Companies-Rules - Transfer-of-Pending-Proceedings

Companies Rules – Transfer of Pending Proceedings

Companies Rules – Transfer of Pending Proceedings

The Government of India (GoI) introduced the Companies (Transfer of Pending Proceeding) Rules which has been amended from time to time. The companies rules relating to the transfer of pending proceedings lighten the process of proceeding. The rules provide a provision of transferring the winding-up proceeding that lay pending in the High Court to the Tribunal. This article deals with the Companies (Transfer of Pending Proceeding) Rules and the circumstances of the transfer.

Winding Up

Winding up of a company is putting an end to the life of the company. The winding-up of the company can either by the Tribunal or through the voluntary actions of the company or winding up under the supervision of the court. A company generally winds up for certain reasons like avoiding the responsibility of compliance, avoid fines, the company cannot carry out its main objective or if the company cannot pay the creditors. The main reason for winding up of a company is when the company fails to repay its debts, and thus commences the proceeding of winding up.

Transfer of Pending Proceedings

There is a facility of transfer of proceedings that are pending for a winding-up company. The following are the conditions where the transfer of the pending proceedings takes place:

Relating Other than Winding Up

All the proceedings under the Companies Act, 2013 like compromise, arrangements, reconstruction and arbitration transfers to the Tribunal. Moreover, it transfers to the respective territorial jurisdiction of the Tribunal. The transfer can take place only when there is an order for allowing the transfer of the proceedings.

Voluntary Winding Up

The company which is up for voluntary winding up and gives advertisement on the notice of the resolution but does not dissolve before the implementation of these rules can follow the provisions of the Companies Act, 2013.

Winding Up Due to Inability to Pay Debts

There will be a transfer of the proceedings where the company winds up due to the inability to pay the debts which lay pending before the High Court. Such a transfer takes place only when there is no response for the petition of the proceedings. Petition transfers to the bench of the Tribunal. The transfer of the proceedings exercises territorial jurisdiction which is in accordance with Part II of the Insolvency and Bankruptcy Code, 2016.

Moreover, the petitioner should submit all the information. However, the petitioner need not include the information of the forming part of the transferred records. But the petition should include the information of the proposed insolvency professional. There will be a removal of the petition if the petitioner fails to submit the details regarding the proposed insolvency professional. The parties of the petition will be eligible to make a fresh application under Sections 7, 8 or 9 of the Insolvency and Bankruptcy Code, 2016. However, there should be no transfer of petition to the Tribunal that relates to the winding up of a company. The pending proceedings stay in the High Court. Such petition should not transfer even if there is no response for the proceedings. 

Winding Up for Reasons Other than Inability to Pay Debts

All the petition that stands pending in the High Court can be transferred to the Tribunal. This transfer occurs when there is no response to the proceedings. Such petitions will come under the Companies Act, 2013.

Transfer of Records

In accordance with the transfer of records under this rule, there will also be a transfer of the relevant records from the High Court to the National Company Law Tribunal (NCLT).

Payment of Fees

There is no payment of fees for the transfer of the pending proceedings.

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