Chennai: Renault Nissan Automotive India Pvt. Ltd. has approached the Madras High Court to declare as ultra vires the legislative competence of Parliament while challenging provisions of the Companies (Transfer of Pending Proceedings Rules) Act. Such provisions direct that winding up petitions filed/pending under the Companies Act before the High Court be treated as an application under Insolvency and Bankruptcy Code.
All such legislation is to be adjudicated only by the National Company Law Tribunal/National Company Law Appellate Tribunal and the company is challenging this too.
The First Bench comprising Chief Justice Indira Banerjee and Justice Abdul Quddhose before whom the petition filed by Renault Nissan came up for hearing admitted the petition and ordered notice, returnable by March 2, to the Union government and SRL Advisors LLP, besides staying the proceedings pending before the NCLT, Chennai branch against the petitioner.
Petitioner’s counsel M. Velmurugan submitted that SRL Advisors, a firm providing financial, tax and accounting services were engaged by the petitioner for services relating to finance, tax and accounting. Subsequently, the petitioner terminated the services of the firm on July 24, 2014. While the termination letter remained unchallenged, the SRL Advisors issued a statutory winding up a notice on March 17, 2015, and commenced winding up proceedings before the Madras High Court, he added.
He said the firm has filed an utterly misconceived, frivolous and untenable petition seeking winding up. Therefore, the petitioner opposed the petition. The dispute was referred to mediation, which failed and posted back to the High Court for further adjudication. Meanwhile, the Insolvency and Bankruptcy Code was brought into effect and certain Rules were notified by the Central government to the effect of directing the winding up proceedings filed under the Companies Act to be treated as applications under the new code and to be
adjudicated by the NCLT. The impugned rules providing for the transfer of pending company petitions involving SRL and the petitioner company in which the entire proceedings were over. Transferring such cases to be adjudicated by the NCLT under the Insolvency Code was impermissible, prejudicial to its rights, interest and entitlements besides being wholly unconstitutional, Velmurugan added.
