CDJ Law Journals

1. The Applicant has, by way of the present Company Application, sought the transfer of the captioned Company Petition to the National Company Law Tribunal (“NCLT”) Mumbai under the provisions of Section 434(1)(c) of the Companies Act, 2013 (“the Companies Act”).

Submissions on behalf of the Applicant:

2. Mr. Behramkamdin, Learned Senior Counsel appearing on behalf of the Applicant, at the outset submitted that the Applicant had acquired various debts of the Company in liquidation from the erstwhile financial creditors and now represented more than 50% of the total financial debt owed by the Company in liquidation. He thus submitted that the Applicant had the requisite locus to file the present Application, for transfer of the proceedings to the NCLT u/s. 434(1)(c) of the Companies Act.

3. Mr. Behramkamdin then submitted that the object underlying the proposed transfer was to facilitate the resolution and revival of the Company in liquidation under the provisions of the Insolvency and Bankruptcy Code of 2016 (“IBC”), in a time-bound manner within the rehabilitative framework for resolution provided for under the IBC. He submitted that the IBC, being a later and special enactment, consolidates and amends the law relating to corporate insolvency resolution with the object of maximising value, ensuring equitable treatment of stakeholders, and preserving employment.

4. Mr. Behramkamdin placed reliance upon the decision of the Hon’ble Supreme Court in the case of Action Ispat and Power Private Limited v. Shyam Metalics and Energy Limited,((2021) 2 SCC 641.) to point out that the Hon’ble Supreme Court had held that the power of the Company Court to transfer winding-up proceedings to the NCLT under Section 434(1)(c) of the Companies Act must be exercised by examining whether the winding-up has reached an irreversible stage. He pointed out from the said decision that the mere admission of a winding-up petition, appointment of a provisional liquidator, or even the liquidator taking possession of assets does not, by itself, amount to an irreversible position. He emphasised that a transfer ought to be refused only where such substantive and final steps had been taken such that it is no longer possible to “set the clock back”, making continuation under the Companies Act inevitable.

5. He then placed reliance upon the decision of the Hon’ble Supreme Court in A. Navinchandra Steels Private Limited v. SREI Equipment Finance Limited and Others((2021) 4 SCC 435.), to point out that the decisive test for refusing a transfer was only when the Court reaches the irresistible conclusion that the company had reached the stage of “corporate death”, rendering revival impossible. He thus submitted that, short of the Court reaching the irresistible conclusion that the revival of the Company in question was no longer feasible, the Court must lean in favour of transfer to the NCLT so that an attempt to revive the corporate debtor can be made under the framework of the IBC. He also pointed out that the Court, in the aforesaid decision, had further clarified that the sale of assets by secured creditors standing outside winding-up does not, by itself, constitute an irreversible step on which a transfer could be refused.

6. He then submitted that, in the facts of the present case, the winding-up proceedings had not reached an irreversible stage, nor was the Company at the stage of its corporate death. He pointed out that the Affidavit dated 25th June 2025 filed by the Official Liquidator which disclosed (i) certain assets of the Company in liquidation situated at Thane, Bangalore and Pune, were in the possession of a Receiver appointed by the Debt Recovery Tribunal (“DRT”); (ii) certain assets of the Company in liquidation, including plots at Aurangabad and Pune, had been sold outside the winding-up proceedings; and (iii) certain other assets of the Company in liquidation located at Pune and Gujarat were presently in the possession of the Official Liquidator.

7. Mr. Behramkamdin submitted that the Official Liquidator, in the Additional Affidavit, had also disclosed that a plot of land situated at Pune was sold to one Ashtech Toolings & Stampings Pvt. Ltd. for Rs. 23,58,00,000/-, which amount constituted an asset of the Company in liquidation. He further pointed out that the Life Insurance Corporation of India had deposited a sum of Rs. 2,19,11,333/- with the Official Liquidator towards payments to workmen under Group Gratuity Scheme No. GGCA-83179. He submitted that the Official Liquidator had also received approximately 476 claims from workmen and creditors and had appointed a Chartered Accountant for the purpose of verification, which process was still ongoing.

