Case Note & Summary
The judgment concerns Company Application No. 10 of 2017 filed by the Resolution Professional of Murli Industries Limited (the corporate debtor) under Section 446 of the Companies Act, 1956, seeking leave to continue the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC), despite a pending winding-up petition (Company Petition No. 6 of 2012) filed by creditors. The corporate debtor was already undergoing CIRP before the National Company Law Tribunal (NCLT), Mumbai Bench. The court noted that similar applications were filed in connected petitions. The facts reveal that creditors had filed winding-up petitions under Section 433(e) read with Section 439 of the Companies Act, 1956. The Resolution Professional argued that the IBC is a complete code and the CIRP should be allowed to proceed without hindrance. The court considered the interplay between the Companies Act, 1956 and the IBC, particularly the moratorium under Section 14 of the IBC, which applies only to proceedings before the NCLT and not to the High Court. The court held that leave under Section 446 of the Companies Act, 1956 is required to proceed with the CIRP while the winding-up petition is pending. The court granted the leave sought, allowing the Resolution Professional to continue the CIRP. The judgment also allowed intervention applications from interested parties. The decision ensures that the CIRP can proceed unimpeded, balancing the objectives of the IBC with the pending winding-up proceedings.
Headnote
A) Company Law - Winding Up - Section 446 Companies Act, 1956 - Leave to Proceed - The Resolution Professional of a corporate debtor sought leave to continue the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, despite a pending winding-up petition under the Companies Act, 1956. The court held that the moratorium under Section 14 of the IBC, 2016 does not apply to proceedings before the High Court, and leave under Section 446 of the Companies Act, 1956 is necessary to proceed with the CIRP. The court granted leave to continue the CIRP, noting that the IBC is a complete code and the CIRP should be allowed to proceed. (Paras 2-3)
Issue of Consideration
Whether the Resolution Professional can continue the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, when a winding-up petition under the Companies Act, 1956 is pending before the High Court, and whether leave under Section 446 of the Companies Act, 1956 is required.
Final Decision
The court allowed Company Application No. 10 of 2017, granting leave to the Resolution Professional to continue the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal, Mumbai Bench. Intervention applications were also allowed.
Law Points
- Section 446 of Companies Act
- 1956
- Section 14 of Insolvency and Bankruptcy Code
- 2016
- moratorium
- leave to proceed
- winding up
- corporate insolvency resolution process
