Calcutta High Court
Bells Control Limited (In Liqn.) vs Festino Marketing Pvt. Ltd on 2 January, 2025
Author: Soumen Sen
Bench: Soumen Sen
OD-1
ORDER SHEET
APOT/140/2024
WITH
CP/808/2016
IA NO: ACO/1/2024
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
IN THE MATTER OF :
BELLS CONTROL LIMITED (IN LIQN.)
AND
FESTINO MARKETING PVT. LTD.
VERSUS
OFFICIAL LIQUIDATOR, HIGH COURT, CALCUTTA AND ANR.
BEFORE:
The Hon'ble JUSTICE SOUMEN SEN
AND
The Hon'ble JUSTICE BISWAROOP CHOWDHURY
Date : 2nd January, 2025.
Appearance:
Mr. Krishnaraj Thaker, Adv.
Mr. Debdut Mukherjee, Adv.
Mr. Tamoghna Saha, Adv.
...for the appellant
Mr.Pratik Ghose, Adv.
Mr. Avishek Roy Chowdhury, Adv.
..for respondent no.2
1. This appeal is arising out of an order passed by Justice Ravi Krishan
Kapur on 12th March, 2024 in an application filed by one of the
unsecured creditors for transfer of proceeding to NCLT.
2. While disposing of the matter, in paragraph 7 of the impugned order,
Justice Kapur has directed NCLT to deal with the proceeding from the
post admission stage of liquidation. In arriving at the said finding, the
learned Single Judge has taken consideration of the fact that expert
body has examined the question of revival of the company (in
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liquidation) and the order dated 16 th January, 2017 passed by Justice
I.P. Mukerji, as his Lordship then was and now the Chief Justice of
Meghalaya High Court there is no further question of re-opening of
the order of winding up upon acceptance of the recommendation of
AAIFR. The BIFR did not find it viable to revive the company on
objective criteria. The provisions of SICA would prevail over the
provisions of the new repealed Companies Act, 1956. The provisions
of SICA contain non-abstante clauses. It is a special statute. The
jurisdiction of the company court in matters relating to the winding
up of a sick company would arise only when BIFR or AAIFR as the
case may be, has exercised its jurisdiction under Section 20 of SICA
recommending winding up of the company upon arriving at the
finding that there does not exist any chance of revival of the company.
3. Winding up proceedings in relation to a matter arising out of the
recommendations of the BIFR commences on the date when the
Company Judge applies its mind to initiate a proceeding relying on or
on the basis thereof and it is on such date the proceedings for winding
up would be deemed to have been started. The order dated 16 th
January 2017 is reproduced below:
“The Court: An affidavit of service is on record. Learned counsel for
the petitioner submits that the cause papers have been duly served on
the company. None appears for them. The Board for Industrial and
Financial Reconstruction of its order dated 16 th May, 2007
recommended winding up of the company, which was confirmed by
AAIFR by its order dated 13th April, 2011.
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The matter is now before this court for passing a formal order of
winding up.
When the above is the position, this court has no manner of
hesitation in directing winding up of the company. I accordingly do so. I
also direct the official Liquidator attached to this court to forthwith take
possession of the assets and effects of the company.
This application is, accordingly, disposed of.”
4. Thereafter several orders were passed by a co-ordinate bench in an
appeal against the said order at the instance of a contributory being
APO No. 370 of 2017, ACO No.85 of 2017, ACO No. 86 of 2017 in
CP No. 808 of 2016 in the High Court at Calcutta, Civil Appellate
Jurisdiction, Original Side (Re. Bells Control Ltd.(in Liqn.) and Kotak
Mahindra Bank Ltd. vs. Shantanu Deb Mookerjea & Ors.). The said
appeals were disposed of on 22nd August, 2017, inter alia, with the
following observations:
“APO 370 of 2017 and ACO No. 86 of 2017 are disposed of by
recording that the status as existed immediately prior to the order
dated April 17, 2017 being passed will be preserved, now that the
Official Liquidator is in possession of such of the assets that had
been relinquished pursuant to the relevant order. The contributory’s
application, CA No. 187 of 2017, will be decided in accordance with
law upon notice to all concerned, particularly the appellant herein.
