Delhi High Court
Ester Industries Ltd vs Indus Polyfilms Specialists Pvt Ltd on 24 April, 2024
Author: Dharmesh Sharma
Bench: Dharmesh Sharma
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on : 05 March 2024
Judgment pronounced on: 24 April 2024
+ CO.PET. 320/2008 & CO.APPL. 1162/2008, CO.APPL.
373/2019
ESTER INDUSTRIES LTD. ..... Petitioner
Through: Mr. Kunal Kher, Adv.
versus
INDUS POLYFILMS SPECIALISTS PVT LTD.
..... Respondent
Through: Mr. Lokesh Chopra, Adv. for
applicant.
CORAM:
HON'BLE MR. JUSTICE DHARMESH SHARMA
CO.PET. 320/2008
1. The instant Company Petition has been instituted under
Sections 433(e), 434 and 439 of the Companies Act, 1956 seeking
winding up of the respondent company - M/s. Indus Polyfilms
Specialists Pvt. Ltd., and is predicated on the non-payment of
outstanding dues amounting to Rs. 31,78,615/- along with interest @
18% per annum.
2. Briefly stated, the petitioner company is engaged in the business
of manufacturing, marketing and sale of certain polyester products
such as yarns, films and other allied products. It is stated on behalf of
the petitioner company that the respondent company placed certain
orders for the supply of the above-mentioned polyester goods. Further,
it was agreed upon between the parties that the petitioner company
Signature Not Verified
Digitally Signed By:PRAMOD
KUMAR VATS CO.PET. 320/2008 Page 1 of 6
Signing Date:24.04.2024
17:40:57
was to supply the goods to an associate company of the respondent,
namely M/s. SJS Packaging Inc. situated in Chicago, USA, and that
the payment for such supplies would be made by the respondent
company and its associate company - SJS Packaging Inc.
3. It appears that the respondent company issued the following
cheques to partly discharge its liabilities towards the invoices raised
by the petitioner company:
(i) Cheque No. 020473, dated 15.02.2008 - for an amount of Rs.
9,80,000/-;
(ii) Cheque No. 205906, dated 25.07.2008 - for an amount of Rs.
5,00,000/-; and
(iii) Cheque No. 205907, dated 25.07.2008 - for an amount of Rs.
5,00,000/-
4. In this regard, it is stated on behalf of the petitioner company
that said cheques were drawn on Centurion Bank of Punjab, Green
Park Extension, New Delhi; and on presentation of the cheques for
encashment, all three of the above-noted cheques stood dishonored
with the remarks "Funds Insufficient", vide the Cheque Return Memo
dated 31.07.2008.
5. It is the case of the petitioner company that the respondent
company failed to discharge its liability despite a notice dated
11.08.2008 having been issued under Section 138 of the Negotiable
Instruments Act of 1881. Thereafter, in view of the fact that the
respondent company failed/neglected to discharge its liability, the
petitioner company was constrained to serve a legal demand notice
dated 15.09.2008 upon the respondent company under Section 434 of
the Companies Act, 1956 calling upon them to repay the outstanding
amount of Rs. 31,78,615/- along with interest @ 18% per annum.
Signature Not Verified
Digitally Signed By:PRAMOD
KUMAR VATS CO.PET. 320/2008 Page 2 of 6
Signing Date:24.04.2024
17:40:57
However, despite issuance and service of the legal notice dated
15.09.2008, the respondent company failed to repay the outstanding
amount, and hence, the present petition was instituted.
6. It is borne out from the record that a Provisional Liquidator was
appointed to the respondent company vide order dated 17.03.2010.
However, subsequently, an application being CO.APPL. No. 621/2010
was moved seeking recall of the order dated 17.03.2010 and said
application was allowed vide order dated 18.10.2010 and the order
dated 17.03.2010, appointing a Provisional Liquidator, was thereby
recalled. Thereafter, vide order dated 17.01.2012, the CO.APPL.
bearing No. 1162/2008, seeking appointed of a Provisional Liquidator
was revived, which has since been pending.
7. Evidently, the respondent company has failed to pay its debt in
the normal and ordinary course of its business, hence, the present
petition has been filed. However, on a perusal of the record, it is borne
out that this winding up petition has been a complete non-starter, and
as of yet, no substantial orders have been passed in furtherance of the
liquidation of the respondent company.
