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2021 (12) TMI 1488 - Tri - Insolvency and BankruptcyLiquidation of the Respondent - liquidation sought on the ground that the Respondent committed a breach of the terms of sanctioned rehabilitation scheme duly approved by Appellate Authority for Industrial and Financial Reconstruction (AAIFR) - whether the sanctioned scheme can be treated as the Resolution Plan within the meaning of Section 5(26) of the IBC 2016? - HELD THAT - This Adjudicating Authority had never considered the point whether the notification dated 24.05.2017 is valid or not. The judgment of the Hon ble NCLAT in the case of Pr. Director General of Income Tax (Admn. TPS) Vs. M/s. Spartek Ceramics India Ltd. Anr. 2018 (6) TMI 350 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI and further the judgment of the Hon ble Supreme Court in the case of M/s. Spartek Ceramics India Ltd. Vs. Union of India 2018 (10) TMI 1660 - SUPREME COURT were never placed before this Adjudicating Authority for consideration. This Adjudicating Authority had given the above advisory without considering the law laid down by the Hon ble Supreme Court as it was not brought to the notice of the Adjudicating Authority. So this order of the Adjudicating Authority cannot be relied on - The sanctioned scheme of rehabilitation dated 07.01.2005 cannot be termed as the Resolution Plan within the meaning of Section 5(26) of the IBC 2016 - the issue answered in negative. Maintainability of application under Section 33(4) of the IBC 2016 - HELD THAT - The sanctioned scheme of rehabilitation is not the Resolution Plan within the meaning of Section 5(26) of the IBC 2016 - there is no question of the Respondent committing the breach of implementing any of such plan hence this application under Section 33(4) of the IBC 2016 is not maintainable. Even otherwise the sanctioned scheme under Sick Industrial Companies (Special Provisions) Repeal Act 2003 cannot be considered as Resolution Plan because the said scheme had not been approved by the Committee of Creditors in terms of sub-section (4) of Section 30 of IBC 2016 which is the mandate of law - Since the approved Scheme dated 07.01.2005 cannot be treated as the Resolution Plan within the meaning of Section 5(26) of the IBC 2016 we hold that there is no question of breach of its implementation as alleged by the Applicant herein - Issue answered in negative. Petition dismissed.
Issues Involved:
1. Whether the sanctioned scheme of rehabilitation dated 07.01.2005 is the Resolution Plan within the meaning of Section 5(26) of the IBC, 2016 in view of the Notification No. S.O. 1683 (E) dated 24.05.2017? 2. Whether it can be held that the Respondent has committed the breach of the sanctioned rehabilitation scheme and, hence, liable for order of liquidation under Section 33(4) of the IBC, 2016? Issue-Wise Detailed Analysis: Issue 1: Whether the sanctioned scheme of rehabilitation dated 07.01.2005 is the Resolution Plan within the meaning of Section 5(26) of the IBC, 2016 in view of the Notification No. S.O. 1683 (E) dated 24.05.2017? The Tribunal analyzed whether the sanctioned rehabilitation scheme approved by AAIFR on 07.01.2005 can be considered a Resolution Plan under Section 5(26) of the IBC, 2016. The definition of "resolution plan" under Section 5(26) of the IBC, 2016 specifies that it is a plan proposed by a resolution applicant for insolvency resolution of the corporate debtor as a going concern. The Tribunal noted that the Central Government amended Section 4 of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 via Notification No. S.O. 1683 (E) dated 24.05.2017, to include sanctioned schemes under SICA, 1985 as deemed approved resolution plans under the IBC, 2016. However, the Hon'ble NCLAT, in the case of Pr. Director General of Income-tax (Admn. & TPS) VS. Spartek Ceramics India Ltd. & Anr., held that the notification dated 24.05.2017 is invalid. This decision was upheld by the Hon'ble Supreme Court, which ruled that the notification travels beyond the scope of the removal of difficulties provision. Therefore, the Tribunal concluded that the sanctioned scheme of rehabilitation dated 07.01.2005 cannot be termed as the Resolution Plan within the meaning of Section 5(26) of the IBC, 2016. The Tribunal answered this issue in the negative. Issue 2: Whether it can be held that the Respondent has committed the breach of the sanctioned rehabilitation scheme and, hence, liable for order of liquidation under Section 33(4) of the IBC, 2016? Given the conclusion on Issue 1, the Tribunal held that since the sanctioned scheme of rehabilitation is not a Resolution Plan under the IBC, 2016, there is no question of the Respondent committing a breach of its implementation. Consequently, the application under Section 33(4) of the IBC, 2016 for passing an order of liquidation of the Respondent is not maintainable. The Tribunal also noted that even if the scheme were considered, it would not qualify as a Resolution Plan because it was not approved by the Committee of Creditors as required under sub-section (4) of Section 30 of the IBC, 2016. This view is supported by the Hon'ble NCLAT's decision in Company Appeal (AT) (Insolvency) No. 160 of 2017, which stated that a plan not approved by the Committee of Creditors cannot be treated as an approved Resolution Plan under sub-section (1) of Section 31. Thus, the Tribunal answered this issue in the negative and rejected the application. Conclusion: The Tribunal rejected CP(IB) 395 of 2020 and directed the registry to upload the order on the official website and send authenticated copies to the concerned parties by Speed-post within one week. The order was signed on the 22nd day of December 2021.
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