The Gujarat High Court recommended the transfer of winding-up proceedings to National Company Law Tribunal (NCLT) as scattering the litigation in various Forums is the root cause of a multiplicity of litigation and amounts to misuse and abuse of process of law.
The petition was filed by the Guarantors-Shareholders of the Defaulter Company, M/s. Ganpati Pulp and Paper Mills Limited (GPPML) (now in liquidation) with the Official Liquidator attached to High Court of Gujarat, aggrieved by the order of the learned Single Judge wherein it was held that it was a matter, which was needed to be looked into by the NCLT as there was a hurried One Time Settlement of GSFC with SIL in favor of which, even the major part of the auction price was converted into a term loan by GSFC and in the repayment of which, SIL defaulted, still instead of again taking over the assets and re-auctioning them, GSFC entered into One Time Settlement with SIL at a mere Rs.60 lakhs.
The division bench of Justice Vineet Kothari and Justice B.N.Karia observed that scattering the litigation in various Forums is the root cause of a multiplicity of litigation and amounts to misuse and abuse of process of law and by sheer passing of the different orders which may or may not be conflicting orders inter-se by different Forums, who apparently would have the competent jurisdiction to be seized of those proceedings and passed those orders, ultimately may result in utter messy confusion of the things and unresolved problems for a long time. Such malpractices deserve to be seriously checked by enacting some kind of filters where the parties to one lis essentially are restricted to one competent Forum to avoid any such chance of conflicting orders and forum shopping.
“We are not seized of the winding-up of proceedings in the present Letters Patent Appeal, we make our aforesaid proposed order absolute now and dispose of this Letters Patent Appeal No.2480 of 2010 as well as Special Civil Application No.11116 of 2008 by requesting the learned Company Judge, who is seized of the winding-up proceedings of Company Petition No.139 of 1985 to consider all the aforesaid relevant aspects of the matter and then take appropriate decision in the matter to transfer the winding-up proceedings to NCLT, Ahmedabad Bench which we strongly recommend. We may make it clear that we have not made any pronouncement on the merits of claims or counterclaims of any of the parties in this matter and advisedly so left the said aspects to be considered and decided by the NCLT afresh, once the proceedings are transferred by learned Company Judge, who may pass appropriate orders in it’s his discretion in this regard and for that purpose, only the impugned orders and OTS Settlement will not stand in the way of NCLT,” the court said.
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