8. It is apposite to note that during the pendency of these
proceedings, the Insolvency and Bankruptcy Code, 2016 as well as the
Companies Act, 2013, have since been enacted. In view of this, it is
the opinion of this Court that the present petition does not deserve to
continue before this Court, and it would be appropriate for the same to
be transferred to the National Company Law Tribunal1. In this regard,
it is necessary to consider Section 434 of the Companies Act, 2013
1 NCLT
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Digitally Signed By:PRAMOD
KUMAR VATS CO.PET. 320/2008 Page 3 of 6
Signing Date:24.04.2024
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which provides for the transfer of proceedings relating to winding up,
pending before High Courts, to the NCLT, and reads as under:
"434. Transfer of certain pending proceedings
(1) On such date as may be notified by the Central Government in
this behalf,-
(a) all matters, proceedings or cases pending before the Board of
Company Law Administration (herein in this section referred to as
the Company Law Board) constituted under sub-section (1) of
section 10E of the Companies Act, 1956 (1 of 1956), immediately
before such date shall stand transferred to the Tribunal and the
Tribunal shall dispose of such matters, proceedings or cases in
accordance with the provisions of this Act; (b) any person
aggrieved by any decision or order of the Company Law Board
made before such date may file an appeal to the High Court within
sixty days from the date of communication of the decision or order
of the Company Law Board to him on any question of law arising
out of such order: Provided that the High Court may if it is satisfied
that the appellant was prevented by sufficient cause from filing an
appeal within the said period, allow it to be filed within a further
period not exceeding sixty days; and
(b)all proceedings under the Companies Act, 1956 (1 of 1956),
including proceedings relating to arbitration, compromise,
arrangements and reconstruction and winding up of companies,
pending immediately before such date before any District Court or
High Court, shall stand transferred to the Tribunal and the Tribunal
may proceed to deal with such proceedings from the stage before
their transfer: Provided that only such proceedings relating to the
winding up of companies shall be transferred to the Tribunal that
are at a stage as may be prescribed by the Central Government.
Provided further that only such proceedings relating to cases other
than winding-up, for which orders for allowing or otherwise of the
proceedings are not reserved by the High Courts shall be
transferred to the Tribunal [Provided also that]-
(i) all proceedings under the Companies Act, 1956 other than the
cases relating to winding up of companies that are reserved for
orders for allowing or otherwise such proceedings; or
(ii) the proceedings relating to winding up of companies which
have not been transferred from the High Courts; shall be dealt with
in accordance with provisions of the Companies Act, 1956 and the
Companies (Court) Rules, 1959.]
Provided also that proceedings relating to cases of voluntary
winding up of a company where notice of the resolution by
advertisement has been given under subsection (1) of section 485
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Digitally Signed By:PRAMOD
KUMAR VATS CO.PET. 320/2008 Page 4 of 6
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17:40:57
of the Companies Act, 1956 but the Company has not been
dissolved before the 1st April, 2017 shall continue to be dealt with
in accordance with provisions of the Companies Act, 1956 and the
Companies (Court) Rules, 1959."
9. It is also expedient to consider the decision of the Supreme
Court in the case titled Action Ispat and Power Pvt. Limited v.
Shyam Metalics and Energy Limited2, wherein the aforesaid
provision came up for interpretation and the relevant extract of which
is reproduced hereunder:
"22. Given the aforesaid scheme of winding up under Chapter XX
of the Companies Act, 2013, it is clear that several stages are
contemplated, with the Tribunal retaining the power to control the
proceedings in a winding up petition even after it is admitted. Thus,
in a winding up proceeding where the petition has not been served
in terms of Rule 26 of the Companies (Court) Rules, 1959 at a
preadmission stage, given the beneficial result of the application of
the Code, such winding up proceeding is compulsorily transferable
to the NCLT to be resolved under the Code. Even post issue of
notice and pre admission, the same result would ensue. However,
post admission of a winding up petition and after the assets of the
company sought to be wound up become in custodia legis and are
taken over by the Company Liquidator, section 290 of the
Companies Act, 2013 would indicate that the Company Liquidator
may carry on the business of the company, so far as may be
necessary, for the beneficial winding up of the company, and may
even sell the company as a going concern. So long as no actual
sales of the immovable or movable properties have taken place,
nothing irreversible is done which would warrant a Company Court
staying its hands on a transfer application made to it by a creditor
or any party to the proceedings. It is only where the winding up
proceedings have reached a stage where it would be irreversible,
making it impossible to set the clock back that the Company Court
must proceed with the winding up, instead of transferring the
proceedings to the NCLT to now be decided in accordance with the
provisions of the Code. Whether this stage is reached would
depend upon the facts and circumstances of each case."
2
(2021) 2 SCC 641
Signature Not Verified
Digitally Signed By:PRAMOD
KUMAR VATS CO.PET. 320/2008 Page 5 of 6
Signing Date:24.04.2024
17:40:57
10. The above noted decision of the Supreme Court has been relied
upon by this Court in Citicorp International Limited v. Shiv-Vani
Oil & Gas Exploration Services Limited3, wherein it was held that
winding up proceedings pending before High Courts, which are at a
nascent stage and have not progressed to an advanced stage, ought to
be transferred to the NCLT.
11. Hence, the instant petition is transferred to the NCLT. Parties to
appear before the NCLT on 27.05.2024. The interim orders passed by
this Court in these petitions, if any, shall continue till the said date.
12. The parties are at liberty to place their rights and contentions
before the NCLT. It is left to the NCLT to consider the matter and
pass appropriate orders in accordance with law.
13. The electronic record of the instant petitions be transmitted to
the NCLT within a period of one week by the Registry. List before the
NCLT on 27.05.2024.
14. In view of the above, the present company petition as well as
pending applications, if any, are disposed of.
DHARMESH SHARMA, J.
APRIL 24, 2024
Sadiq
