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The Madras HC bench consisting of Chief Justice Indira Banerjee and Justice Abdul Quddhose has stayed the insolvency proceedings against Nissan –Renault before the NCLT. The petition in the following case was filed by the SRL advisors, a firm employed by the above company for finance and accounting services. A winding petition was moved by the SRL advisors for unpaid dues although it did not challenge the termination of its services by the company. The petitioners contended that the accusations made by the SRL advisors were mala fide.
Under the new IBC code, the pending proceedings were transferred to NCLT under the rule 5 of the companies (transfer of pending proceedings) rules 2016 and the companies (transfer of pending proceedings) second amendment rules, 2016.
The petitioners in this case, Nissan –Renault sought to stay the proceedings before the NCLT and also challenge the existence of the rule. It contended that the transfer of pending winding up petitions to the NCLT be treated as insolvency applications under the IBC code, 2016 is clearly beyond the legislative competence of the government. The petitioners further claimed that there is a substantial dissimilarity between the winding up provisions under Companies Act, 1956 and the insolvency trials under the IBC code, 2016. So, to amend such statutory provisions, there is a need for enacting a new law. The petitioners relied on the express of doubt regarding the vires of the new rules by the NCLAT in a former instance.
The Madras HC order dated January 11, 2017 transferring all pending winding up petitions under companies act to the NCLT is clearly contrary to the Delhi and Bombay HC judgments which held that the winding up proceedings where notice has already been served upon the respondents will continue under the Companies Act, 1856.
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