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2019 (3) TMI 1286 - AT - Insolvency and BankruptcyLiquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - revised resolution plan(s) - Power to compromise or make arrangements with creditors and members - HELD THAT - We direct the Liquidator to proceed in accordance with law. He will verify claims of all the creditors; take into custody and control of all the assets, property, effects and actionable claims of the corporate debtor , carry on the business of the corporate debtor for its beneficial liquidation etc. as prescribed u/s 35 of the I&B Code. The Liquidator will access information under Section 33 and will consolidate the claim under Section 38 and after verification of claim in terms of Section 39 will either admit or reject the claim, as required under Section 40. Before taking steps to sell the assets of the corporate debtor(s) (companies herein), the Liquidator will take steps in terms of Section 230 of the Companies Act, 2013. The Adjudicating Authority, if so required, will pass appropriate order. Only on failure of revival, the Adjudicating Authority and the Liquidator will first proceed with the sale of company s assets wholly and thereafter, if not possible to sell the company in part and in accordance with law. The Liquidator if initiates, will complete the process under Section 230 of the Companies Act within 90 days. For the purpose of counting the period of liquidation, the pendency of the appeal(s) preferred by the Eight Finance Pvt. Ltd. that is from 12th July, 2018 and till date should be excluded. In the circumstances, while we are not inclined to interfere with the impugned order(s) both dated 25th June, 2018 direct the Liquidator to act in accordance with law and as observe above.
Issues Involved:
1. Liquidation Orders 2. Role and Responsibilities of the Liquidator 3. Application of Section 230 of the Companies Act, 2013 4. Judicial Precedents and Legal Provisions 5. Directions to the Liquidator Detailed Analysis: 1. Liquidation Orders: The appeals were filed by the management of two corporate debtors against the orders dated 25th June 2018, passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which ordered the liquidation of both companies under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The appellate tribunal noted that there were no resolution plans submitted for the revival of the companies, and thus, it was not inclined to interfere with the liquidation orders. 2. Role and Responsibilities of the Liquidator: The management's counsel argued that the Liquidator should keep the companies as 'going concerns' during liquidation and could take steps under Section 230 of the Companies Act, 2013, in consultation with the members or creditors. The Liquidator's counsel assured that the Liquidator would ensure the companies remain going concerns and take appropriate steps as required by law, subject to the Adjudicating Authority's approval. 3. Application of Section 230 of the Companies Act, 2013: Section 230 allows for a compromise or arrangement between a company and its creditors or members, even if the company is being wound up. The tribunal directed the Liquidator to proceed under Section 230 before selling the assets of the corporate debtors. The Liquidator was instructed to verify claims, take custody of assets, and carry on the business for beneficial liquidation, as per Section 35 of the I&B Code. The process under Section 230 should be completed within 90 days. 4. Judicial Precedents and Legal Provisions: The tribunal referenced several Supreme Court judgments, including 'Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.' and 'Meghal Homes Pvt. Ltd. vs. Shree Niwas Girni K.K. Samiti & Ors.', which emphasized the revival and continuation of the corporate debtor as the primary focus of the legislation. The tribunal highlighted that liquidation should be a last resort and that the Liquidator could sell the business as a going concern. 5. Directions to the Liquidator: The Liquidator was directed to verify claims, take control of assets, and carry on the business for beneficial liquidation. The tribunal emphasized that the Liquidator should take steps under Section 230 of the Companies Act, 2013, before proceeding with the sale of assets. The Adjudicating Authority was instructed to pass appropriate orders if required. The tribunal also excluded the period of pendency of the appeals from the liquidation timeline. In conclusion, the tribunal upheld the liquidation orders but provided detailed directions to the Liquidator to ensure the companies remain going concerns and to explore revival options under Section 230 of the Companies Act, 2013, before proceeding with the sale of assets. The appeals were disposed of with these observations and directions, with no costs imposed.
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