All the winding up petitions filed in the courts in which hardly any proceedings have taken towards winding up of the company have to be compulsorily transferred to the NCLT- Delhi High Court.
Title: Aakash Engineers & Contractors v. Gaursons Hi-tech Infrastructure
Decided on: 10th October, 2023
+ CO.PET. 531/2016 & CO.APPL. 1671/2017
CORAM: HON’BLE MS. JUSTICE PRATIBHA M. SINGH
Introduction
The Delhi High Court transferred a winding up petition made under Section 434 of the Companies Act, 1996 on the ground of Non Payment of Debt, to the NCLT as per the Legal Position settled in the case of Action Ispat and Power Limited v. Shyam Metallics and Energy Limited (2021) 2 SCC 641, and in view of Companies (Transfer of Pending Proceedings) Rules, 2016, as hardly any proceedings had been initiated towards winding up of the company because the petition was at a very Nascent stage and no substantive orders had been passed towards the winding up of the company.
Facts of the Case
In 2012 Respondents advertised for Contractors for one of its projects in Noida and thus hired the Petitioners and gave them several work orders for construction. They reassured them of Timely payments and Cooperation however when the petitioner began with the work the Respondents caused several difficulties for them during execution and failed to make payments.
The petitioners still completed the work on time and raised a bill after the completion for all the costs incurred. When the Respondents failed to pay that cost, they sent them a Legal Notice on 1st March 2016 as per section 431 (1) (a) of the Companies Act, 1956.
There was no reply given by the Respondent’s side hence the Petitioners filed the application for Winding up of the company under section 434 on the ground of Non-payment of Debts. An Interim order was passed on 25th July 2016, ordering the respondent company to not dispose of or alienate, or encumber directly or indirectly or part with any asset of the company except for the ordinary course of business or the payment of salary or statutory dues.
On, 10th Jan 2017 Respondents came up with their contentions that no notice was given to them under section 434 of the Companies Act, as claimed by the petitioner, and that on 3rd Feb 2016 itself, the Petitioners invoked the arbitration clause mentioned in the said work orders, they also submitted before the court that the present petition should not be in effect as an alternative remedy for dispute resolution has already been invoked.
Later a Rejoinder dated 25th May 2017 which was on record was found by the court which clearly showed that there were arbitration proceedings between both parties. On 16th of August 2018, the court asked the parties to file a copy of the award that was rendered through the Arbitration proceedings. After that, the petition was adjourned from time to time because either or none of the parties appeared. The provisional Liquidator was also not appointed in the present matter.
Court analysis and decision
After listening to both parties and looking at all the facts and circumstances of the case, Delhi HC in this case relied on the Judgement given in the case of Action Ispat and Power Limited v. Shyam Metalics and Energy Limited (2021), winding up proceedings which have not reached an advanced stage ought to be shifted to the National Company Law Tribunal (NCLT), Only when a Company Liquidator has been assigned and the proceedings have arrived at a phase where it would be irrevocable, making it not possible to reverse time that the Company court must continue with the winding up, instead of moving the proceedings to the NCLT. It would depend upon the facts and circumstances of the case whether that phase has arrived yet, the court examined that in this present case that advanced stage hasn’t been reached yet and it’s still at a very nascent stage and no substantive orders have been passed towards winding up of the company, including the appointment of the Liquidator.
Hence the order was passed to transfer the electronic record of the petition to the NCLT within one week by the Registry. The interim order was allowed to continue till the first hearing of the present petition by NCLT.
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Written by- Aditi