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CS Professional · Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

Meghdoot Textiles Ltd is being wound up by the Tribunal under the Companies Act, 2013. A supplier, Kothari Yarns, files a civil suit in a district civil court to recover its dues from the company, which are a matter the Tribunal is empowered to determine in the winding up. Which statement is correct?

The civil court has no jurisdiction. Under Section 430 of the Companies Act, 2013, no civil court can entertain a suit or proceeding on a matter the Tribunal is empowered to determine, so the supplier's claim must go before the Tribunal in the winding up.

  1. AThe civil court may entertain the suit because the supplier is an unsecured creditor
  2. BThe civil court has no jurisdiction to entertain a suit on a matter the Tribunal is empowered to determine under the ActCorrect
  3. CThe civil court may proceed if the suit was filed before the winding up order was made
  4. DThe civil court may entertain the suit if the supplier obtains the company's consent

Explanation

Section 430 bars civil courts from entertaining any suit or proceeding on a matter the Tribunal or Appellate Tribunal is empowered to determine under the Act or any other law. The creditor's status, the timing of filing or the company's consent does not revive civil court jurisdiction.

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