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2019 (7) TMI 218 - AT - Insolvency and BankruptcyLiquidation order - Section 33 of the Insolvency Bankruptcy Code, 2016 (I B Code) - rejection of resolution plan - HELD THAT - In view of the order of liquidation, the Liquidator is now required to act in terms of the decision of this Appellate Tribunal in Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI where it was held that As the liquidation so taken up under the I B Code , the arrangement of scheme should be in consonance with the statement and object of the I B Code . Meaning thereby, the scheme must ensure maximisation of the assets of the Corporate Debtor and balance the stakeholders such as, the Financial Creditors , Operational Creditors , Secured Creditors and Unsecured Creditors without any discrimination. Appeal disposed off.
Issues Involved:
1. Acceptance of the Resolution Plan. 2. Eligibility under Section 29A of the Insolvency & Bankruptcy Code, 2016 (I&B Code). 3. Liquidation process and revival of the Corporate Debtor. 4. Application of Section 230 of the Companies Act, 2013 during liquidation. Detailed Analysis: 1. Acceptance of the Resolution Plan: The appellant, a shareholder of Ciemme Jewels Limited, contested the order dated 25th March 2019, which mandated liquidation under Section 33 of the I&B Code. The appellant's counsel argued that a resolution plan worth ?6.14 crores was initially submitted but rejected, and a subsequent offer of ?6.5 crores was made. However, the tribunal found the appellant ineligible under Section 29A and noted that more than 270 days had passed, thus upholding the liquidation order. 2. Eligibility under Section 29A of the Insolvency & Bankruptcy Code, 2016: The tribunal emphasized the ineligibility of the appellant under Section 29A of the I&B Code, which disqualifies certain persons from submitting a resolution plan. This ineligibility was a critical factor in the tribunal's decision to not grant relief to the appellant. 3. Liquidation Process and Revival of the Corporate Debtor: The tribunal referred to its previous decision in "Y. Shivram Prasad vs. S. Dhanapal & Ors." and reiterated that during the liquidation stage, the liquidator must ensure that the company remains a going concern. The tribunal highlighted the Supreme Court's observation in "Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors." that liquidation is a last resort and that even in liquidation, the liquidator can sell the corporate debtor as a going concern. 4. Application of Section 230 of the Companies Act, 2013 during Liquidation: The tribunal underscored the importance of Section 230 of the Companies Act, 2013, which allows for compromise or arrangement with creditors and members even during liquidation. The liquidator is required to verify claims, take control of the corporate debtor's assets, and attempt to revive the company through compromise or arrangement before proceeding with the sale of assets. The tribunal also noted that objections during this process could be overruled if the scheme is beneficial for the revival of the corporate debtor. Conclusion: The tribunal directed the liquidator to act in accordance with the law and the tribunal's previous directions, including taking steps under Section 230 of the Companies Act, 2013. The appeal was disposed of with these directions, emphasizing the need to explore all avenues for the revival of the corporate debtor before proceeding with liquidation.
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