Rajni Anand vs Cosmic Structures Ltd

,,,,

Jayant Nath, J",,,,

CA 1025/2018,,,,

This application is filed by Mr.Chandra Shekhar who is said to have booked a commercial space in one of the projects of the respondent company,,,,

seeking appropriate orders for transferring of the present petition to NCLT. The applicant states that he has also moved an application under section 7,,,,

of the Insolvency and Bankruptcy Code, 2016 before NCLT on which NCLT on 25.5.2018 has passed orders appointing IRP (Interim Resolution",,,,

Professional). Hence, it is prayed that this petition be transferred to NCLT.",,,,

The petitioner has filed her reply in court. The same is taken on record and is sent to the Registry for scanning.,,,,

Learned counsel for the applicant has relied upon judgment of the Division Bench of the Bombay High Court in Jotun India Private Limited vs. PSL,,,,

Limited, 2018 SCC Online Bom 1952 to contend that the Insolvency Code would have precedence over the Companies Act, 1956 and that as per the",,,,

said judgment, where revival/resolution proceedings are initiated, NCLT would have precedence. However, he submits that to avoid any conflict it",,,,

would be in the interest of justice that this court may in exercise of powers under proviso to section 434 of the Companies Act, 2013 transfer the",,,,

present petition to NCLT.,,,,

Learned counsel appearing for the OL and for the petitioner have opposed the present application. It has been pointed out that the petition was,,,,

admitted and the OL was appointed as the Provisional Liquidator way back on 11.1.2017. Thereafter the entire assets of the respondent company,,,,

have been sealed and taken into custody by the OL and the process of valuation of the assets is going on. In the meantime, on 29.5.2018 noticing that",,,,

the Ex. Directors were guilty of siphoning off money this Court had directed SFIO to investigate into the affairs of the company. It was also noticed,,,,

that against most of the Ex. Directors FIRs have been registered and they continue to be in judicial custody.,,,,

Section 434 of the Companies Act, 2013 reads as follows:",,,,

“[434. (1) On such date as may be notified by the Central Government in this behalf,â€"",,,,

(a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in this section referred to as the Company",,,,

Law Board) constituted under sub-section (1) of section 10E of the Companies Act, 1956 (1 of 1956), immediately before such date shall stand",,,,

transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases in accordance with the provisions of this Act;",,,,

(b) any person aggrieved by any decision or order of the Company Law Board made before such date may file an appeal to the High Court within,,,,

sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such,,,,

order:,,,,

Provided that the High Court may if it is satisfied that the appellant was prevented by sufficient cause from filing an appeal within the said period,",,,,

allow it to be filed within a further period not exceeding sixty days; and,,,,

(c) all proceedings under the Companies Act, 1956 (1 of 1956), including proceedings relating to arbitration, compromise, arrangements and",,,,

reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to",,,,

the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer:,,,,

Provided that only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be,,,,

prescribed by the Central Government.,,,,

Provided further that any party or parties to any proceedings relating the winding up of companies pending before any Court immediately before the,,,,

commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, may file an application for transfer of such proceedings and",,,,

the Court may by order transfer such proceedings to the Tribunal and the proceedings so transferred shall be dealt with by the Tribunal as an,,,,

application for initiation of corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.",,,,

(2) The Central Government may make rules consistent with the provisions of this Act to ensure timely transfer of all matters, proceedings or cases",,,,

pending before the Company Law Board or the courts, to the Tribunal under this section.â€​",,,,

As per the proviso to section 434(1) (c) any party or parties to the proceedings relating to the winding up of companies may file an application for,,,,

transfer of such proceedings to the NCLT. The proviso further adds that this court may by an order transfer the winding up proceedings to NCLT. I,,,,

may note that the applicant is not a party to the present proceedings.,,,,

It has not been argued before me that in the proviso to Section 434 (1)(c) of the Act the word “may†as used therein, namely, that the court",,,,

may by order transfer such proceedings to the tribunal is mandatory in nature. In my opinion, the same is a discretionary power which has to be",,,,

exercised in the facts and circumstances of the case.,,,,

In this context reference may be had to the judgment of the Supreme Court in The Official Liquidator vs. Dharti Dhan (P) Ltd., (1977) 2 SCC 16.6",,,,

