2020 (11) TMI 1072 - AT - Companies Law

Seeking reconsideration of Scheme of Compromise and Arrangement under Section 230 of the Companies Act, 2013 - HELD THAT - The Corporate Debtor is under liquidation since 11th January, 2018. The Scheme of Compromise and Arrangement for revival of the Corporate Debtor (Company) has been rejected by the secured creditors. Admittedly, 90 days limit from the date of the order of liquidation has elapsed. Now after lapse of more than two years, the Adjudicating Authority has declined to reconsider the Scheme on the same grounds as were taken earlier for approval of the Scheme. The revised Scheme placed by Shareholders before the Creditors has been rejected. It is noticed from the impugned order that the creditors have objected to the addition of TEV Study . It goes without saying that the Scheme of Compromise sought to be reconsidered on the basis of TEV Study could not be forced upon the stakeholders who were unwilling to consider the same even after addition of TEV Study - no change in circumstances warranting reconsideration at the hands of the Adjudicating Authority was made out and the Adjudicating Authority was right in dismissing the application. Appeal dismissed.

Summary

Issues:
1. Reconsideration of Scheme of Compromise and Arrangement under Section 230 of the Companies Act, 2013.
2. Consideration of 'TEV Study' in the Scheme.
3. Liquidation as the last resort and efforts for revival of the Company.
4. Rejection of Scheme by secured creditors.
5. Time elapsed since liquidation order.
6. Stakeholders' unwillingness to consider revised Scheme.
7. Adjudicating Authority's decision on reconsideration.

Analysis:

1. The judgment concerns the dismissal of an application by the representatives of the employees of a Company under liquidation to reconsider the Scheme of Compromise and Arrangement under Section 230 of the Companies Act, 2013. The impugned order was challenged on the grounds that the 'TEV Study' was not considered and the Adjudicating Authority did not consider the proposition that liquidation should be the last resort with efforts made to revive the Company.

2. The Corporate Debtor had been under liquidation since January 11, 2018, and the Scheme for its revival had been rejected by secured creditors. The Adjudicating Authority declined to reconsider the Scheme after the 90 days' limit from the liquidation order had elapsed. The revised Scheme, including the 'TEV Study,' was rejected by creditors, indicating their objection to its addition.

3. The judgment highlighted that stakeholders were unwilling to consider the revised Scheme even after the 'TEV Study' was included. The Adjudicating Authority, in its decision, emphasized that no change in circumstances necessitating reconsideration was evident, leading to the dismissal of the application. The Authority's stance was that forcing the Scheme based on the 'TEV Study' on unwilling stakeholders was not justified.

4. Ultimately, the appeal was dismissed, and no costs were awarded. The decision reinforced the importance of creditor involvement and the lack of significant changes justifying reconsideration of the Scheme. The judgment underscored the Authority's discretion in evaluating Scheme reconsideration requests based on stakeholder willingness and the absence of substantial alterations in relevant circumstances.