8. Basis the above Mr. Behramkamdin submitted that the record clearly demonstrated that the Official Liquidator had taken very limited steps in the winding-up proceedings and had sold only one property of the Company. He fairly conceded that while certain actions had been taken in respect of the Company’s assets, such actions did not amount to irreversible or irretrievable steps, nor can it be said that the Company has reached a stage of “corporate death”. He therefore submitted that the present case fell squarely within the category of matters which, as per the prevailing legal position, ought to be transferred to the NCLT.

9. Mr. Behramkamdin further submitted that the existence of secured creditors or the fact that certain assets were mortgaged cannot constitute a ground to refuse transfer, as held by the Hon’ble Supreme Court in the case of A. Navinchandra Steels Private Limited.

10. He also emphasised that, despite the passage of nearly 17 years, the Official Liquidator had neither adjudicated the claims received from workmen and creditors nor taken substantial steps towards liquidation, with only a limited number of assets having been sold during this period. Consequently, he submitted that no irreversible or irretrievable steps had been taken, and reiterated that the Company in liquidation cannot be said to have reached a stage of “corporate death” and hence the Company Application be allowed in terms of prayer clause ‘(a)’. Submissions on behalf of the Official Liquidator:

11. Mr. Carvalho, Learned Counsel appearing on behalf of the Official Liquidator, opposed the transfer and submitted that the Official Liquidator had on 30th May 2023 taken possession of the immovable property of the Company in liquidation situated at Survey No.410/02 Plot No.4, at Mouje Indrad, Tal, Kadi, Dist. Mehsana, Gujrat.

12. He then pointed out that even prior to the order of winding up possession of various other assets of the Company in liquidation were taken over by the Receiver appointed by the DRT in Recovery Proceedings No.136 of 2002, and therefore Official Liquidator could not take possession of these assets. He then invited my attention to the status of the assets of the Company in liquidation, which are tabulated in the Additional Affidavit in Reply dated 25th June 2026 filed on behalf of the Official Liquidator, and for convenience and reproduced below:

Sr.No.	Description of the assets	Status
i	Bombay Corporate Office: 399A, Vithalbhai Patel Road, Congress House, Mumbai – 400004	Tenanted premises handed over to the Landlord prior to winding up order
ii	Thane Office: Siddhanchal – Phase – II Co – Operative Housing Society Ltd, Flat No 702, Building No.11, Vipulgiri, Off VasantVihar, Pokharan Road No2, Thane (West), Pin – 400610	Possession is with DRT Receiver
iii	Thane Office: Siddhanchal – Phase – II Co – Operative Housing Society Ltd, Flat No 702, Building, No12, Kailashgiri, Off VasantVihar, Pokharan Road No. 2, Thane (West), Pin – 400610	Possession is with DRT Receiver
iv	Thane Office: Siddhanchal – Phase – I Co – Operative Housing Society Ltd, Flat No 303, Building No 2-A, Rajgiri, Off. Pokharan Road No 2, Thane (West), Pin – 400610	Possession is with DRT Receiver
v	Thane Office: Siddhanchal – Phase – I Co – Operative Housing Society Ltd., Flat No 404, Building No 2-B, Rajgiri, Off. Pokharan Road No 2, Thane (West), Pin – 400610	Possession is with DRT Receiver
vi	At Bangalore: Flat No A – 1, Chandan Apartment, (Area) 2503 sq. ft. + car parking & Private terrace of 154 sq. ft, Bangalore, Karnataka State	Possession is with DRT Receiver
vii	At Pune: 250A, Boat Club Road, Sangamwadi, Pune – 411 001	Possession is with DRT Receiver
viii	At Tamil Nadu: Wind Mill Project situated at Village – Karungulam & admeasuring to 6.96 acres) and Village: - Pazhavur (admeasuring to 32.15 acres) in Nellai Kattabomman District, State - Tamil Nadu	Possession is with IFCI
ix	At Aurangabad: Plot No H-17/1/2, MIDC Industrial Area, Walunj, Aurangabad	DRT Receiver has confirmed the sale of the assets in e-auction on 30.05.2023 for an amount of Rs.32,06,75,000/-.
x	At Pune: E–20, MIDC, Bhosari, Pune – 411026	DRT Receiver has sold the assets in e-auction held on 15.09.2023 for an amount of Rs.11,25,00,000/-
xi	At Pune: Plot No F-II / 7, MIDC, Pimpri, Pune – 411018	Possession was taken by the Official Liquidator on 23.06.2023. Further, pursuant to the order dated 12.04.2024 passed by the Hon’ble High Court, Bombay, in OLR No.46 of 2024, the Official Liquidator has sold the assets to Ashtech Toolings & Stampings Pvt. Ltd. for an amount of Rs.23,58,00,000/- (Rupees Twenty Three Crores Fifty Eight Lakhs Only)
xii	Survey No.410/02 Plot No.4, at Mouje Indrad, Taluka Kadi, District Mehsana, Gujrat	Possession was taken by the Official Liquidator on 30.05.2023. Further, the Official Liquidator sold the assets to Jasmine Fazal Memon vide Hon’ble High Court Order dated 19.04.2024 passed in OLR No.47 of 2024. However, the purchaser did not deposit the balance amount and hence the sale was cancelled vide Hon’ble High Court Order dated 20.06.2024 passed in OLR No.76 of 2024.

