Pre-2016 Winding-Up Petitions and Their Transfer to the NCLT

A winding-up petition filed under the Companies Act, 1956 before the Insolvency and Bankruptcy Code, 2016 came into force transfers compulsorily to the National Company Law Tribunal only where it was not served on the respondent under rule 26 of the Companies (Court) Rules, 1959, as required by rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. A petition already served remains with the High Court unless a party applies under the fifth proviso to section 434(1)(c) of the Companies Act, 2013. This post sets out the statutory architecture, the case law governing transfer after admission, and the checks counsel should run when a legacy petition surfaces.

Section 434, the Transfer Rules and the Fifth Proviso

Three instruments govern the position. Section 434 of the Companies Act, 2013 (the 2013 Act) transferred to the Tribunal matters pending before the Company Law Board, the Board for Industrial and Financial Reconstruction and the High Courts under the Companies Act, 1956 (the 1956 Act), subject to rules made by the Central Government. The Companies (Transfer of Pending Proceedings) Rules, 2016 (the Transfer Rules) supplied those rules, and they deliberately did not transfer everything. The fifth proviso to section 434(1)(c), inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2018, then added a discretionary route: any party to a winding-up proceeding pending before a court may apply for its transfer, the court may order it, and the Tribunal then deals with the matter as an application to initiate a corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (the Code).

Two features of the fifth proviso matter in practice. It is not confined by the stage the winding up has reached, which is precisely what distinguishes it from the compulsory transfer worked by the Transfer Rules. It is also available to any party, so a respondent company that would rather be resolved than liquidated can seek transfer over the petitioning creditor's objection, and frequently should.

Served or Not Served: the Line the Transfer Rules Drew

Rule 5 of the Transfer Rules transferred to the Tribunal all petitions for winding up under clause (e) of section 433 of the 1956 Act, on the ground of inability to pay debts, which were pending before a High Court and where the petition had not been served on the respondent under rule 26 of the Companies (Court) Rules, 1959. Transferred petitions are then treated as applications under section 7, 8 or 9 of the Code. Rule 6 did the same for unserved petitions under clauses (a) and (f) of section 433. Petitions already served stayed where they were.

Service was chosen as the dividing line because rules 26 and 27 of the 1959 Rules operate at the pre-admission stage, so an unserved petition is one in which nothing irreversible has yet occurred. The difficulty is evidential rather than conceptual. On a file opened in 2014, establishing whether service under rule 26 was in fact effected, as against merely ordered or attempted, is often the entire argument, and the answer usually lives in the High Court registry record rather than in anyone's file copy.

A trap sits alongside compulsory transfer. An amendment to the Transfer Rules notified on 29 June 2017 required petitioners in transferred matters to file the information needed for admission within sixty days, failing which the petition would abate. A creditor who assumed that transfer preserved its position and did nothing further may discover there is no live petition anywhere, in the High Court or the Tribunal. That is worth checking before any assumption is made about what a legacy matter is worth.

Where Each Category of Legacy Petition Now Stands

The categories below track the sequence of questions a High Court works through when transfer is sought, and between them they determine both the forum and the realistic recovery.

Petition status	Forum	Transfer position	What counsel should check
Filed under section 433(e), never served under rule 26	NCLT	Compulsorily transferred by rule 5 and treated as an application under section 7, 8 or 9	Whether the petitioner filed the information required for admission in time, or the petition has abated
Served on the respondent but not admitted	High Court	Stays there unless a party applies under the fifth proviso to section 434(1)(c)	The date and mode of service on the registry record, and who gains from a transfer
Admitted, no liquidator appointed yet	High Court, transfer readily available	Nothing irreversible has happened, so transfer is usually ordered where resolution is realistic	Whether the business is still viable enough to attract a resolution applicant
Admitted, Official Liquidator holding assets	High Court, with discretion to transfer	Action Ispat confirms the discretion survives admission and the appointment of a liquidator	The liquidator's inventory, any advertised or notified sale, and what has actually been done since admission
Assets sold and proceeds under distribution	High Court	No transfer; the winding up has reached an irreversible stage	That the claim is properly proved in the winding up, since no better forum is available
Winding up pending and a CIRP admitted against the same company	NCLT	Section 238 gives the Code primacy and section 14 halts the winding up against the company	That the winding-up petitioner has filed its claim with the interim resolution professional within the announced window
Legacy proceeding derived from a repealed SICA reference	High Court until a party applies	Jaipur Metals: it continues before the High Court unless transfer is sought under the fifth proviso	Whether any party has the incentive to apply, and whether a fresh Code filing is the cleaner route

Action Ispat and the Irreversible Stage Test

The governing authority is Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd. [(2021) 2 SCC 641]. The Supreme Court held that the discretion to transfer a winding-up proceeding to the Tribunal survives admission of the petition, and survives the appointment of a Company Liquidator who has taken the assets of the company into custody. The controlling question is not the label attached to the stage reached but whether the winding up has gone so far that it cannot be undone, the paradigm being a completed sale of assets with proceeds under distribution. Short of that point, and where resolution under the Code would serve the body of creditors better than liquidation, transfer is the course the Court preferred.