There will be no order as to costs.
It is recorded that several other properties, including the immovable
properties, of the company (in liquidation) are not in the control of the
Official Liquidator and the Official Liquidator and the creditors of the
4company (in liquidation) will be entitled to seek appropriate
directions from the Company Court in such regard.”
5. The order of the co-ordinate bench however has diluted the order
dated 16th January, 2017 and 17th April, 2017 to the extent indicated
in the said order.
6. During the pendency of such proceeding an application has been find
for transfer of the winding up proceedings being CP No.808 of 2016 to
the National Company Law Tribunal (NCLT). The contention of the
appellant appears to be that in view of the amended provisions of
Section 434 of the Companies Act, 2013 the winding up proceedings
along with all connected applications cannot be proceeded with any
further before this court and should be transferred to the NCLT.
7. It is being strenuously argued that NCLT is required to appoint a
Resolution Professional in order to assess the revival of the company.
The said submission is made on the basis of observation made in
paragraph 17 of Jaipur Metals and Electricals Employees
Organisation v. Jaipur Metals and Electricals Limited reported at
2019 (4) SCC 227 which reads:
“17. However, though the language of Rule 5(2) is plain enough, it
has been argued before us that Rule 5 was substituted on 29-6-
2017, as a result of which, Rule 5(2) has been omitted. The effect of
the omission of Rule 5(2) is not to automatically transfer all cases
under Section 20 of the SIC Act to NCLT, as otherwise, a specific rule
would have to be framed transferring such cases to NCLT, as has
been done in Rule 5(1). The real reason for omission of Rule 5(2) in
the substituted Rule 5 is because it is necessary to state, only once,
5on the repeal of the SIC Act, that proceedings under Section 20 of the
SIC Act shall continue to be dealt with by the High Court. It was
unnecessary to continue Rule 5(2) even after 29-6-2017 as on 15-12-
2016, all pending cases under Section 20 of the SIC Act were to
continue to be dealt with by the High Court before which such cases
were pending. Since there could be no opinion by the BIFR under
Section 20 of the SIC Act after 1-12-2016, when the SIC Act was
repealed, it was unnecessary to continue Rule 5(2) as, on 15-12-
2016, all pending proceedings under Section 20 of the SIC Act were
to continue with the High Court and would continue even thereafter.
This is further made clear by the amendment to Section 434(1)(c),
with effect from 17-8-2018, where any party to a winding-up
proceeding pending before a court immediately before this date may
file an application for transfer of such proceedings, and the Court, at
that stage, may, by order, transfer such proceedings to NCLT. The
proceedings so transferred would then be dealt with by NCLT as an
application for initiation of the corporate insolvency resolution
process under the Code. It is thus clear that under the scheme of
Section 434 (as amended) and Rule 5 of the 2016 Transfer Rules, all
proceedings under Section 20 of the SIC Act pending before the High
Court are to continue as such until a party files an application before
the High Court for transfer of such proceedings post 17-8-2018.
Once this is done, the High Court must transfer such proceedings to
NCLT which will then deal with such proceedings as an application
for initiation of the corporate insolvency resolution process under the
Code.”
8. We do not find any provision which may bar an applicant to apply for
revival of the company under changed circumstances. No such
circumstances however, have been revealed before us. Moreover, the
application of the contributory is also required to be decided. The
appellant has a claim of only Rs.18 lakhs and is not supported by any
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other creditor. There is not a single averment in the petition that the
appellant is willing to revive the company. However, we are not
expressing any final opinion with regard to the revival of the company
and it would be for the NCLT to take a decision in this regard
considering the order passed by the co-ordinate bench on 22 nd
August, 2017.
9. In the instant case unlike in Jaipur Metals (supra) there has been a
decision on winding up subject to the rights preserved by the Co-
ordinate Bench in the orders referred earlier.
10. With these observations, the appeal and the application are
disposed of. However, there shall be no order as to costs.
11. Affidavit of service filed in Court today is kept with the record.
(SOUMEN SEN, J.)
(BISWAROOP CHOWDHURY, J.)
bp/R.Bhar
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