M/S BERNINA INTERNATIONAL PVT.LTD Vs M/S PICCADILY HOTELS PVT.LTD -Judgment by Delhi High Court
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on : 05 December 2023
Judgment pronounced on: 10 January 2024
+ CO.PET. 34/2014 & CO.APPL. 102/2014, CO.APPL. 103/2014
M/S BERNINA INTERNATIONAL PVT.LTD ….. Petitioner
Through: Mr. Kanishk Agarwal and Mr.
Deepak Bashta, Advs.
versus
M/S PICCADILY HOTELS PVT.LTD ….. Respondent
Through: Mrs. Vikas Jain, Adv.
+ CO.PET. 36/2014 & CO.APPL. 107/2014,CO.APPL. 108/2014
J.S FURNISHINGS PVT.LTD. ….. Petitioner
Through: Mr. Kanishk Agarwal and Mr.
Deepak Bashta, Advs.
versus
M/S PICCADIALY HOTELS PVT.LTD. ….. Respondent
Through: Mrs. Vikas Jain, Adv.
CORAM:
HON’BLE MR. JUSTICE DHARMESH SHARMA
J U D G M E N T
1. This judgement shall decide the above-noted petitions, which
have been preferred under Sections 433(e) read with 439 of the
Companies Act, 1956, seeking winding up of the respondent company
� M/s Piccadily Hotels Pvt. Ltd., on the ground of non-payment of
dues amounting to Rs. 22,21,899.50/- in CO.PET. 34/2014 as well as
Rs. 26,65,298/- in CO.PET. 36/2014, as owed to the petitioners
respectively.
FACTUAL BACKGROUND:
2. The respondent company is engaged in the hotel business, and
runs a 5-star hotel in Janak Puri Delhi, which was earlier operating in
the name of �The Piccadily Hotel” and is presently functioning under
the brand name �Hyatt Centric Janakpuri”, at the same location.
3. The facts of the present company petitions are largely identical
in so far as certain purchase orders were made by the respondent
company for which payments were to be made to the petitioner and
such amounts were not duly paid.
4. In CO.PET. 34/2014, the petitioner company is a wholesale
distributor and supplier of Bombay Dyeing products including bed
linens, towels etc. Briefly stated, a purchase order was issued by
Hilton Janakpuri (a Unit of Piccadily Hotels Pvt. Ltd.) bearing No.
PH534 on 09.06.2010, for which an amount totaling Rs. 28,20,870/-
was payable to the petitioner company for supply of certain Bombay
Dyeing products to the respondent company/hotel. It is stated that an
advance of Rs. 7,05,242,50/- was paid to the petitioner company on
15.06.2012, and thereafter the goods were supplied and delivered per
the purchase order, for which delivery challans and retail invoices
were raised.
5. However, apart from the initial payment of the advance amount,
the respondent company neglected to and failed to pay the due amount
of Rs. 22,21,899.50/-. Several emails were sent by the petitioner
company requesting the respondent to liquidate the liability on
24.11.2011, 04.01.2012 and thereafter on 13.03.2012 whereby the
entire statement of accounts and ledgers were sent as well. However,
as no response was received, the petitioner company was constrained
to serve a legal notice upon the respondent on 07.01.2013, which was
not responded to either, and the dues remain unpaid. Subsequent to
this, a statutory legal notice under Sections 433 and 434 was sent to
the respondent on 13.03.2013, however, the sum due to the petitioner
amounting to Rs. 22,21,899.50/- remained unpaid.
6. Similarly, in CO.PET. 36/2014, two purchase orders bearing
No. PH0015 dated 10.10.2007 for an amount of Rs.66,52,800 as well
as No.PH241 dated 15.07.2008 for Rs. 3,01,282/-, were issued by the
respondent company for supply of wooden flooring, wallpapers,
furnishing fabrics and curtains. These goods were duly delivered by
the petitioner company who also undertook the work of stitching
curtains, fixing of wooden floors and affixing the wall papers. It is
also stated that the petitioner company made a payment of Rs.
7,95,903.10/- to M/s Ivana International Pvt. Ltd. on behalf of the
respondent, for the import of certain wooden flooring, on the basis of
a promise of repayment of the same to the petitioner. Although part-
payments were made on 21.11.2009, 16.01.2010, 23.03.2010,
11.04.2010, 24.04.2010 and 29.06.2010, presently, as per the
statement of account and ledgers provided by the petitioner, a sum of
Rs. 26,65,298/- remains to be paid by the respondent company.
