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2018 (10) TMI 1488 - HC - Companies LawCorporate insolvency proceedings - company is under liquidation - seeking appropriate orders for transferring of the present petition to NCLT - Held that - There are allegations of fraud and misappropriation on the part of the Ex. Directors. AS informed that the Ex. Directors Mr.Sushant Mutreja and Mr.Nishant Mutreja are still in judicial custody pursuant to lodging of different FIRs against them. Keeping in view the observations in the chargesheet, this court has already ordered investigation by the SFIO. The liquidation proceedings are at an advanced stage. Much time has passed since the order appointing the OL as the Provisional Liquidator was passed. In view of the above, there is no ground made out to transfer the petition to NCLT. As applicant had pleaded that this fact that this court has admitted this petition and appointed the OL as the provisional liquidator was brought to the notice of NCLT, however, a perusal of the order of NCLT dated 25.05.2018 does not show any reference to the fact that the proceedings are pending in this court. As admittedly the winding up proceedings has been admitted and ordered for winding-up of the respondent- Corporate Debtor , we hold that the question of initiation of Corporate Insolvency Resolution Process against same Corporate Debtor does not arise. Application dismissed.
Issues Involved:
1. Transfer of petition to NCLT. 2. Jurisdiction and precedence of Insolvency Code over the Companies Act. 3. Allegations of fraud and misappropriation by Ex. Directors. 4. Investigation by SFIO. 5. Pending Supreme Court decision on NCLT's authority. Issue-wise Detailed Analysis: 1. Transfer of Petition to NCLT: The application was filed by an individual who booked a commercial space in one of the respondent company's projects, seeking to transfer the petition to NCLT. The applicant cited that NCLT had already appointed an Interim Resolution Professional (IRP) under section 7 of the Insolvency and Bankruptcy Code, 2016. The court noted that the applicant is not a party to the present proceedings and emphasized that the power to transfer under section 434 of the Companies Act, 2013, is discretionary, not mandatory. 2. Jurisdiction and Precedence of Insolvency Code over the Companies Act: The applicant's counsel argued, referencing the Bombay High Court judgment in Jotun India Private Limited vs. PSL Limited, that the Insolvency Code should take precedence over the Companies Act, 1956. However, it was noted that the petition was admitted, and the OL was appointed as the Provisional Liquidator on 11.1.2017, with the respondent company's assets already sealed and under valuation. The court highlighted that the word 'may' in section 434(1)(c) of the Companies Act, 2013, indicates discretionary power, not an obligation. 3. Allegations of Fraud and Misappropriation by Ex. Directors: The court's order on 29.5.2018 directed SFIO to investigate the respondent company due to allegations of siphoning off money by Ex. Directors, who were already in judicial custody. The chargesheet indicated significant financial misappropriations, justifying the need for a thorough investigation. 4. Investigation by SFIO: The court ordered SFIO to investigate under section 212 of the Companies Act, 2013, based on prima facie evidence of fraud and misappropriation. The Ex. Directors were accused of siphoning funds to various entities, necessitating an in-depth investigation to protect investors' interests. 5. Pending Supreme Court Decision on NCLT's Authority: The court noted the pending Supreme Court decision in State Bank of India v. Shakti Bhog Foods Ltd., which would address whether NCLT can initiate Insolvency Resolution Process when a High Court has already ordered the winding up of a company. This pending decision adds complexity to the jurisdictional issue. Conclusion: The application to transfer the petition to NCLT was dismissed, with the court emphasizing the advanced stage of liquidation proceedings and ongoing investigations by SFIO. The court maintained its jurisdiction, citing the discretionary nature of section 434(1)(c) and the significant progress made in the liquidation process. The pending Supreme Court decision on NCLT's authority further supported the court's decision to retain the case. The applications by flat buyers to continue proceedings before the Consumer Court were withdrawn, with liberty to file claims before the OL granted.
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