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TMI Blog2018 (12) TMI 1744X X X X Extracts X X X X X X X X Extracts X X X X ..... r consents. Even in such a scenario, the Court has to apply its mind to see whether any other is sought to be prejudiced by such consent. It is possible that the very admission of a financial creditor s petition by the adjudicating authority under the IBC simultaneously triggers off of a moratorium of all other proceedings pertaining to the same company including the pending proceedings before the company Court. But the company Court should be sure that the proceedings before the tribunal or adjudicating authority are firmly in place before transferring the proceedings pending before it when the transfer is resisted by the creditor who has brought the petition before the company Court. It is possible that by virtue of the related provisions of the IBC, an order of admission would imply the immediate appointment of interim resolution professionals and the consequential suspension of authority of other adjudicating fora in respect of matters pertaining to the concerned company; but so be it. Once the proceedings under the IBC have been admitted, the company Court should yield to the more modern mechanism under the IBC in view of the obvious legislative intent apparent. It was b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d new concepts that have opened up upon the Companies Act, 2013 and the Bankruptcy Code operating in tandem. There are now financial creditors who are distinct from operational creditors. There are interim resolution professionals who lose the interim tag once their appointments are ratified. There is also a body another of the many tribunals set up to emasculate the Courts which started off as the National Company Law Tribunal, but is referred to as the Adjudicating Authority under the IBC. The appellant has also referred to the several amendments to the Companies Act, 2013 since it was partially first given effect to and notifications galore issued, sometimes on a monthly basis by the Central Government, to alter, amend or modify the provisions of the 2013 Act and the rules thereunder. There is at least one amendment to the Act of 2013 introduced by the Central Government in exercise of the authority delegated to it by the statute for the purpose of removing difficulties. Through the labyrinth of confusion that has been brought about in the applicable law since or about 2013 when the Companies Act, 2013 was given substantial effect to, winding-up petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 7 of the IBC. The appellant maintains that in the absence of any discretion being conferred by the relevant provision and since a regime pertaining to resolution plans has replaced the liquidation proceedings envisaged under the Act of 1956, the company Court has little discretion to refuse to transfer a matter to the adjudicating authority upon a request under such provision being made. At any rate, it is the submission of the appellant, that once the company Court sees that the process under the IBC has been put into motion by any creditor pertaining to the same company, the company Court should scarcely cling on to the petition notwithstanding having the authority so to do in terms of Rule 5 or Rule 6 of the notification of December 7, 2016 that has come into effect on December 15, 2016. The principal ground cited by the respondent creditor in response is that till such time that a petition filed under the IBC is admitted by the adjudicating authority in receipt thereof, there can be no question of the company Court transferring a creditor s winding-up petition that was validly carried to this Court and the preservation whereof has been provided for by the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties to the proceedings and, in such light, it may not be invoked by any other who may have interest in the proceedings but may not be a party thereto. Again, the interpretation of the word parties will carry a different meaning in respect of references under Section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985 that remain pending in company Courts. For the present purpose, the legal question that has arisen in the context of the impugned order is whether the mere filing of a petition by a financial creditor under Section 7 of the IBC in respect of a company should prompt the company Court in seisin of a creditor s petition against the same company to transfer such pending proceedings to the adjudicating authority under the IBC. There are several situations which can arise. Either party meaning the creditor or the company may apply in such a situation or, in the post-admission stage, any other creditor may apply and assert that since the matter has partaken a representative character, any other creditor of the company would be deemed to be a party within the meaning of that word first used in the second proviso to Section 434(1)(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the creditor who has brought the petition before the company Court. It is possible that by virtue of the related provisions of the IBC, an order of admission would imply the immediate appointment of interim resolution professionals and the consequential suspension of authority of other adjudicating fora in respect of matters pertaining to the concerned company; but so be it. Once a petition has been validly brought before a sovereign forum of a Court and the person who has brought such petition resists the transfer thereof, the company Court as part of such sovereign system will not require the suitor before it to be banished to another forum where the larger proceedings have not yet taken shape. Once the proceedings under the IBC have been admitted, the company Court should yield to the more modern mechanism under the IBC in view of the obvious legislative intent apparent. It was because the liquidation proceedings envisaged by the 1956 Act were found to be less than ideal, that an entirely different scheme has been put in place by the IBC in 2016. Thus, once proceedings pertaining to a company have been admitted by the IBC and the merits of such proceedings are to be g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion can be re-transferred to the company Court. Such view is exceptionable and does not appeal since there is no statutory provision for re-transfer. It is possible, however, to recall the order of transfer upon noticing that the reason for transferring the creditor s petition from the company Court was subsequently invalidated upon the financial creditor s petition not being admitted by the tribunal. But, with respect, it would be more appropriate not to effect the transfer at all till such time that the financial creditor s petition is admitted by the tribunal; whatever may be the legal consequences of such admission. In any event a moratorium may mean the creditor s petition in the company Court cannot be proceeded with; a moratorium may not imply that the company Court may lose its authority to transfer the creditor s petition to the tribunal. In fine, there is no ground to disagree with the order impugned dated August 9, 2018 by which the company s petition for transfer of the respondent s winding-up proceedings to the National Company Law Tribunal has been declined by the company Court here. The other appeal pertains to the order of August 10, 2018 by which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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