Several reminders were sent by the petitioner company to the
respondent, including letters dated 04.10.2010 and 13.10.2010.
Further, a statutory legal notice dated 09.08.2011 was served upon the
respondent company as provided for under Sections 433 and 434 of
the Companies Act, 1956. However, the respondent company is yet to
repay the amount due and liquidate its liability towards the petitioner.
SUBMISSIONS
7. Given that the respondent company has failed to repay its debt
even after repeated reminders and also after being served statutory
legal notice, it is submitted by the petitioners that on the basis of the
fact that the company is unable to make good the liability, they have
moved the present winding up petitions against the respondent
company.
8. It has been submitted on behalf of the respondent company that
the instant petitions stand to be dismissed as the debts which have
been purported as due and payable to the petitioners are barred by
limitation. It is stated that the debts alleged are from the period of
2007 to 2009 and admittedly became payable in 2009, however, the
present petition was only filed in the year 2013, which is after the
lapse of the statutory period provided for under Section 433(e). It has
further been submitted that statutory notice under Section 434(1)(a)
has not been served upon the respondent at its registered address, prior
to the filing of these petitions. Moreover, it is stated on behalf of the
respondent that they had not acknowledged that the goods supplied
were in accordance to the specifications as agreed upon by the parties
and therefore, the alleged transactions stand disputed by the
respondent. It has also been urged that these petitions are not
maintainable and even otherwise stand to be transferred to the
National Company Law Tribunal. In furtherance of the aforesaid
contentions, the respondent has relied on the judgments in Pradeshiya
Industrial and Investment Corporation of U.P. v. North India
Petrochemicals Ltd. & Anr.1 and M/s Kaledonia Jute and Fibres
Ltd. v. Axis Nirman and Industries Ltd. and Ors.2 Reliance has
also been placed on a Notification dated 07.12.2016, bearing F.No/
1/5/2016-CL-V issued by the Ministry of Corporate Affairs.
1 (2008) 1 SCC 1
2 (2021) 2 SCC 403
3 NCLT
ANALYSIS AND DECISION:
9. It is apposite to point out that the present winding up petitions
are a complete non-starter. A perusal of the record shows that the
proceedings are at a very nascent stage, so much so that neither a
Provisional Liquidator nor an Official Liquidator has been appointed
to the respondent company. As such, no substantive orders have been
passed in these company petitions.
10. In view of the enactment of the Insolvency and Bankruptcy
Code, 2016 as well as the Companies Act, 2013, the present petitions
do not deserve to continue before this Court, and it would be
appropriate for the same to be transferred to the National Company
Law Tribunal3. In this regard, it is relevant to consider Section 434 of
the Companies Act, 2013 which provides for the transfer of
proceedings relating to winding up, pending before High Courts, to
the NCLT, and 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
(b)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 subsection (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.�
11. It is also expedient to consider the decision of the Supreme
Court in the case titled Action Ispat and Power Limited v. Shyam
Metalics and Energy Limited4, whereby it was held that those
winding up proceedings pending before High Courts, which have not
progressed to an advanced stage, ought to be transferred to the NCLT.
The relevant extract of the said decision is as follows:
4 (2021) 2 SCC 641
�22. 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
preadmission 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 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.�
12. This Court has also considered the legal position of winding up
petitions which are yet to reach an advanced stage, in its judgement
dated 25.07.2023, titled Citicorp International Limited v. Shiv-
Vani Oil & Gas Exploration Services Limited5 and has held the
same view as stated above.
13. In view of the foregoing discussion, it is the opinion of this
Court, that since no substantive proceedings have been undertaken
towards winding up of the company, the present petitions do not
deserve to be continued before this Court. These company petitions
are at a very nascent stage and no effective orders as such have been
passed towards the winding up of the company.
14. In view of the above, the present company petitions as well as
pending applications, if any, are accordingly disposed of.
15. Hence, the instant petitions are transferred to the NCLT. Parties
to appear before the NCLT on 01.03.2024. The interim orders passed
by this Court in these petitions, if any, shall continue till the said date.
16. It is left to the NCLT to consider the matter and pass
appropriate orders in accordance with law.
17. The electronic record of the instant petitions be transmitted to
the NCLT within a period of one week by the Registry. List before the
NCLT on 01.03.2024.
5 2023:DHC:5206
DHARMESH SHARMA, J.
JANUARY 10, 2024
Sadique