Chief Justice of India SA Bobde, Justices AS Bopanna and V. Ramasubramanian while hearing the appeal of financial creditor in the matter of winding up has held that creditor of a company can seek transfer of winding up proceeding pending before a High court to a National Company Law Tribunal.
The issues taken into consideration were:
•what are the circumstances under which a winding up proceeding pending on the file of a High court could be transferred to the NCLT and
• At whose instance, such transfer could be ordered.
The court relied on the case Forech India Ltd. vs. Edelweiss Assets Reconstruction Co. Ltd where it was held that any person can apply for the transfer of proceedings. But the court in this case took the literal interpretation stating “But we do not think that the decision in Forech India Limited (supra) is an authority for the proposition that the 5th proviso to Clause (c) of Subsection (1) of Section 434 could be invoked by any person who is not a party to the proceeding for 20 winding up. The 5th proviso which we have already extracted uses the words “any party or parties to any proceedings relating to the winding up of companies pending before any Court.” Therefore, on a literal interpretation, such a right should be held to be confined only to”the parties to the proceedings.”
The transferability of a winding up proceeding, both under Rule 5 as well as well as under Rule 6, is directly linked to the service of the winding up petition on the respondent under rule 26 of the companies rule, 1959.
Therefore the appeal is allowed, the impugned order is set aside and the petition is transferred to NCLT from Allahabad High Court under section 7 of the IBC.