13. It was basis the above that he submitted that irreversible steps had been taken by the Official Liquidator. When it was put to Mr. Carvalho as to how the above steps would qualify as irretrievable and irreversible in view of the law laid down by the Hon’ble Supreme Court, he was unable to do so.

14. Mr. Carvalho then independent of the above, also opposed the transfer on the ground that the same would prejudice the workmen of the Company in liquidation. He submitted that, in the event the resolution process was to fail, liquidation would thereafter commence from the “liquidation commencement date” as defined under Section 5(17) of the IBC. He submitted that this would cause grave prejudice of the workmen since, under the IBC, workmen would be entitled only to wages and dues for the twenty-four months preceding the liquidation commencement date and also that the secured creditors, who rank pari passu with workmen under the IBC, would be entitled to interest on their claims, whereas the workmen would not be entitled to interest on their dues.

15. Mr. Carvalho submitted that, in the event this Court was so inclined to transfer the Company Petition to the NCLT, then in that case, the NCLT ought to be directed to take into account the workmen’s claims at the stage at which they presently stand. He submitted that such a direction would be fair and equitable and would prevent undue prejudice to the workmen and would be consistent with both the scope and the underlying intent of Section 434(1)(c) of the Companies Act. Submissions on behalf of IFCI:

16. Mr. Samantaray, Learned Counsel appearing on behalf of IFCI Limited, a secured creditor of the Company in liquidation, submitted that the Applicant has approached this Court with unclean hands by suppressing material facts that are crucial for deciding the captioned Company Application.

17. He submitted that the Company Application was filed sometime in June 2018 seeking transfer of Company Petition No. 65 of 1999, along with all connected proceedings, to the NCLT under the proviso to Section 434(1)(c) of the Companies Act, purportedly to rehabilitate the Respondent Company in a time-bound manner under the IBC. However, despite the passage of nearly eight years since the filing of the Application, the Applicant made no attempt to place on record subsequent developments by filing an additional affidavit.

18. He submitted that in particular, the Applicant had failed to disclose the recovery proceedings initiated by the remaining secured creditors, who had obtained Recovery Certificates from the DRT under the Recovery of Debts and Bankruptcy Act, 1993 (“RDDB Act”), and the recovery steps undertaken by them against the assets of the Company in liquidation. On this ground alone, the Company Application deserves to be dismissed with costs.

19. Mr. Samantaray further submitted that the Applicant had neither objected to nor disputed the averments made by the Official Liquidator or IFCI Limited in their respective Affidavits. He also pointed out that the Official Liquidator in the Additional Reply Affidavit dated 25th June 2025 had, in a tabular form, set out the status of the twelve assets of the Company in liquidation and categorically averred that “irreversible steps have been taken” which had also not been denied by the Applicant.