The Supreme Court was in that case interpreting the powers of the court under Section 442 (b) of The Companies Act, 1956 which provides that",,,,

where a suit is pending against a company in any other court, the company or creditor may apply to restrain further proceedings in the suit. The",,,,

Supreme Court held as follows:-,,,,

“7. Sections 442 and 446 of the Act have to be read together. It is only where the object of the two sections, when read together, is served by a",,,,

stay order that the stay order could be justified. That object is to expeditiously decide and dispose of pending claims in the course of winding up,,,,

proceedings. A stay is not to be granted if the object of applying for it appears to be, as it does in the case before us, merely to delay adjudication on a",,,,

claim, and, thereby to defeat justice. In other words, a stay order, under Section 442, cannot be made mechanically, or, as a matter of course, on",,,,

showing fulfilment of some fixed and prescribed conditions. It can only be made judiciously upon an examination of the totality of the facts which vary,,,,

from case to case. It follows that the order to be passed must be discretionary and the power to pass it must, therefore, be directory and not",,,,

mandatory. In other words, the word “mayâ€, used before “stay†in Section 442 of the Act really means “may†and not “must†or",,,,

“shall†in such a context. In fact, it is not quite accurate to say that the word “mayâ€, by itself, acquires the meaning of “must†or",,,,

“shall' sometimes. This word, however, always signifies a conferment of power. That power may, having regard to the context in which it occurs,",,,,

and the requirements contemplated for its exercise, have annexed to it an obligation which compels its exercise in a certain way on facts and",,,,

S.

No.","Entities

incorporate by

Cosmic

Structures ltd.","Total

Receipts","Total

payments","Net

balance

1,"CosmickEagle

Realtors Pvt. Ltd.","1,416,212","156,914,116","15,539,790

2,"Cosmic Orange

Yojna Pvt. Ltd./

Cosmic

Townplanners","2,940,000","23,781,042","20,841,042

,"Ltd. (HS

Madhukar)",,,

4,"Cosmic Orange

Infraventures

Pvt.LTd. (HS

Madhukar)",,"53,000,000","53,000,000

5.,"Cosmic Yojna

Infotech Pvt. Ltd.","4,400,000","134,560,870","130,

160,870

6,"Jaguar

Infrastructure",,"100,000","100,000

7,"51, Rohini Infra

Developers Pvt.

Ltd.","15,649,798","23,990,971","8,341,173

8,"Cosmic Hotels &

Resorts","90,000","261,543","171,543

9,"Cosmic

Infradevelopers

Pvt.LTd.",,"112,138","112,138

10.,"Cosmic Meditech

Pvt. Ltd.","13,891,075","34,609,598","20,808,523

11,"Eagle Techno

Infra  ParkPvt.

Ltd.",,"12,400","12,400

12,"R 794 First Floor

Infra Pvt. Ltd.","19,416,422","38,924,449","19,508,027

13,"R 794 Ground

Floor Infra

Pvt.Ltd.",,"130,023","130,023

14.,"Trigometric

Technobuild Pvt

LTd.","318,000","14,912,623","14,594,623

15.,"Cosmic

International

Structures Ltd.",,"452,000","452,000

16.,"Growth Infinity

Structures Pvt.

Ltd.",,"160,000","160,000

17.,"Growth Nucleus

Pvt. Ltd.",,"160,000","160,000

18.,Growth Realty,,"160,000","160,000

,"Infraplanners Pvt.

Ltd.",,,

19.,"Growth

Unlimited

Structures Pvt.

Ltd.","100,000","160,000","60,000

20.,"Pragati

Infraplanners Pvt

. LTd.",,"166,000","166,000

21,"Premier League

Structures Pvt.

