Calcutta HC Refuses To Stay Single Judge Order In Chrestien Mica Liquidation Case Over Fraud Allegations

The Calcutta High Court has refused to stay a single judge's order that stepped in to undo alleged fraudulent dealings in the decades-old liquidation of Chrestien Mica Industries Ltd., holding that the High Court exercising company jurisdiction retains authority once winding-up proceedings reach an “irreversible stage."

A division bench of Justice Sabyasachi Bhattacharyya and Justice Supratim Bhattacharya said the transfer of such cases to the National Company Law Tribunal (NCLT) is permissible only before that stage is crossed.

“In the event a winding up proceeding does not reach an irreversible stage, the NCLT retains jurisdiction. However, in the present case, the winding up petition not only reached an advanced stage, but had already culminated in an order of winding up, which was virtually undone by the order dated December 12, 1991 and by the subsequent orders passed by the Company Court”

The appeal was filed by Nomura Investment and Finance Pvt. Ltd., which challenged the November 20, 2025 judgment of a single judge of the High Court exercising company jurisdiction in proceedings arising out of the 1979 winding-up of Chrestien Mica Industries Ltd.

The winding-up order, passed on November 5, 1979 and affirmed by a Division Bench on April 21, 1983, was later stayed by consent in 1991, when the High Court handed over control of the company's assets and affairs to Special Officers, effectively displacing the Official Liquidator.

Subsequent orders in 1993 allowed a Board of Management to run the company under their supervision.

Nomura argued that in view of Section 434 of the Companies Act, 2013, the matter ought to have been transferred to the NCLT and that the single judge had no jurisdiction to pass orders effectively revisiting a winding-up order that had already attained finality.

It also contended that the challenge before the single judge was hopelessly delayed, having been filed more than three decades after the winding-up order.

The respondents countered that the case involved serious allegations of fraud by one of the special officers, Arun Kumar Agarwal, and that the High Court exercising company jurisdiction was well within its powers to undo actions tainted by fraud.

They relied on provisions of the Companies Act, 1956, including Sections 456 and 460, to argue that the court could reverse or modify acts of those effectively discharging the functions of the Official Liquidator.

The bench noted that the foundation of the dispute lay in allegations that Agarwal had siphoned off assets of the company and gained control through related entities. It recorded that Nomura had become the beneficiary of a 2011 transaction involving assets mortgaged to Punjab National Bank and that findings had been returned in the impugned judgment that Nomura was effectively an alter ego of Agarwal, controlled through his relatives and associates.

Rejecting the jurisdictional challenge, the court held that the peculiar course of events, particularly the 1991 order staying the winding-up and vesting control in Special Officers, meant that the High Court exercising company jurisdiction continued to retain authority over the proceedings. It relied on the Supreme Court's ruling in Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd. to reiterate that transfer to the NCLT is not warranted once the proceedings reach a stage where it is impossible to “set the clock back."

The court found that such a stage had clearly been reached in the present case, noting that the winding-up order had attained finality and that subsequent judicial orders had significantly altered the management and control of the company's assets.

On the issue of delay, the bench observed that the record indicated that no Annual General Meetings had been held for decades and that the last available annual report dated back to 1970.

In that context, it held that the cause of action was continuing in nature and that limitation would be a mixed question of law and fact to be decided at the final hearing.

The appellant's reliance on the Insolvency and Bankruptcy Code, 2016, was also rejected. The court said, "With regard to the arguments that the trappings of the IBC are applicable and as such, the Company Court ought not have exercised jurisdiction, it is surprising that the entire liquidation process, after being taken out of the control of the Company Court (as exercised through the Official Liquidator) was vested in Special Officers, that too on consent, which is beyond the scheme of Company Jurisprudence in India and operated detrimental to the interest of the company (in liquidation)."

Refusing to grant ad interim relief, the bench noted that a similar prayer for stay had earlier been declined by the regular bench and that no material change in circumstances had been shown to justify reconsideration. Accordingly, the plea for an ad-interim stay of the impugned judgment was rejected.