High Court of Bombay Admits Appeal Against Order Vacating Ex-Parte Stay on NCLT Proceedings in Corporate Insolvency Case. Company Petition for Winding Up Admitted Prior to IBC Application; Court to Determine Jurisdiction Overlap Between Winding Up and Corporate Insolvency Resolution Process.

Appeal against an order of the Single Judge vacating an ex-parte ad-interim order that restrained the National Company Law Tribunal from proceeding with a corporate insolvency resolution process application filed by the respondent corporate debtor.

Appellant original petitioner in winding up petition sought to set aside the order vacating restraint on NCLT and to maintain status quo pending winding up proceedings.

Dispute arose out of unpaid invoices of Rs.7.25 crores; appellant filed company petition for winding up under Sections 433, 434 Companies Act, 1956; respondent filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016 before NCLT, leading to competing proceedings.

Company Petition admitted on 9 March 2017; Single Judge on 19 July 2017 granted ex-parte order restraining NCLT from proceeding with IBC application; said order was challenged in Appeal (L) No. 280 of 2017 which was withdrawn after Division Bench kept question of jurisdiction open; Single Judge on 5 January 2018 vacated the restraint order, holding no bar on NCLT proceeding with IBC application.

Whether the National Company Law Tribunal is barred from entertaining the respondent's application under Section 10 of the Insolvency and Bankruptcy Code, 2016, given the pendency of an admitted winding up petition under Sections 433 and 434 of the Companies Act, 1956. Interpretation of Section 4(b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 and whether it confers exclusive jurisdiction on NCLT after abatement of BIFR reference. Effect of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 on proceedings after its repeal.

On 1/12/2016 the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (for short the Repeal Act, 2003) was notified and the Sick Industrial Companies (Special Provisions) Act, 1985 (for short the SICA) came to be repealed. Under the provisions of Section 4(b) of the Repeal Act, 2003 (as amended by the IBC, 2016), a company, whose reference was pending before the BIFR as on 1/12/2016, was entitled to file an application under Section 10 of the IBC, 2016 within a period of 180 days from the notification of the Repeal Act, 2003 i.e. on or before 31/5/2017. Section 22 (1) of the SICA reads as under :- “ 22. Suspension of legal proceedings, contracts, etc. - (1) Where in respect of an industrial company, an inquiry under section 16 is pending ... no proceedings for the winding up of the industrial company ... shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.”

10 March 2015: Appellant Jotun India filed Company Petition No. 434 of 2015 under Sections 433, 434 of the Companies Act, 1956 seeking winding up and claiming Rs.7.25 crores. Respondent PSL Limited made reference to BIFR. 1 December 2016: SICA Repeal Act 2003 notified, SICA repealed, IBC came into force. 9 March 2017: Company Petition admitted. 29 May 2017: PSL Limited filed IBC application under Section 10 before NCLT Ahmedabad within 180-day period. 18 July 2017: NCLT heard matter, reserved orders; same day, appellant filed Company Application (L) No. 333 of 2017 for appointment of provisional liquidator. 19 July 2017: Single Judge passed ex-parte order restraining NCLT from proceeding with IBC application. 20 July 2017: PSL Limited filed Appeal (L) No. 280 of 2017 against restraint order; Division Bench on 1 August 2017 kept question of jurisdiction open; appeal withdrawn, stay continued. 15 September 2017: PSL Limited filed Company Application No. 572 of 2017 to vacate order dated 19 July 2017. 5 January 2018: Single Judge vacated restraint order, held NCLT not barred. 7 February 2018: Appellant Jotun filed present appeal against order dated 5 January 2018.

• Companies Act, 1956: 433, 434
• Sick Industrial Companies (Special Provisions) Act, 1985: 22
• Sick Industrial Companies (Special Provisions) Repeal Act, 2003: 4(b)
• Insolvency and Bankruptcy Code, 2016: 10, 12, 14, 22