Grand Venezia Buyers Association ... vs Bhasin Infotech And Infrastructure ... on 14 September, 2023

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Delhi High Court - Orders

Grand Venezia Buyers Association ... vs Bhasin Infotech And Infrastructure ... on 14 September, 2023

$~C4 TO C7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 14th September, 2023
+ CO.PET. 49/2016, CO.APPLs. 205/2016, 206/2016, 96/2018,
1023/2018, 1260/2018, 93/2019
GRAND VENEZIA BUYERS ASSOCIATION (REG.)..... Petitioner
Through: Appearance not given.
versus

BHASIN INFOTECH AND INFRASTRUCTURE
PVT. LTD. ..... Respondent
Through: None.
C5 WITH
+ CO.PET. 146/2016, CO.APPLs. 662-63/2016, 1259/2018, 92/2019
GRAND VENEZIA BUYERS ASSOCIATION
(REGD.) ..... Petitioner
Through:
versus

GRAND VENEZIA COMMERCIAL TOWER PVT.
LTD. ..... Respondent
Through: None.
C6 WITH
+ CO.PET. 445/2016
SHRI VIRENDER KUMAR JAIN ..... Petitioner
Through:
versus

GRAND VENEZIA COMMERCIAL TOWERS PRIVATE
LIMITED & ANR. ..... Respondent
Through: None.
C7 AND
+ CO.PET. 1143/2016
SHRI NAND KISHOR THAKUR ..... Petitioner
Through:
versus

CO.PET. 49/2016 & connected matters Page 1 of 9

This is a digitally signed order.
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The Order is downloaded from the DHC Server on 16/09/2023 at 19:20:13
GRAND VENEZIA COMMERCIAL TOWERS PRIVATE
LIMITED ..... Respondent
Through: None.
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J.(Oral)

1. This hearing has been done through hybrid mode.

2. These are four petitions filed against two Respondent Companies i.e. M/s Bhasin Infotech and Infrastructure Pvt. Ltd. and M/s Grand Venezia Commercial Tower Pvt. Ltd. relating to the project being Grand Venezia Commercial Towers Private Ltd. situated at SH-3, SITE-IV, Greater Noida, UP (hereinafter, 'the Project').

3. The two petitions being CO.PETs.445/2016 & 1143/2016 are filed by two individual buyers i.e. Shri Nand Kishor Thakur and Shri Virender Kumar Jain and CO.PET. 49/2016 & CO.PET. 146/2016 have been filed by Grand Venezia Buyers Association (Regd.,) in respect of the same Project.

4. These petitions were filed in 2016 seeking winding up of the said two Respondent Companies, which have accepted various amounts from the members of the Grand Venezia Buyers Association (Regd.,) as also from two individual buyers.

5. The case of the Petitioners is that despite making of the payments of substantial sums of monies, no development work was started and the Project did not take off. Moreover, in terms of the agreements, the assured returns, which were agreed, were also not given to the Petitioners. The petitions also reveal that the construction was not fully completed and no allotment has been made. It is under these circumstances that the present winding up petitions were filed.

CO.PET. 49/2016 & connected matters Page 2 of 9

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6. Notices were issued in these matters on 22nd January, 2016. Thereafter on 22nd September, 2016, ld. Counsel appearing for the Respondents had given an undertaking that the Respondents wished to comply with their obligations and sought time for the same. On the said date, the directors including the Managing Director/s of both the Respondents were directed to remain present in the Court. On 21st October, 2016, it was further recorded that the Respondent Companies had failed to comply with their obligations and again the senior management of the Respondent Companies were directed to appear before the Court. Further information including all the accounts etc. of the Respondent Companies was also directed to be filed by the managing director, who was present in the Court on the said date.

7. Thereafter, vide order dated 8th May, 2017, the following directions were issued in this matter:

"Further in the meantime, in order to secure the interest of the contributors/creditors of the respondent company, it is considered just, necessary and expedient to restrain the respondent company and its directors/promoters from disposing of or dealing with, alienating or encumbering either directly or indirectly, or otherwise parting with possession of any assets of the respondent company or its directors/promoters, except in the ordinary course of business and for the payment of salaries and statutory dues."

8. However, today the grievance of the Petitioners is that despite the above order being in operation, third party interest seems to have been CO.PET. 49/2016 & connected matters Page 3 of 9 This is a digitally signed order.

9. None appears for the ex-management of the Respondent Companies today. On the last date of hearing also, there was no appearance. It is further noted that apart from the notices having been issued, no further proceedings have been held in these winding up petitions.

10. It is clear that the Respondents are now avoiding the appearance before the Court. The winding up petitions are still at the stage of notice.

11. During the pendency of this petition, the Insolvency and Bankruptcy Code, 2016 has been enacted and pending proceedings under Section 434 of the Companies Act, 1956 are to be transferred to the National Company Law Tribunal (NCLT). The said section reads as under:

"434. Transfer of certain pending proceedings (1) On such date as may be notified by the Central Government in this behalf,-

(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 CO.PET. 49/2016 & connected matters Page 4 of 9 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 19:20:13

(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 only such proceedings relating to cases other than winding-up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal [Provided also that]-

(i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or

(ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.] Provided also that proceedings relating to cases of voluntary winding up of a company where notice of the resolution by advertisement has been given under sub-

section (1) of section 485 of the Companies Act, 1956 but the Company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959."

