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In Light Of Corporate Ministry Notification, Bombay HC Lays Down Rules For Transfer Of Petitions To NCLT [Read Order]

Nitish Kashyap
26 Dec 2016 5:26 PM GMT
In Light Of Corporate Ministry Notification, Bombay HC Lays Down Rules For Transfer Of Petitions To NCLT [Read Order]
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On December 7, 2016, a notification was issued by the Central Government, through the Corporate Ministry, it stated- All petitions relating to winding up under clause (e) of Section 433 pending before High Courts, and which have not been served on the Respondent as required by Rule 26 of the Companies (Court) Rules, 1959, stand transferred to the appropriate Bench of the National Company Law Tribunal (“NCLT”) exercising territorial jurisdiction over the mater.

In light of the above notification, Neelkamal Realtors contended before the High Court that the winding up petitions filed against it, ought to be transferred to the National Company Law Tribunal. Whereas the petitioners argued that since the petition has been served to the respondents under Rule 26, the transfer notification did not apply to them and the Bombay High Court retains its jurisdiction over them.

Since the issue pertains to a particular notification that may potentially decide the fate of many petitions filed before the high court, the single bench of Justice SC Gupte deemed it appropriate to give a patient hearing to all interested parties including the ones who were not a part of the two petitions.

Noting that the new Companies Act of 2013 seeks to repeal the earlier act of 1956 and consolidates the law relating to companies over the last 100 years in this country (the first Indian Companies Act being the Act of 2013), Gupte J observed that the whole of the 2013 Act is yet to be brought into force and the centre has been bringing in different provisions of the said act through notifications on a piecemeal basis.

On June 1, 2016, the centre constituted NCLT and NCLAT through notifications issued by the corporate ministry.

The crucial question before the court was whether or not the petition has been served on the Respondent “as required under Rule 26 of the Companies (Court) Rules, 1959”. Zal Adhyarujina, who appeared for the Neelkamal Realtors argued that Rule 26 contemplates service of petition after it has been admitted by the High Court. While Simil Purohit who appeared for the petitioners, arguing against the transfer submitted the distinction between service of petition and notice of petition. Court accepted the argument made by the petitioners and held that “service of petition implies service on the respondent or other person, as the case may be, of a copy of the petition, whereas notice of the petition connotes notice of the hearing of the petition before the court.”

Thus, the court refused to transfer the two winding up petitions to the NCLT and held that – “Every winding up petition under clause (e) of Section 433 which is pending before the High Court and which is not served by the petitioner on the respondent company shall stand transferred to NCLT under Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. If such pending petition is served by the petitioner on the respondent, the petition will continue to be dealt with by this court and the applicable provisions will be the provisions of 1956 Act.”

Read the order here.

This article has been made possible because of financial support from Independent and Public-Spirited Media Foundation.
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