Calcutta HC Bars Shifting of Registered Office If IBC Appeal Pending

Jeel Kandla Service & Anr. Vs Union of India and Ors. (Calcutta High Court)

Companies Act, 2013, Sections 13(4) and 13(5); Companies (Incorporation) Rules, 2014, Rule 30(8), Rule 30(9) and second proviso to Rule 30(9); Insolvency and Bankruptcy Code, 2016, Sections 31, 60(5) and 238 – challenge to order permitting shifting of registered office after approval of resolution plan while appeals against the plan were pending before NCLAT. Held that the second proviso to Rule 30(9) is a binding restrictive condition governing exercise of power under Section 13(4); pendency of an appeal against the resolution plan is itself an embargo on shifting and the proviso must be strictly construed, with the second “and” read as “or”. There was no inconsistency between the IBC and the 2014 Rules on the issue, and Section 238 of the IBC could not be used by the Regional Director to override the statutory restriction. NCLAT had merely left the matter to the Regional Director to decide in accordance with law and had not authorized departure from the Rule. Since the Regional Director acted beyond jurisdiction, the no-prejudice test was inapplicable. The appellants, having received notice, participated in the proceedings and being aggrieved by the order, had locus to maintain the writ petition. The appeal was allowed; the orders of the Single Judge and Regional Director were set aside; the application for shifting was directed to remain in abeyance till the embargo ceased.

Facts of the Case

• The appeal arose from an order dated February 27, 2026 by a learned Single Judge dismissing the writ petition and holding, inter alia, that the order of the Regional Director, Eastern Region, Ministry of Corporate Affairs permitting shifting of the registered office was not in violation of the second proviso to Rule 30(9) of the Companies (Incorporation) Rules, 2014.
• The respondent company went into CIRP on October 21, 2021. The appellants claimed to be post-CIRP creditors whose transportation dues were payable in preference. They alleged non-payment for transportation services rendered during CIRP and approached the NCLT for release of post-CIRP dues. The NCLT directed payment of 75% of the balance dues within 60 days; the claim was allowed to the extent of Rs. 44 lakhs, but interest under Section 16 of the MSMED Act was disallowed. An appeal was filed before the NCLAT.
• Independent Sugar Corporation Limited submitted a resolution plan for revival of the company, which was approved by the NCLT on August 14, 2025. The appellants filed an application for rejection of the plan before the NCLT; that application was rejected and the plan was approved. The appellants then filed an appeal before the NCLAT against approval of the resolution plan and rejection of their application. Several other appeals were also filed and 24 appeals were pending before the NCLAT on October 28, 2025.
• The successful resolution applicant applied before the Regional Director for permission to shift the registered office from West Bengal to Maharashtra. Initially, the Regional Director kept the matter in abeyance in view of the pending appeals. The successful resolution applicant then moved the NCLAT seeking clarification that pendency of appeals should not obstruct consideration of the application. The NCLAT observed that the Regional Director should consider the application in accordance with law and clarified that no order in the appeals affected the statutory authority’s exercise of jurisdiction; it also recorded that the appeal remained pending.
• The Regional Director issued notice dated January 14, 2026 to 11 noticees, including the appellants, calling for comments and appearance at hearing regarding the application under Section 13(4) of the Companies Act, 2013 for shifting the registered office. The appellants participated and objected.
• By order dated February 4, 2026, the Regional Director allowed shifting of the registered office, subject to the outcome of pending NCLAT appeals and certain undertakings, including that no employee would be retrenched and there would be no jurisdictional change in pending legal proceedings.
• The writ petition challenging that order was dismissed by the learned Single Judge. The present intra-court appeal was filed therefrom. During hearing of the appeal, trade unions sought intervention; they were heard after filing applications, though they had not been parties before the writ court.

Contentions of the Parties

• The appellants contended that the Regional Director’s order was ex facie contrary to the second proviso to Rule 30(9), which permitted shifting after approval of a resolution plan only when no appeal against the plan was pending before any court or tribunal; since several appeals were pending before the NCLAT, the order was without jurisdiction. They further contended that the learned Single Judge wrongly treated absence of stay of the plan and absence of demonstrated prejudice as decisive, and misread the NCLAT order as authorizing the Regional Director to proceed.
• The appellants also contended that they had locus, as they were noticees before the Regional Director, objected to the application, were heard, and had no efficacious alternative remedy against the Regional Director’s order. They argued that Section 238 of the IBC was wrongly invoked because there was no inconsistency between the IBC and Section 13 of the 2013 Act read with Rule 30. (p9, p12, p15)
• The successful resolution applicant and the corporate debtor contended that the learned Single Judge correctly exercised writ discretion, that the order of the Regional Director was not patently illegal, and that prejudice was a relevant consideration. They submitted that the Regional Director had protected creditors and workers, that the appellants were based in Mumbai, and that shifting was for administrative convenience and operational efficiency.
• They further contended that, upon approval of the resolution plan, the appellants ceased to be creditors; their dues stood dealt with under the plan and the plan was binding under Section 31(1) of the IBC. They argued that only a person aggrieved with an enforceable legal right could invoke writ jurisdiction.
• The respondents contended that the second proviso to Rule 30(9) was permissive and discretionary, not a bar; according to them, it operated as an exception to the first proviso. They also relied on Section 13(4) and Section 13(5) of the 2013 Act and argued that the Rules could not curtail the legislative power vested in the Regional Director under the Act.
• The Union of India supported the Regional Director’s order, contending that implementation of the resolution plan and revival of the company as a going concern justified the order and that Section 238 of the IBC could be used as a legal bridge to permit shifting in public interest.
• The intervening trade unions contended that implementation of the resolution plan was essential for continuity of operations, employment, industrial peace and workforce stability. They argued that the appellants were not operational creditors, their dues had been paid, they lacked locus to object before the Regional Director or to maintain the writ petition, and that the writ petition was intended only to obstruct implementation of a valid and operative resolution plan.

