance with the rules, but the petitioner was granted liberty to file a fresh petition based on the same cause of action. The judgment highlighted the importance of adhering to the procedural requirements under the new insolvency laws and the limited scope for invoking provisions of the old Companies Act in such matters.

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