Winding-Up Petitions Transferred From High Courts Must Meet Prevailing Insolvency Threshold: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has held that winding-up proceedings transferred from High Courts must satisfy the prevailing insolvency threshold applicable at the time they are considered by the tribunal, dismissing appeals filed by Aidem Ventures Pvt. Ltd. against three media companies.

A bench of Judicial Member Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha held:

“The proviso appended with Section 434 of the Companies Act, 2013 is crystal clear that by transfer of such proceedings the same shall be dealt with by the Tribunal as an application of initiation of CIR process under the Code and when the Tribunal would treat such proceeding as an application for initiation of CIRP, the threshold which is applicable on the date of considering of such application would be relevant.”

The tribunal upheld the National Company Law Tribunal Principal Bench, New Delhi's decision rejecting Aidem Ventures' pleas against Skyline Radio Network Ltd., E24 Glamour Ltd. and News24 Broadcast India Ltd.

The dispute arose from agreements executed in 2010 under which Aidem Ventures was appointed the exclusive representative for selling advertising inventory for the respondents' television channels in return for commissions ranging from 12% to 25%.

Claiming unpaid commissions of ₹43.71 lakh, ₹8.69 lakh and ₹23.08 lakh respectively, Aidem filed winding-up petitions before the Delhi High Court in 2013.

After the matters were transferred to the NCLT in October 2023, Aidem filed insolvency applications in the prescribed format. The NCLT dismissed the petitions on the ground of pre-existing disputes between the parties.

Before the appellate tribunal, Aidem argued that the threshold applicable when the original winding-up petitions were filed should continue to govern the cases, rather than the threshold in force when the transferred matters were taken up by the NCLT.

The respondent companies argued that once the matters were transferred and treated as insolvency applications, they had to satisfy the threshold applicable at that stage. They also relied on the NCLAT's earlier Falcon Industries ruling, where the same view was taken. The respondents pointed out that the Supreme Court had declined to interfere with that ruling while keeping the question of law open.

The tribunal also observed,

“We do not find any illegality in the impugned judgment as the petitions filed by the appellant before the Ld. Adjudicating Authority were not meeting the threshold at the time of transfer of petition to NCLT, as provided under Section 4 of the Code i.e. Rs. 1 Crore and therefore the petitions were not maintainable.”

The tribunal consequently dismissed all three appeals.