Issues

• Whether the second proviso to Rule 30(9) of the Companies (Incorporation) Rules, 2014 barred the Regional Director from allowing shifting of the registered office when appeals against approval of the resolution plan were pending before the NCLAT. (p34, p42–45, p65–66)
• Whether Section 238 of the Insolvency and Bankruptcy Code, 2016 could be invoked to override or circumvent the restriction contained in the second proviso to Rule 30(9).
• Whether the second proviso to Rule 30(9) was merely permissive/discretionary or imposed an operative restriction on the Regional Director’s jurisdiction.
• Whether the learned Single Judge was correct in applying a prejudice-based approach and in holding that absence of stay of the resolution plan meant the proviso did not operate as an embargo.
• Whether the appellants had locus standi to challenge the Regional Director’s order in writ jurisdiction and whether an alternative remedy barred the writ petition.
• What was the correct effect of the NCLAT’s order directing the Regional Director to decide the application in accordance with law.

Decision

A. Statutory framework governing shifting of registered office

• The Court held that the application for shifting of the registered office was filed under Section 13(4) of the Companies Act, 2013, which governs alteration in the memorandum relating to change of registered office from one State to another. The IBC contains no similar provision governing such alteration.
• The 2014 Rules were framed under the 2013 Act, including Section 13(3), (4) and (5), and prescribe the form and manner in which the Regional Director must deal with an application under Section 13(4). Rule 30 is therefore procedural machinery flowing from the parent statute and does not override Section 13(4).
• The Court set out the relevant portions of Rule 30, including sub-rules (7), (8) and (9), and noted that sub-rule (8) governs hearing of objections and preservation of the objector’s original jurisdiction to pursue legal remedies even after shifting.

B. Nature and construction of the second proviso to Rule 30(9)

• The Court held that the two provisos to Rule 30(9) operate as restrictions on the general power of the Regional Director to confirm alteration on terms and conditions. The second proviso, inserted in 2023, is an additional restrictive condition specifically dealing with cases where management has been taken over by new management under an approved resolution plan.
• The Court held that the second proviso must be strictly construed and that pendency of an appeal against the resolution plan is an independent threshold bar to shifting. The proviso is not to be diluted by an interpretation inconsistent with the legislative intent.
• The Court expressly held that in the second proviso the second use of “and” has to be read as “or”, because the embargo applies in two different classes of situations: first, when an appeal against the resolution plan is pending; second, when inquiry, inspection or investigation is pending or has been initiated after approval of the plan. If either situation exists, shifting should not be permitted.
• The Court reasoned that a literal and purposive reading supported this interpretation, since if appeals are pending the very foundation of new management’s control is under challenge, and interstate shifting during that period would complicate jurisdiction, regulatory supervision, creditors’ remedies, and possible reversal of the plan.
• The Court rejected the respondents’ argument that the second proviso was merely permissive and an exception to the first proviso. It held that the two provisos deal with different situations and classes of applicants; the second proviso is independent of the first and not carved out from it. Consequently, the reliance on Satnam Singh was held inapplicable.

C. No conflict between IBC and Rule 30(9); Section 238 not attracted

• The Court held that there was no inconsistency between the IBC and the 2014 Rules in the context of the dispute before it. The Regional Director’s jurisdiction arose under Section 13(4) of the 2013 Act and had to be exercised in accordance with Rule 30.
• The second proviso to Rule 30(9) was held not to be in conflict with the IBC. The Regional Director therefore erred in importing Section 238 of the IBC to circumvent the statutory restriction.
• The Court held that the question before the Regional Director was not implementation of the resolution plan but exercise of a statutory function under the 2013 Act. He had no authority to adjudicate on the overriding effect of the IBC so as to facilitate shifting contrary to the Rule.
• The Court further held that decisions such as Ghanshyam Mishra & Sons, Innovative Industries Ltd. v. ICICI Bank, and Duncan Industries Ltd. v. A J Agrochem did not apply because the Regional Director was not deciding primacy of the resolution plan but exercising statutory power under the Companies Act framework.