High Courts have applied that test consistently since, transferring admitted petitions where nothing of substance had happened after admission and declining transfer where the liquidator had already sold. Counsel arguing either side should be assembling a factual chronology of what the Official Liquidator has actually done, with dates, rather than a submission on the meaning of the word irreversible. The chronology decides these applications.

A Parallel CIRP and Which Proceeding Yields

In Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. [(2019) 18 SCC 549] the Supreme Court held that an application under section 7 of the Code is an independent proceeding to be decided on its own terms, and that a winding-up petition pending against the same company under the 1956 Act does not bar it. The Court also directed the appellant's attention to the fifth proviso as the mechanism for bringing the two together.

The same interface was approached from the other direction in Jaipur Metals and Electricals Employees Organisation v. Jaipur Metals and Electricals Ltd. [(2019) 4 SCC 227]. The Supreme Court held that a winding-up proceeding pending before the High Court continues there unless and until a party applies for transfer under the fifth proviso, and that the High Court had no jurisdiction to interfere with an admission order passed by the Tribunal under section 7, section 238 of the Code giving the Code primacy wherever there is inconsistency.

Read together the practical position is clear enough. A pending winding up gives the company no protection from a fresh filing under section 7 or section 9. Once a CIRP is admitted, the moratorium under section 14 stops the winding-up proceeding progressing against the company, and the sensible step is to apply for transfer so that one process deals with the estate. Running both consumes costs on two fronts and delivers nothing to creditors on either.

Relation Back, Limitation and the Look-Back Windows

Forum choice changes the arithmetic of recovery, and this is the part a board is rarely told about when it is asked to approve a transfer application.

Under section 357 of the 2013 Act a winding up by the Tribunal is deemed to commence at the time of presentation of the petition. The Code has no relation back at all: the insolvency commencement date is the date of the admission order under section 5(12). For a petition presented in 2013 that difference is a decade, and it moves every date from which a past transaction can be attacked.

The look-back windows differ too. Sections 43 and 46 of the Code reach back two years before the insolvency commencement date for preferential and undervalued transactions involving related parties, and one year for everyone else. The fraudulent preference provisions of the 1956 Act operated on a six-month window before the commencement of the winding up, which relation back placed at the date of presentation. A transaction that can be unwound in one forum may be beyond reach in the other, and which way that cuts depends entirely on when the suspect dealings occurred.

Limitation is the third variable and the one that most often decides strategy. The Limitation Act, 1963 applies to applications under the Code, and article 137 allows three years from the date of default. A creditor whose 2013 petition is still alive, and whose underlying default is older still, may find a fresh application time-barred even though the old petition is not. That single question usually settles whether to press for transfer of the legacy petition or to start again.

The Checks to Run When a Legacy Petition Surfaces

What Should Counsel Check When the Company Is the Respondent?

Establish first whether the petition was served under rule 26 of the 1959 Rules and on what date, because that alone determines whether it ought already to have been transferred. Then confirm whether it was admitted, whether a provisional liquidator or the Official Liquidator was appointed, and what the liquidator has taken into custody. Obtain the inventory and the status of any sale process, since those facts decide a transfer application. Check whether any party has already applied under the fifth proviso. Where the company still has a viable business, the company itself is often the party with the strongest reason to apply, because resolution preserves the enterprise and liquidation does not.

What Should Counsel Check When the Company Is the Petitioning Creditor?

The questions run differently. Confirm the debt still meets the threshold in section 4 of the Code, which stands at one crore rupees, since many legacy petitions were filed when a far smaller sum sufficed. Test limitation for a fresh application under article 137 before abandoning the old petition, not afterwards. Establish whether an information utility record is available, because the 2026 Amendment to the Code, in force from 26 May 2026, makes a record filed by a financial institution sufficient to ascertain default for the purposes of section 7. Where transfer is sought, be ready to show the Court why resolution serves the general body of creditors better than the liquidation already under way, since that is the ground on which the discretion turns.

One further check applies whoever the client is. A legacy winding-up petition is a contingent liability and a material litigation for the purposes of the annual report and of any transaction disclosure. A petition nobody has examined for eight years is very often described in those documents in terms that no longer match the court record.

Frequently Asked Questions

Were all pre-2016 winding-up petitions moved to the NCLT?

No. Only petitions that had not been served on the respondent under rule 26 of the Companies (Court) Rules, 1959 were compulsorily transferred by the Transfer Rules. Petitions already served remained with the High Court, and they move only if a party applies under the fifth proviso to section 434(1)(c) and the Court so orders.

Can a petition still be transferred after the Official Liquidator has taken custody of assets?

Yes. Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd. confirms that the discretion survives both admission and the appointment of a liquidator. What defeats transfer is an irreversible stage, typically a completed sale of assets with proceeds being distributed. The argument therefore turns on what the liquidator has actually done and when.