20. Mr. Samantaray submitted that IFCI Limited had, by its Affidavit dated 8th December 2025, placed on record that five assets of the Respondent Company were mortgaged to IFCI and other lenders, being assets corresponding to serial nos. 4, 5, and 7 to 10 in the Official Liquidator’s affidavit (“the said assets”). He submitted that the Affidavit also recorded that IFCI’s Original Application No. 185 of 2005 was decreed by the DRT on 17th August 2005, and a Recovery Certificate dated 26th October 2005 was issued declaring a pari passu charge in favour of IFCI and that the assets at serial nos. 8, 9 (factory premises), and 10 were sold by the DRT.

21. Mr. Samantaray also placed reliance upon the decision of the Supreme Court judgment in the case of Action Ispat and Power Private Limited to point out that once winding-up proceedings had reached an irreversible stage, where assets have been sold and the clock cannot be turned back, the Company Court must proceed with winding up and the proceedings cannot transfer the matter to the NCLT. He submitted that in the facts of the present case, such an irreversible stage has clearly been crossed, warranting dismissal of the Application.

22. Mr. Samantaray further submitted that the Applicant was also bound by the pleadings and findings recorded in proceedings before the Board for Industrial and Financial Reconstruction (“BIFR”). He pointed out that the Managing Director of the Respondent Company, one Paramjit Singh Patheja, had filed Miscellaneous Application No. 392 of 2015 in Case No. 292 of 1998 before the BIFR seeking revival under the Sick Industrial Companies (Special Provisions) Act, 1985 (“SICA”). He submitted that a perusal of the said Application disclosed the following:

                   i. The net worth of the Company in liquidation had been completely eroded as on 30th September 1997, and subsequently the Company in liquidation had been declared a sick industrial company by the BIFR on 24th March 1999;

                   ii. On 5th April 2002, the BIFR formed an opinion under Section 20 of the SICA that the Company in Liquidation ought to be wound up, which opinion was affirmed by the Appellate Authority on 28th February 2003;

                   iii. A Techno-Economic Viability Assessment dated 30th September 2015 proposed revival by setting up a plant at Chakan, Pune, requiring an investment of Rs. 215 lakhs.

23. Mr. Samantaray further pointed out that the BIFR had, by its order dated 20th May 2016, noted the inordinate delay of fourteen years, and expressed uncertainty as to the number of creditors pursuing recovery, and recorded that the TEV study had been prepared unilaterally. He submitted that no subsequent BIFR orders had been disclosed by the Applicant.

24. Mr. Samantaray submitted that it was now a matter of record that the Respondent Company’s factory premises at Walunj, Aurangabad, were sold by the DRT Receiver on 30th May 2023, and the Chakan, Pune plot earmarked for the proposed plant was sold on 15th September 2023. In these circumstances, he submitted that the resolution under the IBC was illusory as the Company is not a going concern, its manufacturing assets stand sold, its net worth was admittedly eroded decades ago, and no infusion of funds was proposed by the Applicant.

25. Finally, Mr. Samantaray submitted that the Applicant was also disentitled to any equitable relief on account of its own conduct. He pointed out that after ARCIL had assigned its debt to the Applicant in 2008, the Applicant had sold the Boat Club Property of the Company, in 2012 for Rs. 10 crores, despite IFCI having a pari passu charge thereon. He submitted that IFCI had successfully sought recall of the consent order and setting aside of the sale, and that although this Court had directed the Applicant in April 2014 to deposit the entire sale consideration and granted status quo, the Applicant had failed to comply with that direction for over a decade while continuing to enjoy the benefit of the status quo order.

26. For all these reasons, Mr. Samantaray submitted that the Company Application deserves to be dismissed with costs.

27. Mr. Vishwakarma appearing on behalf of the workmen and Ms. Merchant appearing on behalf of the secured creditor Omkara ARC adopted the submissions of Mr. Samantaray.

Submissions in Rejoinder on behalf of the Applicant:

28. Mr. Behramkamdin first in dealing with the submissions of the Official Liquidator that the workmen may be prejudiced in case of a transfer to the NCLT that even assuming this was correct, the same was not a valid reason to refuse the transfer to the NCLT under Section 434(1)(c) of the Companies Act.

