Forech India Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. [Civil Appeal No. 818 of 2018] - Synopsis
Team SoOLEGAL 21 Oct 2020

Regarding the case, Forech India Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. [Civil Appeal No. 818 of 2018] on 10th January 2014, the petitioner had filed a winding-up petition in Delhi High Court against a company stating that the company was not able to pay its dues. A notice under Rule 26 of Companies (Court) Rules, 1959, was also served along with this petition. In the year 2017, the respondent company that is Edelweiss Asset Reconstruction Company Limited was the financial creditor of the same company. The respondent moved to NCLT in an insolvency petition filed under Section 7 of IBC. The petition of the respondent was duly accepted by NCLT. Being aggrieved the petitioner filed an appeal at NCLAT, but NCLAT also rejected the application under Section 11 of IBC and was of the view that Delhi High Court did not pass any order regarding winding up hence, the petition of the respondent is maintainable. Being aggrieved the petitioner further appealed to the Supreme Court of India. The main issue, in this case, is that whether the request made by the financial creditor pursuant to Section 7 of the Code could be retained while the winding up petition is pending before the High Court.
The Supreme Court was of the view that Section 434 of Companies Act, 2013 has been amended and there is a provision which clearly states that even in the winding up of petitions where notification has been issued, any person could apply for the transfer of such petitions to the NCLT under the Code. If any such applications are being made, then the petitions must transfer from the High Court to NCLT and must be treated as insolvency petition under IBC. The Supreme Court did not agree with the justification of the NCLAT for upholding the order passed by the NCLT. The Supreme Court noted that any reference to Section 11 of the Code was entirely irrelevant to the matter at hand. The final order of the NCLAT was not dealt with and it was held that the appeal of the financial creditor, as approved by the NCLT, was simply an independent proceeding to be determined in compliance with the provisions of the Code.


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