Does a pending winding-up petition stop a creditor filing under section 7 or section 9?

No. Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. holds that an application under the Code is an independent proceeding decided on its own terms, and a pending winding-up petition under the 1956 Act is not a bar. Practically, a company defending a legacy petition should not treat it as protection against a Code filing.

Who can apply for transfer under the fifth proviso?

Any party to the winding-up proceeding, which includes the respondent company. That is significant, because a company with a viable business often has more to gain from resolution than the petitioning creditor does, and can seek transfer even where the creditor resists it.

What happens to assets in the Official Liquidator's custody on transfer?

The transfer order ordinarily directs the Official Liquidator to hand over records, books and custody of the assets to the interim resolution professional appointed by the Tribunal, and deals with the liquidator's costs and remuneration already incurred. Examine the inventory carefully at handover, because gaps identified later become the resolution professional's problem and then the creditors' loss.

Is a fresh Code filing better than continuing a decade-old petition?

Often, but check limitation first. Article 137 of the Limitation Act, 1963 gives three years from default for a fresh application, and an old default may leave a fresh filing time-barred while the legacy petition remains alive. Weigh that against the delay and the relation-back consequences of continuing in the winding up, then choose one route and abandon the other.

What happens if a transferred petition's information is not filed within sixty days?

The 2017 amendment to the Companies (Transfer of Pending Proceedings) Rules, 2016 required petitioners in transferred matters to file the information needed for admission within sixty days of transfer. A petitioner who misses that window risks the petition abating, leaving no live proceeding in either the High Court or the National Company Law Tribunal. Anyone valuing a legacy claim should confirm this filing was made before assuming the petition still exists.

How is the section 4 threshold relevant to a legacy winding-up petition?

Section 4 of the Insolvency and Bankruptcy Code, 2016 sets the minimum default at one crore rupees for an application under section 7, 8 or 9. Many winding-up petitions filed under the Companies Act, 1956 involved far smaller sums, since no such threshold applied at the time. A creditor considering a fresh Code filing, rather than continuing the old petition, must first confirm the debt still clears the current threshold.

Does the National Company Law Tribunal have to admit a transferred petition automatically?

No. A petition transferred under the Transfer Rules is treated as an application under section 7, 8 or 9 of the Insolvency and Bankruptcy Code, 2016, and it must satisfy the admission requirements of that provision, including proof of default and completeness of the application. Transfer changes the forum and the governing procedure; it does not guarantee admission.

What does the Tribunal do with a provisional or Official Liquidator's costs after transfer?

The transfer order ordinarily directs the Official Liquidator to hand over the company's records, books and assets to the interim resolution professional, while also addressing the liquidator's costs and remuneration already incurred. These amounts are typically settled from the estate rather than left outstanding, and counsel should ask for this to be dealt with expressly in the transfer order rather than assumed.

How does a winding-up petition affect a company's ability to obtain fresh credit or approvals?

A pending winding-up petition, whether before the High Court or the National Company Law Tribunal, is typically a disclosable event and a red flag in lender and regulatory due diligence, regardless of which forum is seized of it. Companies with an old, dormant petition on file should resolve its status, whether by seeking dismissal, transfer, or a negotiated settlement, rather than leaving it unaddressed.

Can a winding-up petition and a section 7 application against the same company proceed together?

Not indefinitely. Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. confirms a section 7 application is independent and not barred by a pending winding-up petition, but once a corporate insolvency resolution process is admitted, section 14 of the Insolvency and Bankruptcy Code, 2016 halts the winding-up proceeding against the company. Continuing both wastes costs, and the sensible course is to seek transfer so a single process governs the estate.

What is the realistic timeline for a transfer application under the fifth proviso?

There is no fixed statutory timeline for disposal of a transfer application under the fifth proviso to section 434(1)(c) of the Companies Act, 2013, and the duration depends on the High Court's list and whether the application is contested. Counsel should expect several months at minimum and should not assume transfer resolves a legacy petition quickly.

Does the two-year or one-year look-back period run from the same date in both forums?

No. Under the Insolvency and Bankruptcy Code, 2016 the look-back period for preferential and undervalued transactions runs from the insolvency commencement date, which is the date of the admission order. Under the Companies Act, 1956 relation back placed winding up at the date the petition was presented, so the reference date and the length of the window both differ depending on which forum ultimately winds up the company.

Vikrant D. Shetty | Vikrant D. Shetty leads the Insolvency and Arbitration Practice at the Mumbai-based law firm Vikrant D. Shetty & Associates, Advocates & Solicitors, which advises financial creditors, operational creditors and corporate debtors in proceedings before the National Company Law Tribunal, Mumbai Bench, and appears in company matters, including winding up and transfer applications, before the Bombay High Court.

Choosing between a legacy petition and a fresh filing is a recovery strategy decision, and the same cost discipline applies as in any other contested forum. Related reading: five mistakes Indian banks and NBFCs make that lead to overpaying for claims.

This article is for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please seek direct consultation with an advocate.