Anra Pharmaceuticals Pvt. Ltd. & Ors vs A. Ramasubbu

Company Appeal (AT) No. 310 of 2017

IN THE MATTER OF:

Anra Pharmaceuticals Pvt. Ltd. & Ors. ... Appellants

Versus

A. Ramasubbu ... Respondent

Present: For Appellants: Shri Jayant K. Mehta, Shri Aditya Verma and Shri Rahul Kukreja, Advocates

For Respondent: Shri M.A. Chinnasamy, Shri M. Anbalagan and Shri V. Senthil Kumar, Advocates

ORDER

13.11.2017 Respondent, Mr. A. Ramasubbu, filed a petition under

Sections 397, 398, 433, 439 and 450 of the Companies Act, 1956 before

the erstwhile Company Law Board (hereinafter referred to as 'CLB') with

the following prayers :

"IX. FINAL RELIEF :

a. The 1st respondent's ANRA Pharmaceuticals Pvt.

Limited, order to be wound up by appoint(ing) of

Receiver/Official Liquidator to take over

Management with all assets

b. direct the official liquidator to bring the public

auction of the company properties and

Company Appeal (AT) No. 310 of 2017-13.11.2017 2

c. pay the petitioner share of property and R.

Andandhakrishnan's share of the property to the

petitioner.

d. To declare the 05.01.2007 sale deed in Document

No. 96/2007 and 97/2007 and mortgage deed in

Document No. 286 of 2009 are null and void.

e. Any other relief deem fit and proper in the

circumstances of the case.

X. Particulars of Bank Draft Evidence payment of Fee

for the Petition Made.

i. Bank of which drawn : State Bank of India

ii. Name of the issuing branch : Palanganatham, Madurai

iii. Date : 03.03.2016

iv. Amount : Rs. 7500/-

v. Demand Draft No. 782982.

Dated at Madurai on this day of March, 2016."

2. In exercise of powers conferred under Clause (a) of sub-Section (1) of

Section 434 of the Companies Act, 2013, the petition pending before the CLB

was transferred to the National Company Law Tribunal (hereinafter referred

to as 'Tribunal') for adjudication. After transfer of the case, the appellant-

respondent objected to the maintainability of the petition under Sections 433,

439 and 450 of the Companies Act, 1956 on the ground that the CLB had no

jurisdiction to entertain such petition. However, the Tribunal by impugned

Company Appeal (AT) No. 310 of 2017-13.11.2017 3

order dated 20th June, 2017 passed in T.C.P. No. 206 of 2016 (C.P. No. 19 of

2015), rejected the objection raised by the respondent (appellant herein) and

held that the learned Adjudicating Authority is competent to try the company

petition treating the petition under Section 9 of the Insolvency and

Bankruptcy Code. 2016 (hereinafter referred to as 'I&B Code'). The said order

is under challenge in this appeal.

3. Learned counsel for the appellant/respondent submits that the petition

under Sections 433, 439 and 450 of the Companies Act, 1956 was not

maintainable before the Tribunal. Therefore, the question of initiation of

winding up proceedings in terms with the I&B Code does not arise.

4. On the other hand, according to learned counsel for the

respondent/petitioner after transfer of the case, the Adjudicating Authority

(Tribunal) has jurisdiction to initiate insolvency resolution process against

the appellant.

5. To decide the issue, it is desirable to refer to the rules framed by the

Central Government in terms with the provisions of Section 434 of the

Companies Act, 2013 and Section 239 of the I&B Code.

6. Clause (a) of sub-Section (1) of Section 434 of the Companies Act, 2013

while deals with the transfer of cases pending before the Company Law Board

to the Tribunal, Clause (c) of sub-Section (1) of Section 434 relates to transfer

of cases from the Hon'ble High Courts to Tribunal, as apparent from the

provisions and quoted below :

Company Appeal (AT) No. 310 of 2017-13.11.2017 4

"Sec. 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

Company Appeal (AT) No. 310 of 2017-13.11.2017 5

(c) 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 Court shall be transferred to the Tribunal :

Provided further 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

Company Appeal (AT) No. 310 of 2017-13.11.2017 6

(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.]