12. The issue of transfer of winding up petitions to the NCLT has also been dealt with in the notification dated 7th December, 2016 passed by the CO.PET. 49/2016 & connected matters Page 5 of 9 This is a digitally signed order.

"5. Transfer of pending proceedings of Winding up on the ground of inability to pay debts. (1) All petitions relating to winding up under clause (e) of section 433 of the Act on the ground of inability to pay its debts pending before a High Court, and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under sub-section (4) of section 419 of the Act, exercising territorial jurisdiction and such petitions shall be treated as applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance with Part II of the Code:

Provided that the petitioner shall submit all information, other than information forming part of the records transferred in accordance with Rule 7, required for admission of the petition under Sections 7,8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the Tribunal within sixty days from the date of this notification, failing which the petition shall abate. Provided that the petitioner shall submit all information, other than information forming part of the records transferred in accordance with rule 7, required for admission of the petition under sections 7,8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the Tribunal upto 15th day of July, 2017, failing which the petition shall stand abated:

Provided further that any party or parties to the petitions shall, after the 15th day of July, 2017, be eligible to file fresh applications under sections 7 or 8 or 9 of the Code, as the case may be, in accordance with the provisions of the Code:

Provided also that where a petition relating to CO.PET. 49/2016 & connected matters Page 6 of 9 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 19:20:13 winding up of a company is not transferred to the Tribunal under this rule and remains in the High Court and where there is another petition under clause (e) of section 433 of the Act for winding up against the same company pending as on 15th December, 2016, such other petition shall not be transferred to the Tribunal, even if the petition has not been served on the respondent."

13. The issue of transfer of pending cases has been considered by this Court in Co. Pet 446/2013 titled Citicorp International Limited v. Shiv- Vani Oil & Gas Exploration Services Limited wherein the Court relying on the decision in Action Ispat and Power Limited v. Shyam Metalics and Energy Limited ( 2021) 2 SCC 641 has observed as under:

"20. As per the proviso highlighted above, upon the application being filed by any of the parties to the proceedings, the transfer may be made by the Court in terms of the second proviso of Section 434 (1) of the Companies Act, 1956. In Action Ispat (supra), if the winding up is not at an advanced stage, the High Court may transfer the matter to the NCLT. The relevant portion of the said judgement is set out below:

31. Given the aforesaid scheme of winding up under Chapter XX of the Companies Act, 2013, it is clear that several stages are contemplated, with the Tribunal retaining the power to control the proceedings in a winding up petition even after it is admitted.

Thus, in a winding up proceeding where the petition has not been served in terms of Rule 26 of the Companies (Court) Rules, 1959 at a pre-admission stage, given the beneficial result of the application of the Code, such winding up proceeding is compulsorily transferable to the NCLT to be resolved under the Code. Even post issue of notice CO.PET. 49/2016 & connected matters Page 7 of 9 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 19:20:13 and pre admission, the same result would ensue. However, post admission of a winding up petition and after the assets of the company sought to be wound up become in custodia legis and are taken over by the Company Liquidator, section 290 of the Companies Act, 2013 would indicate that the Company Liquidator may carry on the business of the company, so far as may be necessary, for the beneficial winding up of the company, and may even sell the company as a going concern. So long as no actual sales of the immovable or movable properties have taken place, nothing irreversible is done which would warrant a Company Court staying its hands on a transfer application made to it by a creditor or any party to the proceedings. It is only where the winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that the Company Court must proceed with the winding up, instead of transferring the proceedings to the NCLT to now be decided in accordance with the provisions of the Code. Whether this stage is reached would depend upon the facts and circumstances of each case."

21. In the present case, the Provisional Liquidator was appointed in 2017. However, the winding up is not at an advanced stage. No auction has been conducted, no claims have been invited. Clearly the winding up process could consume considerable time. Accordingly, the present company petition is transferred to the NCLT. The entire record of the present petition shall also be remitted in the electronic form to the Registrar, NCLT, and the same shall be listed before the NCLT. All the parties appearing CO.PET. 49/2016 & connected matters Page 8 of 9 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 19:20:13 before the Court are also permitted to appear before the NCLT on 3rd August, 2023. The OL shall continue to exercise the control over all the properties of the Company under liquidation, subject to any orders that the NCLT may pass in future."

14. A conjoint reading of Rule 5 of the notification dated 7th December, 2016 along with the aforementioned judgment would show that in cases where the petition is not at an advanced stage, the matter is to be transferred to the NCLT.

15. Accordingly, the present petitions are transferred to the NCLT.

16. Let the Petitioners appear before the NCLT on 10th October, 2023. Interim order dated 8th May, 2017 shall be continued to be in operation till the NCLT comes in seisin of the matters.

17. It is made clear that any transactions carried out post the filing of these petitions would be liable to be dealt with in accordance with law by the NCLT. The said transactions would also not prejudice the interest of the Petitioners.

18. The electronic records of this Court shall be transmitted to the Registrar NCLT within one week along with a copy of today's order.

19. The petitions, along with all pending applications, are disposed of in the above terms.

PRATHIBA M. SINGH JUDGE SEPTEMBER 14, 2023/dk/kt CO.PET. 49/2016 & connected matters Page 9 of 9 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 19:20:13

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Delhi High Court - Orders