Ltd.",,"75,000","75,000

22,"Growth Inche

Infratech Pvt.

LTd.",336996,2107811,1770815

23,"Cosmic India

Structures Ltd.",,647000,647000

24,"Cosmic

Infradevelopers

Pvt. Ltd.","10,000","100,000","90,000

25,"Cosmic

Townplanners

Pvt. Ltd.",,"100,000","100,000

26.,"Sun Infrarealty

Pvt. Ltd.",,"100,000","100,000

,TOTAL,"58,478,503","488,373,273","429,794,770

,"Entities taken

over by cosmic

for purpose of

land purchase","Total

receipts","Total

payments","Net

balance

1.,"Bluebell Infra

Developers &

Realtors Pvt.Ltd.",,"5,439,215","5,439,215

2,Amiras India,,"97,583,400","97,583,400

3,"Amplex

Technology Parks

Pvt. Ltd.",,"30,534,000","30,534,000

4,Minimax,,"250,625,000","250,625,000

,"Computers &

Software Pvt.

Ltd.",,,

5,"Splendor Infopark

Pvt. Ltd.",,"2,100,000","2,100,000

6,"Bluebell Infra

Developers",,"100,000","100,000

,Total,,"386,381,615","386,381,615

,"Trusts

Incorporated  for

CSR Initiatives","Total

receipts","Total

payments","Net

balance

1.,"Subhash Muttreja

Foundation","5,950","12,509,324","12,503,374

2.,"Mission India

Development

Forum",,"86,000","86,000

,Total,"5,950","12,595,324","12,589,374

,"Other related

entities","Total

receipts","Total

payments","Net

balance

1,"Cosmic Eagle

Brands Pvt. Ltd.","29,750,000","51,227,389","21,477,389

List on 13.8.2018.â€​,,,,

A perusal of the above order would show that there are allegations of fraud and misappropriation on the part of the Ex. Directors. I am informed,,,,

that the Ex. Directors Mr.Sushant Mutreja and Mr.Nishant Mutreja are still in judicial custody pursuant to lodging of different FIRs against them.,,,,

Keeping in view the observations in the chargesheet, this court has already ordered investigation by the SFIO. The liquidation proceedings are at",,,,

an advanced stage. Much time has passed since the order appointing the OL as the Provisional Liquidator was passed.,,,,

In view of the above, in my opinion, there is no ground made out to transfer the petition to NCLT.",,,,

I may also note that the learned counsel for the applicant had pleaded that this fact that this court has admitted this petition and appointed the OL,,,,

as the provisional liquidator was brought to the notice of NCLT. However, a perusal of the order of NCLT dated 25.05.2018 does not show any",,,,

reference to the fact that the proceedings are pending in this court.,,,,

I may only note that the issue as to whether NCLT can initiate Insolvency Resolution Process when a company has been directed to be wound up,,,,

by this court is pending before the Supreme Court In State Bank of India v. Shakti Bhog Foods Ltd., civil appeal No.4536/2018. That appeal was filed",,,,

against the judgment of NCLAT which had held that where winding up proceedings have been initiated by the High Court, there is no question of filing",,,,

of any application under section 10 or initiation of Insolvency Resolution Process. The tribunal held as follows:,,,,

“20. In the present case, as admittedly the High Court has already admitted the winding up proceedings and ordered for winding-up of the",,,,

respondent- “Corporate Debtorâ€, we hold that the question of initiation of “Corporate Insolvency Resolution Process†against same",,,,

“Corporate Debtorâ€​ does not arise.â€​,,,,

Application is dismissed.,,,,

Co.Pet.152/2016,,,,

List on 15.2.2019.,,,,

CA Nos.768/2018 & 773/2018 & 381/2018,,,,

These applications are filed by some of the flat buyers seeking relief of continuing with the proceedings before the Consumer Court.,,,,

Learned counsel for the applicants seek to withdraw the present applications with liberty to file a claim before the OL.,,,,

Granting leave and liberty present applications are disposed of.,,,,