29. He then submitted that such contention was in fact factually misconceived, since under Sections 529, 529A and 530 of the Companies Act, 1956, workmen’s dues were payable only after taxes, cesses and company dues. He, however, pointed out that as per Section 53 of the IBC, workmen’s dues, though limited to twenty-four months preceding commencement of the liquidation date, ranked pari passu with the dues of secured creditors, who had relinquished their security. He submitted that this recalibration of priorities was a deliberate legislative choice, reflecting Parliament’s balancing of distributive justice with the objective of corporate revival. Consequently, he submitted that any perceived reduction in payout to workmen under the regime of the IBC cannot be relied upon to oppose the transfer to the NCLT.

30. He then pointed out that the question of the workmen being prejudiced under the IBC was now a moot point since the Hon’ble Supreme Court had, in the case of Moser Baer Karamchari Union v. Union of India((2023) 9 SCC 499.) categorically held that the revised waterfall under the IBC was a matter of legislative policy and that the legislature is entitled to reorder priorities in furtherance of revival and value maximisation. He pointed out that the Hon’ble Supreme Court had expressly observed that, although the IBC’s scheme differs from the earlier regime, it represents a fair, well-considered and carefully structured legislative decision, recognising that in an insolvency process, all stakeholders must share the burden of attempting to save the Company.

31. He then placed reliance upon the decision of the Hon’ble Supreme Court in the case of Forech India Ltd. v. Edelweiss Assets Reconstruction Company Limited and Anr.((2019) 18 SCC 549.), which held that once an application for transfer is made, the High Court is required to transfer the winding-up proceedings to the NCLT, and that no parallel proceedings can thereafter continue. He submitted that the Hon’ble Supreme Court had explicitly recognised that the IBC regime prevails over winding-up proceedings under the Companies Act. Mr. Behramkamdin therefore submitted that the Official Liquidator’s apprehension that workmen may receive a lesser amount under the IBC cannot justify refusing the transfer and retaining the matter before the High Court. He submitted that any such perceived reduction was not a defect, but a known and deliberate legislative trade-off, arising from Parliament’s conscious balancing of competing stakeholder interests. He submitted that equity cannot be invoked to override this statutory design.

32. In response to the submissions advanced on behalf of IFCI, Mr. Behramkamdin submitted that the reliance placed on Action Ispat and Power Private Limited by IFCI was both misplaced and misconceived. He submitted that the law had since evolved, and, as now affirmatively held by the Supreme Court in A. Navinchandra Steels Private Limited, the determinative test is whether the company has reached a stage of irreversible corporate death, rendering revival impossible. He pointed out that the Supreme Court had expressly held that the sale of assets by secured creditors, who stand outside the winding-up, does not by itself constitute an irreversible or irretrievable stage so as to bar either the transfer of proceedings to the NCLT or the initiation of proceedings under the IBC. Placing particular reliance on paragraphs 25 to 28 of the said judgment, he submitted that, short of an irresistible conclusion that corporate death is inevitable, every effort must be made to revive the corporate debtor in the larger public interest, which includes not only the interests of workmen and creditors but also the broader interests of the economy.

33. Mr. Behramkamdin reiterated that, in the present case, the Official Liquidator had taken no substantive steps towards liquidation for over 15 years, and therefore the question of any irreversible or irretrievable stage having been reached simply does not arise. He submitted that reliance on the BIFR proceedings was also wholly misplaced, as the BIFR regime itself stood repealed and replaced by the IBC, which provides a fundamentally different and rehabilitation-centric framework.

34. Mr. Behramkamdin, in dealing with the contention that the Applicant had approached this Court with unclean hands and had suppressed the proceedings pending before the DRT, pointed out from the Application that such contention was plainly untenable since the Application specifically sets out the DRT proceedings. He further submitted that no rejoinder had been filed since the Affidavits filed by the Official Liquidator, IFCI and the secured creditor Omkara ARC did not merit any response since what had been stated therein did not in any manner detract from the Applicant’s case for transfer of the proceedings to the NCLT.

Reasons and Conclusions:

35. After having heard learned counsel for the parties and having considered the rival contentions and the case law relied upon, I am satisfied that the Applicant has made out a case for transfer of the proceedings to the National Company Law Tribunal under Section 434(1)(c) of the Companies Act, 2013. I say so for the following reasons.

