M/S. Karismaa Foundations Pvt. Ltd vs M/S. Indust Cityscapes Constructions ...

M/s. Karismaa Foundations Pvt. Ltd. ...Appellant

Vs.

M/s. Indust Cityscapes Constructions Pvt. Ltd. ...Respondent

Present: For Appellant:- Shri Shivam Singh, and Ms. Apoorva Srivastava, Advocates

ORDER

04.01.2018─ The appellant filed an application under Section 433(e) of

the Companies Act, 1956 before the Hon'ble High Court of Madras which

stood transferred pursuant to 'The Companies (Transfer of Pending

Proceedings) Rules, 2016' framed by the Central Government in exercise of

the 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

Insolvency and Bankruptcy code, 2016 notified on 7th December, 2016.

Rule 5 framed 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 of a company under clause (e)

of section 433 of the 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 2

respondent 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 Companies Act, 2013 exercising territorial

jurisdiction to be dealt with in accordance with Part Il

of the Code:

Provided that the petitioner shall submit all

information, other than information forming pan 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 upto 15th day of July, 2017, failing which the

petition shall stand abated:

Provided further that any party or parties to the

petitions shall, after the 15th day of July, 2017, be

eligible to file fresh applications under sections 7 or 8

or 9 of the Code, as the case may be, in accordance

with the provisions of the Code:

Provided also that where a petition relating to

winding up of a company is not transferred to the

Tribunal under this rule and remains in the High

Company Appeal (AT) (Insolvency) No. 315 of 2017 3

Court and where there is another petition under

clause (e) of section 433 of the Act for winding up

against the same company pending as on 15 th

December, 2016, such other petition shall not be

transferred to the Tribunal, even if the petition has not

been served on the respondent."

2. In view of the aforesaid Rule 5 and amended notification dated

29.06.2017, the appellant was required to comply with the requirement by

15th July, 2017 but failed to comply with the same. In view of the non-

compliance, the application preferred under Section 433(e) of the

Companies Act, 1956, was not treated to be an application under Section

9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as

the 'I & B Code') and the case stood abated.

3. Learned Adjudicating Authority by the impugned order dated 6 th

July, 2017 rejected the application in view of the aforesaid provisions and

for non-compliance of the order passed by the Adjudicating Authority on

2nd June, 2017.

4. Learned counsel for the appellant submitted that the appellant was

entitled to comply with the provision by 15th July, 2017 but it was rejected

much prior to the same. He also referred to the decision of this Appellate

Tribunal in M/s. Paharpur Colling Towers Limited vs. Dalmia Cement

(Bharat) Limited - Company appeal (AT) (Insol.) No. 127 of 2017

Company Appeal (AT) (Insolvency) No. 315 of 2017 4

wherein by order dated 31st August, 2017 the Appellate Tribunal observed

as follows :

"9. Taking into consideration the totality of the case, while

we accept the stand taken by Ld. Counsel for the

appellant that it should have been allowed time till 15th

July, 2017 to take steps in terms of Second Amended

Rules published on 29th June, 2017 i.e. prior to the

impugned order, but setting aside of the impugned

order will be of no avail as no further time can be

granted to the appellant to act in terms of Rules

aforesaid which is not in force after 15th July, 2017.

10. In the circumstances, in terms of Second proviso to

Second Amendment Rule 5, the appellant is allowed to

file a fresh application under Section 7 or Section 9 of

the Insolvency and Bankruptcy Code, 2016, as the case

may be, in accordance with the provision of the I & B

Code. It is for the appellant is to decide whether it

comes within the meaning of 'Financial Creditor' or

'Operational Creditor'. If the appellant feels that if the

company is an 'Operational Creditor' then before filing

application under section 9, it will provide notice under

section 8 to the 'Corporate Debtor' and follow all

Company Appeal (AT) (Insolvency) No. 315 of 2017 5

conditions of the Insolvency and Bankruptcy Code and

Rules framed thereunder.

11. In such case, the application cannot be decided on the

ground of limitation taking into consideration that the

appellant originally preferred a petition under section

433(e) of the Companies Act, 1956, for the purpose of

counting delay and laches.

12. It will also be open to the respondent to raise all the

objections at the stage of giving reply to Section 8 notice

or at the time of admission of the application."

5. In view of the fact that the case of the appellant is covered by this

Appellate Tribunal order in 'M/s. Paharpur Cooling Towers Limited', we are

not inclined to interfere with the impugned order dated 6th July, 2017 but

give liberty to the appellant to file fresh application under Section 9 of the I &

B Code after complying with the provisions of sub-section (1) of Section 8. In

such case, the Adjudicating Authority will not reject the application on the

ground that the application under Section 433(e) of the Companies Act, 2016

abated and/or earlier application was rejected. The appeal stands disposed

of with the aforesaid liberty and observations.

(Justice S.J. Mukhopadhaya) Chairperson

/ns/gc

Company Appeal (AT) (Insolvency) No. 315 of 2017