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2019 (8) TMI 588 - AT - Insolvency and BankruptcyExistence of resolution plan - Liquidation passed u/s 33 of the Insolvency and Bankruptcy Code, 2016 - condonation of delay of 11 days in filing appeal - HELD THAT - We direct the Liquidator to take steps of Liquidation in terms of the order 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 that the liquidator is required to act in terms of the aforesaid directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members or the Corporate Debtor or the creditors or a class of creditors like Financial Creditor or Operational Creditor approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the Adjudicating Authority i.e. National Company Law Tribunal, Chennai Bench Appeal disposed off.
Issues Involved:
1. Delay in filing the appeal. 2. Lack of opportunity for the promoter to settle with creditors. 3. Order of liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016. 4. Procedure and steps to be taken during the liquidation process. Detailed Analysis: 1. Delay in Filing the Appeal: The appeal was preferred by a shareholder/director of the corporate debtor against the order of liquidation. The appeal was filed with a delay of 11 days. The tribunal, after hearing the learned counsel for the parties and being satisfied with the grounds provided, condoned the delay of 11 days in preferring the appeal. 2. Lack of Opportunity for the Promoter to Settle with Creditors: The appellant argued that the promoter was not given an opportunity to settle the matter with the creditors. However, the tribunal noted that this ground could not be taken once the resolution plan had been called for. The tribunal emphasized that settlement under Section 12A of the Insolvency and Bankruptcy Code (I&B Code) was not applicable in this context. 3. Order of Liquidation under Section 33 of the I&B Code: The tribunal was not inclined to interfere with the impugned order of liquidation dated 25th March 2019. The tribunal referenced previous judgments, including "Y. Shivram vs. S. Dhanapal & Ors." and "S.C. Sekaran v. Amit Gupta & Ors.," to support its decision. The tribunal reiterated that liquidation is a last resort if there is no resolution plan or if the plans submitted are not satisfactory. The liquidation process should aim to sell the business of the corporate debtor as a going concern to avoid corporate death by liquidation. 4. Procedure and Steps to be Taken During the Liquidation Process: The tribunal provided detailed steps to be followed during the liquidation process: - The liquidator must verify claims of all creditors and take control of all assets, property, effects, and actionable claims of the corporate debtor. - The liquidator should carry on the business of the corporate debtor for its beneficial liquidation as prescribed under Section 35 of the I&B Code. - The liquidator should access information under Section 33 and consolidate claims under Section 38. After verification of claims in terms of Section 39, the claims should be either admitted or rejected as required under Section 40. - Before selling the assets of the corporate debtor, the liquidator must take steps in terms of Section 230 of the Companies Act, 2013, which involves compromise or arrangement with creditors or members. - If revival through compromise or arrangement fails, the liquidator should proceed with the sale of the corporate debtor's business as a going concern. - The tribunal emphasized that liquidation should be the last resort, and efforts should be made to avoid the corporate debtor's death by liquidation. The tribunal concluded that the liquidator must act according to these directions and take steps under Section 230 of the Companies Act. If any members, creditors, or classes of creditors approach the company through the liquidator for a compromise or arrangement, the liquidator should move an application under Section 230 before the adjudicating authority. If the revival fails, steps should be taken for the outright sale of the corporate debtor to enable the continuation of employment for its workers. Conclusion: The appeal was disposed of with the above observations and directions, and no costs were awarded. The tribunal's order emphasized the importance of attempting revival and continuation of the corporate debtor before resorting to liquidation.
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