                   A. The IBC is a special enactment intended to provide a comprehensive, uniform and time-bound mechanism for the resolution of corporate insolvency, replacing the earlier regime under the Companies Act. The legislative intent and scheme of the IBC is to give primacy to resolution over liquidation. Section 238 of the IBC also expressly provides that the provisions of the IBC shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

                   B. The Hon’ble Supreme Court in the case of A. Navinchandra Steels Private Limited v. SREI Equipment Finance Limited, in dealing with the question of transfer under Section 434(1)(c), has held that a transfer ought to be refused only when the Court reaches an irresistible conclusion that the Company has reached a stage of “corporate death”, rendering revival impossible. Thus, save and except such a situation, the Court is required to transfer the proceedings to the NCLT so as to enable an attempt at revival within the framework of the IBC.

                   C. While in the facts of the present case, it is true that from the material placed on record, several assets of the Company in liquidation have been taken over and dealt with by secured creditors in proceedings before the DRT. However, as held by the Supreme Court in A. Navinchandra Steels, the sale of assets by secured creditors enforcing their security interest while standing outside the winding-up does not, by itself, constitute an irreversible step so as to bar transfer under Section 434(1)(c). Though the Official Liquidator has, in the Affidavit, stated that ‘irreversible steps’ have been taken, on a query from the Court, learned counsel was unable to justify how the steps taken would meet the test laid down by the Hon’ble Supreme Court in the case of A. Navinchandra Steels.

                   D. In this case, the winding-up order was passed on 4th February 2008, and to date, the steps taken by the Official Liquidator are limited to (i) taking possession of two immovable properties of the Company in liquidation and (ii) inviting claims from workmen and creditors. The process of verification of claims is admittedly still ongoing. As observed by the Supreme Court in Action Ispat, such steps do not amount to irreversible progress of winding-up proceedings. Thus, clearly, the Official Liquidator has not taken any irreversible steps in the course of winding up.

                   E. Though certain assets of the Company in liquidation have been sold and/or otherwise dealt with by secured creditors, it is not in dispute that the Official Liquidator continues to remain in possession of some assets of the Company, in addition to substantial funds. In these circumstances, it is impossible for me to conclude with certainty that there is not even the slightest possibility of revival or resolution of the Company in liquidation, as bleak as they may appear to be. Further, the determination of whether resolution is ultimately possible or not lies squarely within the exclusive domain of the NCLT and must be undertaken in accordance with the statutory framework of the IBC. Also, the fact that revival under SICA did not materialise is not a factor that, by itself, would assume revival under the scheme of the IBC would fail.

                   F. The objection raised on behalf of the Official Liquidator that a transfer of the proceedings to the NCLT would prejudice the workmen also cannot be accepted as a ground to refuse transfer. As held by the Supreme Court in Moser Baer Karamchari Union v. Union of India, the distribution waterfall under the IBC is a matter of legislative policy. Parliament has consciously recalibrated priorities in furtherance of value maximisation and revival. The Court cannot, therefore, decline transfer on the basis of perceived differences in distributive outcomes under two statutory regimes.

                   G. To my mind, it is plain that the real objection to the transfer by IFCI and the Official Liquidator is that such a transfer would affect their position as secured creditors and impact proceedings initiated by them for recovery. That, however, cannot be a valid ground to oppose transfer, having regard to the legislative intent and the larger public interest sought to be achieved by the IBC.

36. Hence, for the aforesaid reasons, I pass the following Order:

i. Company Application No. 506 of 2018 is made absolute in terms of the prayer clause ‘(a)’.

ii. The Applicant shall, within seven (7) days from the date of this order being uploaded, file in the NCLT an application for initiation of the corporate insolvency resolution process in accordance with the IBC, together with a certified copy of this order and all relevant documents forming part of the Company Petition No. 65 of 1999.

iii. The workmen shall be at liberty to file an appropriate application before the NCLT in respect of their dues, which application is filed shall be decided on its own merits.

iv. It is also clarified that the transfer of the Company Petition to the NCLT shall not, ipso facto, invalidate the actions taken by secured creditors or the Orders passed by this Court in pending legal proceedings. Parties shall be at liberty to apply to the NCLT for appropriate reliefs/directions.

v. No order as to costs.

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