(2) The Central Government may make rules

consistent with the provisions of this Act to ensure timely

transfer of all matters, proceedings or cases pending

before the Company Law Board or the courts, to the

Tribunal under this section.]"

7. The Central Government, in exercise of powers conferred under Clause

(a) of sub-Section (1) of Section 434, transferred the cases from the Company

Law Board to the Tribunal. Subsequently also, in exercise of powers

conferred under sub-Sections (1) and (2) of Section 434 of the Companies Act,

2013 read with sub-Section (1) of Section 239 of the I&B Code, the Central

Government framed Rules known as "The Companies (Transfer of Pending

Proceedings) Rules, 2016" (hereinafter referred to as 'Transfer Rules'), which

relates to transfer of cases from the Hon'ble High Court to the

Tribunal/Adjudicating Authority. Rule 5 therein reads as follows :

"5. Transfer of pending proceedings of Winding up

on the ground of inability to pay debts.- (1) All petitions

relating to winding up under clause (e) of section 433 of the

Company Appeal (AT) No. 310 of 2017-13.11.2017 7

Act on the ground of inability to pay its debts pending

before a High Court, and where the petition has not been

served on the respondent as required under rule 26 of the

Companies (Court) Rules, 1959 shall be transferred to the

Bench of the Tribunal established under sub-section (4) of

section 419 of the Act, exercising territorial jurisdiction and

such petitions shall be treated as applications under

sections 7, 8 or 9 of the Code, as the case may be, and

dealt with in accordance with Part II of the Code:

Provided that the petitioner shall submit all information,

other than information forming part of the records

transferred in accordance with Rule 7, required for

admission of the petition under sections 7, 8 or 9 of the

Code, as the case may be, including details of the proposed

insolvency professional to the Tribunal within sixty days

from date of this notification, failing which the petition shall

abate.

(2) All cases where opinion has been forwarded by

Board for Industrial and Financial Reconstruction, for

winding up of a company to a High Court and where no

appeal is pending, the proceedings for winding up initiated

under the Act, pursuant to section 20 of the Sick Industrial

Companies (Special Provisions) Act, 1985 shall continue to

Company Appeal (AT) No. 310 of 2017-13.11.2017 8

be dealt with by such High Court in accordance with the

provisions of the Act."

8. Admittedly, no petition under Sections 433, 439 and 450 of the

Companies Act, 1956 was maintainable before the erstwhile Company Law

Board and it was maintainable before the Hon'ble High Court. For the said

reason, the case pending before the Hon'ble High Court under Section 433

were transferred to the Adjudicating Authority (Tribunal). On the other hand,

the cases under other provisions of the Companies Act, 1956 such as

Sections 397 and 398 were transferred from the Company Law Board to the

Tribunal, not to the Adjudicating Authority.

9. In view of discussion aforesaid, we hold that the petition under Sections

433, 439 and 450 of the Companies Act, 1956 was not maintainable before

the Company Law Board. Therefore, the question of treating the case under

the I&B Code does not arise. Further, as the Rule 5 relates to transfer of

cases from the Hon'ble High Court, we hold that the Rule 5 cannot be made

applicable to the cases transferred from Company Law Board.

10. In view of the discussion made above, we have no option but to set-

aside the impugned order dated 20th June, 2017 passed by the Tribunal in

T.C.P. No. 206 of 2017 (C.P. No. 19 of 2015). The said order is set aside with

liberty to the Tribunal to try the Company Petition No. 19 of 2016 as a petition

under Sections 397 and 398 of the Companies Act, 1956 (Now Section 241 of

Company Appeal (AT) No. 310 of 2017-13.11.2017 9

the Companies Act, 2013) and to decide the same in accordance with law

after notice and hearing of the parties.

11. The appeal is allowed with the aforesaid observations and directions.

However, in the facts and circumstances, there shall be no order as to costs.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice A.I.S. Cheema] [Balvinder Singh] Member (Judicial) Member (Technical)

/ng/

Company Appeal (AT) No. 310 of 2017-13.11.2017