2022 (1) TMI 1215 - Tri - Insolvency and Bankruptcy

Seeking convention of meeting of the Creditors - placing of scheme of compromise/settlement for their consideration before the creditors - ex-Promoters/Directors held guilty for the preferential transactions under Section 43 of the IBC, 2016 - HELD THAT - In terms of Section 29A(g) of the IBC 2016 and Regulation 2(B)(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, the Applicant is not eligible to file any application under Sections 230-232 of the Companies Act. Reliance placed in the Hon'ble Supreme Court decision 2021 (3) TMI 611 - SUPREME COURT in Civil Appeal No. 9664/2019 dated 15.03.2021, where it was held that it is clear that the Promoter, if ineligible under Section 29A Cannot make an application for Compromise and Arrangement for taking back the immovable property or actionable claims of the Corporate Debtor. Application dismissed.

Summary

Issues:
- Eligibility of the Applicant to file a scheme of compromise/settlement under Sections 230-232 of the Companies Act.
- Consideration of Section 29A(g) of IBC 2016 and Regulation 2(B)(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

Eligibility of the Applicant to file a scheme of compromise/settlement under Sections 230-232 of the Companies Act:
The Applicant filed an application requesting the Liquidator to convene a meeting of Creditors to consider a scheme of compromise/settlement. The Liquidator objected, citing Section 29A(g) of IBC 2016, stating the Applicant, as ex-Promoters/ex-Directors held guilty for preferential transactions, are ineligible to file any scheme under Sections 230-232 of the Companies Act. The Liquidator referenced previous orders by NCLAT and the Supreme Court upholding this ineligibility. The Applicant argued that since the scheme was submitted before the order finding them guilty, Section 29A(g) should not apply. The Adjudicating Authority noted the previous order finding the Applicant guilty of preferential transactions and that the order was still in operation due to a pending appeal.

Consideration of Section 29A(g) of IBC 2016 and Regulation 2(B)(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016:
The Adjudicating Authority analyzed the decisions of NCLAT and the Supreme Court, emphasizing that ineligibilities under Section 29A of IBC must also apply to schemes of compromise or arrangement under Section 230 of the Companies Act during liquidation. Referring to Regulation 2(B)(1) of the Liquidation Process Regulations, the Authority concluded that the Applicant, being ineligible under Section 29A(g) of IBC 2016, cannot file any application under Sections 230-232 of the Companies Act. Therefore, the Authority dismissed the present application based on the Applicant's ineligibility.

In conclusion, the judgment highlights the strict application of Section 29A(g) of IBC 2016 and related regulations, barring certain individuals from filing schemes of compromise or settlement under the Companies Act during liquidation. The decision underscores the importance of upholding legal ineligibilities to maintain the integrity of insolvency proceedings and prevent back-door entries by disqualified parties.