HP High Court: Winding-Up Cases Should Be Transferred to the NCLT if Revival Possible under IBC

The Himachal Pradesh High Court has held that winding-up petitions should be transferred to the NCLT under the Insolvency and Bankruptcy Code (IBC), 2016, unless the company's closure is inevitable or beyond revival.

The case involved Elecon Engineering's petition to wind up Inox Wind Ltd. over unpaid dues of Rs. 3,25,78,000. While the petition was pending, Inox requested that the case be transferred to the NCLT. The court allowed the transfer despite Elecon's objection that the company was beyond recovery.

However, the court pointed to changes in Section 434(1)(c) of the Companies Act and supporting rules, stating the IBC favors giving businesses a chance to recover before liquidation.