Company Court retains jurisdiction over winding up proceedings that have reached an irreversible stage.

The company (in liquidation) was ordered to be wound up on November 5, 1979, which was affirmed by a Division Bench in 1983.

On December 12, 1991, a consent order was passed staying the winding-up proceedings and appointing two Special Officers—including Mr. Arun Kumar Agarwal—to supervise a Board of Management, effectively displacing the Official Liquidator.

Decades later, several applications were filed alleging that Mr. Agarwal committed egregious fraud, siphoned off assets, and abused his office to gain controlling interest.

On November 20, 2025, a Single Judge (Company Court) passed an order addressing these grievances.

The Appellant, Nomura Investment, challenged this order on grounds of jurisdiction and delay, seeking an ad interim stay of its operation.

1. Whether the Single Judge lacked jurisdiction to pass the impugned order under Section 434 of the Companies Act, 2013, which mandates the transfer of winding-up proceedings to the NCLT.

2. Whether the challenge before the Single Judge was barred by the law of limitation or excessive delay, given it was initiated three decades after the winding-up order.

3. Whether the Insolvency and Bankruptcy Code, 2016 (IBC) divested the Company Court of jurisdiction to pass orders regarding the company’s management.

4. Whether the Appellant made out a case for an ad interim stay of the impugned judgment.

The Court applied the "irreversibility" test established in Action Ispat and Power Private Limited vs. Shyam Metalics and Energy Limited (2021) 2 SCC 641, which holds that if winding-up proceedings have reached a stage where setting the clock back is impossible, the Company Court must retain the matter instead of transferring it to the NCLT.

The Court relied on Sections 456 and 460 of the Companies Act, 1956, which vest the company's property in the Court's custody and empower the Court to confirm, reverse, or modify any act of a liquidator.

Furthermore, the Court invoked Rule 9 of the Company Court Rules, 1959, regarding inherent powers, and Article 215 of the Constitution of India, designating the High Court as a Court of Record with the power to correct its own records.

The Court rejected the jurisdictional challenge, noting that since the winding-up order had reached an advanced/final stage in 1979, the matter was "irreversible" under the Action Ispat doctrine; thus, the Company Court, not the NCLT, retained jurisdiction.

Regarding the IBC, the Court observed that no corporate insolvency resolution process had ever been initiated, meaning the IBC did not interdict the Court's existing jurisdiction over assets already in custodia legis.

On the issue of delay, the Court held that since no Annual General Meetings were held and fraud was alleged, the cause of action was continuing (de die in diem).

The Court found that the 1991 order had erroneously bypassed the statutory "eco-system" of the 1956 Act by handing control to Special Officers instead of the Official Liquidator.

Finally, regarding the stay, the Court determined that the balance of convenience favored the Respondents; staying the judgment would leave the company under the management of a Special Officer accused of fraud, which would be "risky" and amount to deciding the appeal prematurely.

It held that the Company Court possessed the inherent and statutory jurisdiction to correct wrongs and manage assets in its custody, especially when fraud is alleged.

The Court further noted that a previous regular bench had already declined an interim stay and there was no "change of circumstance" to warrant a different order.

The Court directed the Respondents to file affidavits-in-opposition within three weeks and ordered the matter to be placed before the regular Bench for final adjudication.