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2019 (12) TMI 1465 - AT - IBCSeeking permission to participate for submitting the proposal of scheme of compromise and arrangement - HELD THAT - Similar issue fell for consideration before this Appellate Tribunal in Jindal Steel and Power Limited vs. Arun Kumar Jagatramka and Anr. 2020 (2) TMI 1130 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI . In the said case, the question fell for consideration as to whether in the liquidation proceeding under Insolvency and Bankruptcy Code, 2016 in terms of Section 230-232 of the Companies Act, 2013 a promoter is eligible to file application for compromise and arrangement, while he is ineligible under Section 29A of the I B Code. The Appellant in view of Section 29A of the I B Code, cannot file any application for compromise and arrangement in terms of Section 230-232 of the Companies Act, 2013 to take over the Company - there is no delay in preferring the Appeal - Appeal dismissed.
Issues:
1. Rejection of application under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority. 2. Interpretation of Section 230 of the Companies Act, 2013 regarding the eligibility of Promoter/ Shareholder to participate in a scheme of compromise or arrangement. 3. Comparison with a previous judgment regarding the eligibility of a promoter to file for compromise and arrangement under Section 29A of the I&B Code. Analysis: 1. The Appeal was filed by the Promoter/ Shareholder of a Corporate Debtor against the rejection of their application under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority. The application sought to set aside an email sent by the Liquidator and to participate in submitting a proposal for a scheme of compromise and arrangement. The Liquidator and the Adjudicating Authority held that the Promoter/ Shareholder cannot participate in the scheme of compromise or arrangement as per Section 230 of the Companies Act, 2013, along with references to Section 29A and Section 35(1)(f) of the I&B Code, 2016. 2. The Appellant argued that they had presented the best proposal scheme for compromise and arrangement, beneficial to all creditors, and if not accepted, the Corporate Debtor would face liquidation without any resolution or revival. The Appellant contended that their proposal should have been considered by the Liquidator, especially if the Members or Creditors had no objections. However, the Adjudicating Authority's decision was based on the interpretation of the relevant provisions of the Companies Act and the I&B Code. 3. The Appellate Tribunal referred to a previous case, "Jindal Steel and Power Limited vs. Arun Kumar Jagatramka and Anr. - Company Appeal (AT) No. 221 of 2018," where a similar issue was considered. The question revolved around the eligibility of a promoter to file for compromise and arrangement under Section 230-232 of the Companies Act, 2013, while being ineligible under Section 29A of the I&B Code. The Appellate Tribunal's judgment in the mentioned case clarified that a Promoter ineligible under Section 29A cannot make an application for compromise and arrangement involving the Corporate Debtor's assets. 4. In line with the precedent set in the Jindal Steel and Power Limited case, the Appellate Tribunal held that the Appellant, being ineligible under Section 29A of the I&B Code, cannot file an application for compromise and arrangement under Section 230-232 of the Companies Act, 2013 to take over the Company. The Appeal was dismissed, citing no delay in filing, and no costs were awarded.
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