Sale of assets by secured creditors does not, by itself, bar transfer of winding-up proceedings to NCLT.

The appeal challenged the order dated 3 February 2026 by which the learned Single Judge directed transfer of the winding-up proceedings concerning Patheja Forging & Auto Parts Manufacturing Ltd. to the National Company Law Tribunal (“NCLT”) under Section 434(1)(c) of the Companies Act, 2013, to enable consideration of the company’s revival under the Insolvency and Bankruptcy Code, 2016 (“IBC”).

Omkara Assets Reconstruction Pvt. Ltd. opposed the transfer, contending that the company had been in liquidation since 2008, its net worth had eroded by 1997, and BIFR had found it incapable of functioning as a going concern.

It further relied on sales of core industrial and factory assets at Aurangabad, Chakan, Bhosari and Pimpri through Debt Recovery Tribunal (“DRT”) proceedings, asserting that these sales were concluded and irreversible.

The Respondent, an erstwhile financial creditor holding more than 50% of the company’s financial debt, supported the transfer and asserted that revival remained legally and commercially possible within the IBC framework.

The record also showed that certain assets remained in the custody of the DRT receiver, while other assets remained with the Official Liquidator.

Whether the winding-up proceedings had reached an irreversible stage, or “corporate death,” so as to justify refusal to transfer them to the NCLT under Section 434(1)(c) of the Companies Act, 2013.

Whether sales of assets by secured creditors outside the winding-up proceedings, together with the steps taken by the Official Liquidator, constituted an irreversible step defeating the possibility of revival under the IBC.

Whether an erstwhile financial creditor holding more than 50% of the company’s financial debt was entitled to seek transfer of the winding-up proceedings for revival of the company.

The Court applied Section 434(1)(c) of the Companies Act, 2013, which permits transfer of pending winding-up proceedings to the NCLT, particularly where revival under the IBC remains possible.

Relying on Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd., (2021) 2 SCC 641, the Court held that transfer must be assessed by examining whether the winding-up process has reached an irreversible stage; mere admission of a winding-up petition, appointment of a provisional liquidator, or even possession of assets by the liquidator does not automatically establish irreversibility.

The Court also relied on A. Navinchandra Steels Pvt. Ltd. v. SREI Equipment Finance Ltd., (2021) 4 SCC 435, supporting a fact-based assessment of whether revival remains possible and recognising the primacy of the IBC’s rehabilitative framework.

An erstwhile financial creditor is entitled to seek transfer where the application is made within the statutory framework and revival is sought in a time-bound manner.

The Court rejected the Appellant’s contention that the company had effectively undergone “corporate death.” Although certain core assets had been sold through DRT proceedings, those sales occurred outside the winding-up proceedings and did not, by themselves, establish that revival under the IBC was impossible.

The Court noted that assets remained at Thane, Bangalore and Pune in the custody of the DRT receiver, while other assets in Pune and Gujarat remained with the Official Liquidator.

The Official Liquidator had taken only limited steps, which could not be characterised as irreversible.

Since the possibility and desirability of revival were matters for the creditors and prospective investors to assess under the IBC, and the Respondent represented more than 50% of the financial debt, there was no sufficient basis to prevent transfer to the NCLT.

It therefore upheld the learned Single Judge’s order transferring the company petition to the NCLT and dismissed the appeal without costs.

The connected Interim Application was disposed of as having become infructuous.