SHIVA SHAKTI SECURITY SERVICES v. OFFICIAL LIQUIDATOR

What happened

The appellant, Shiva Shakti Security Services, was appointed by the Official Liquidator to provide security guards to protect and preserve the assets of Martina Boi Genics Pvt. Ltd. (in liquidation), whose winding-up order was made on 21 November 2016 in CP/49/2016. Its bills remained unpaid; the Official Liquidator said the secured creditor had not paid. The first appeal, APOT/316/2023, challenged the order of 18 January 2023 in IA No. CA/1/2021 in CP/49/2016 transferring that petition and connected applications to the NCLT, Kolkata, in view of the order of 26 September 2022 in CP/347/2015. The second, APOT/79/2026, challenged that order of 26 September 2022, which had applied Action Ispat and Power v. Shyam Metalics and Energy Ltd., (2021) 2 SCC 641, and A. Navinchandra Steels v. SREI Equipment Finance, (2021) 4 SCC 435. The appellant said the transfer would leave its claim for protecting the assets not treated as an expense in the corporate insolvency process, and relied on orders of the Bombay Company Court in Action Barter in which transfer was conditional on payment of the liquidator's expenses.

Questions before the court

• Should the winding-up petition not be transferred to the NCLT because the contractor's expenses for preserving the assets remain unpaid?

Why the court ruled this way

In Action Ispat, the Supreme Court held that even after admission and the appointment of a company liquidator, the Company Court has discretion to transfer a petition to the NCLT, and set out how that discretion is to be exercised (paragraphs 17 and 18). The Bench read Action Ispat as laying down a test, not as making payment of the liquidator's expenses a sine qua non; the direction there was given in the context of a secured creditor's pending section 7 application (paragraph 21). In Navinchandra Steels, a secured creditor sought to sell the company's assets, and the same tests were applied (paragraph 23). Both tests apply on the issue of transfer: as long as no sale of the company's property took place and nothing irreversible was done, a petition ought to be transferred (paragraph 25). No irreversible or irretrievable act or stage was shown (paragraph 26). Section 529 of the Companies Act, 1956 did not help; the appellant can make its claim before the NCLT, and non-payment does not make the petition reach an irreversible stage (paragraph 27).

Controlling point

No irreversible stage had occurred, so there was no error in the transfer orders.

Order and next steps

In ACO 1 of 2026 in the second appeal, delay was condoned and leave granted. Both appeals, APOT/316/2023 and APOT/79/2026, were dismissed together with all connected applications, with no order as to costs.

Practical implications

A creditor or contractor of a company in liquidation should expect the winding-up petition to be transferred to the NCLT and file its claim there; unpaid dues alone do not stop the transfer.

Limits of this ruling

• The ruling turns on the absence of any sale of assets or other irreversible step, and does not decide how the appellant's claim will rank before the NCLT.