Delhi High Court: In a company petition seeking the winding up of the respondent company due to the non-payment of outstanding dues amounting to US$ 723,193.03/- along with interest, a Single Judge Bench of Dharmesh Sharma, J., while holding the petition maintainable, transferred the proceedings to the National Company Law Tribunal (‘NCLT’) in view that the matter was at a nascent stage and had not progressed to an advanced stage as no substantive orders had been passed towards the winding up of the respondent company.
Background
The present company petition was instituted under Sections 433(e) and (f) read with Sections 434 and 439 of the Companies Act, 1956, and sought the winding up of the respondent company. The respondent company, incorporated as a ‘Foreign Company’ under the Companies Act, 1956, was engaged in the business of providing drilling services for the oil and gas sector.
The respondent company placed a purchase order worth US$ 738,380/- with the petitioner company for the supply of CIF Kolkata Port casing material of the desired specifications. After the receipt of the purchase order, certain terms of agreement related to the charges of delayed payments were not agreeable to the petitioner company. Therefore, correspondence ensued between the parties, and it was agreed, vide e-mail dated 16-12-2014, that charges of 1% per month would be payable for delayed payments and liquidated damages were waived off. Thereafter, another purchase order was placed by the respondent company for the supply of casing material of a different specification, and the said order amounted to US$ 199,466,50/-.
The petitioner company stated that it duly supplied the goods to the respondent company as per the purchase orders and raised certain invoices against the same dated 29-12-2014, 05-02-2015, and 15-02-2015 for a total amount of US$ 818,496.58/-. Further, it was also contended that except for the amount of US$ 147,111.66/- which was paid by the respondent company in instalments, no further payments were made. The petitioner company raised certain invoices in respect of delay in payments and these amounted to US$ 66,957.34/-.
The respondent company repeatedly gave assurances to the petitioner company that the payment of outstanding dues would be made but despite several reminders, no payment was made because of which the petitioner company served upon them a legal notice dated 15-10-2015 under Section 434 of the Companies Act, 1956. Even though the legal notice was received by the respondent company, neither did the company respond nor did it comply with the demand raised therein.
Analysis and Decision
After perusing the records, the Court noted that no substantive orders related to the winding up of the company had been passed after the order dated 14-08-2018 through which the liquidator of the respondent company was appointed.
The Court stated that to determine whether or not the present winding-up petition was maintainable, reference would have to be made to Section 583 of the Companies Act, 1956 which brings out the fact that the respondent company was an unregistered company and the circumstances under which it may be wound up are indicated in Section 583(4) of the Companies Act, 1956. The Court noted that since the respondent company had not paid its debts, the winding-up proceedings against the company were maintainable.
Further, the Court stated that even an unregistered company would be subject to the winding up proceedings under Part II comprising of Section 375 of the Companies Act, 2013, and that sub-clause 3(b) is pari materia to Section 583 of the Companies Act, 1956. To further establish this ground, the Court referred to the Supreme Court’s decision in Rajah of Vizianagram v. Official Receiver and Official Liquidator of Vizianagaram Mining Co. Ltd., 1962 Supp (1) SCR 344 as well as Calcutta High Court’s view in Deutsche Dampschiffshrts Gessellschaft “Hansa” Bremen v. Bharat Aluminium Co. Ltd., 1983 SCC OnLine Cal 216.
The Court opined that the winding up petition was maintainable and since the proceedings were at a nascent stage, it was found appropriate by the Court to transfer the matter to the NCLT. The Court found it necessary to consider Section 434 of the Companies Act, 2013 which provides for the transfer of winding up proceedings that are pending before the High Courts to the NCLT.
In Citicorp International Limited v. Shiv-Vani Oil & Gas Exploration Services Ltd., 2017 SCC OnLine Del 9390, this Court placed reliance on Action Ispat & Power (P) Ltd. v. Shyam Metalics & Energy Ltd., (2021) 2 SCC 641 and held that winding up proceedings that are pending before the High Courts, which are at a nascent stage and have not progressed to an advanced stage, ought to be transferred to the NCLT.
The Court, while disposing of the petition, held that since it was evident that the present company petition had not reached an advanced stage and no substantive orders had been passed toward the winding up of the respondent company, the matter was to be transferred to the NCLT. The Court directed the parties to appear before the NCLT on 09-07-2024.
[Arabian Oilfield Suppliers & Services v. Greka Drilling (India) Ltd., 2024 SCC OnLine Del 3654, Decided on 17-05-2024]
Advocates who appeared in this case :
For Petitioner — Advocate Saurabh Jain, Advocate Prayag Jain
For Respondent — Advocate Yogesh Jagia, Advocate Amit Sood, Advocate Chandan Dutta