D. Errors in the Regional Director’s reasoning

• The Court examined the Regional Director’s reasoning that the IBC and the Companies Act clashed, that Rule 30(9) acted as a speed bump, and that Section 238 permitted the resolution plan and commercial necessity to prevail. The Court held that this approach was beyond jurisdiction and legally incorrect.
• The Regional Director was aware that the Rule effectively froze shifting during pendency of appeals to prevent jurisdiction shopping or evasion of creditors while the matter was sub judice, yet still allowed shifting by invoking Section 238. The Court held this could not be sustained because shifting of the registered office is not governed by the IBC.
• The Court also observed that the resolution plan itself did not provide for shifting; rather, clause 6.1.5(xx) contemplated that the registered office would not be shifted till management was taken over by the reconstituted board. The Court therefore held that the respondents’ submissions and the Regional Director’s reasoning about supremacy of the resolution plan and urgent need for its implementation were misplaced.

E. Effect of the NCLAT order

• The Court held that the NCLAT had merely observed that the Regional Director could consider the pending application in accordance with law and expressly stated that it made no observations on the merits of the rival contentions. It also recorded that the appeal remained pending.
• The Court held that the Regional Director and the learned Single Judge misconstrued the NCLAT order as if it interpreted the second proviso or conferred jurisdiction to proceed despite the pending appeals. The NCLAT neither clarified that pendency was no bar nor directed allowance of the application.
• The application before the NCLAT seeking clarification that pending appeals should not stand in the way of shifting was itself described by the Court as misconceived; the NCLAT did not grant the relief sought and only left the matter to the statutory authority to decide according to law.

F. Locus standi of the appellants

• The Court held that proceedings before the NCLT and NCLAT are proceedings in rem, and noted that the appellants had pending appeals before the NCLAT both regarding non-grant of interest and challenging approval of the resolution plan on multiple grounds.
• The appellants were noticees in the Section 13(4) proceedings before the Regional Director, submitted objections, and were asked to participate in the hearing. In those circumstances, the Court held that the question of their lacking locus to approach the writ court did not arise. They were aggrieved by the order passed in proceedings under Section 13(4).
• The Court also noted that the learned Single Judge had overlooked the records showing that the appellants had preferred an appeal against the resolution plan itself and had treated only the appeal concerning denial of interest as relevant.

G. Alternative remedy and maintainability of the writ petition

• The Court quoted Section 60(5) of the IBC and held that the NCLT does not have jurisdiction to adjudicate on the legality of an order of the Regional Director passed under Section 13(4) of the 2013 Act. Therefore, the decisions relied on by the interveners and respondents concerning NCLT/NCLAT jurisdiction were held inapplicable.
• Accordingly, the writ petition was maintainable in the absence of an alternative efficacious remedy against the Regional Director’s order.

H. Prejudice test and scope of judicial review

• The Court held that since the Regional Director’s decision was beyond jurisdiction and violative of the Rule, the prejudice test was inapplicable. Real prejudice may be relevant in cases of minor procedural irregularity or breach of natural justice, but not where there is a legal bar to exercise of power.
• The Court held that a writ court must exercise jurisdiction when a statutory authority acts contrary to law or in excess of jurisdiction. Therefore, the learned Single Judge erred in treating absence of demonstrated prejudice as decisive.
• The Court further held that the learned Single Judge rewrote the Rule by observing that unless the resolution plan had been specifically stayed in appeal, the second proviso would not operate as an embargo. The proviso was held to be clear and unambiguous and had to be read as it stands.

I. Final determination

• The Court concluded that the order of the Regional Director was in excess of jurisdiction and violative of the second proviso to Rule 30(9), and that the learned Single Judge failed to appreciate the prohibition contained in that proviso.
• The appeal was therefore allowed. The order of the learned Single Judge and the order of the Regional Director were set aside. The application for shifting of the registered office filed by the resolution applicant was directed to be kept in abeyance till the embargo under the second proviso ceased to operate.
• The connected applications were disposed of, and a later prayer by respondent no. 4 for stay of the judgment and order was rejected.

Conclusion

The Division Bench held that shifting of the registered office after takeover by new management under an approved resolution plan is governed by Section 13(4) of the Companies Act, 2013 read with Rule 30 of the Companies (Incorporation) Rules, 2014, and that the second proviso to Rule 30(9) imposes a binding restriction. Since appeals against the resolution plan were pending before the NCLAT, the Regional Director lacked jurisdiction to allow shifting. The Regional Director could not invoke Section 238 of the IBC to bypass that restriction, and the learned Single Judge erred in upholding the order on a no-prejudice and no-stay basis. The appellants had locus to maintain the challenge.

Disposition

The appeal was allowed. The order of the learned Single Judge dated February 27, 2026 and the order of the Regional Director dated February 4, 2026 were set aside. The application for shifting of the registered office filed by the resolution applicant was directed to remain in abeyance till the embargo under the second proviso to Rule 30(9) ceased to operate. The connected applications were disposed of. The later prayer for stay of the judgment and order was rejected.”