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2022 (2) TMI 1175 - AT - Insolvency and BankruptcyEligibility to prefer an Application under Section 230-232 of the Companies Act, 2013 - eligibility of a person to be Resolution Applicant - HELD THAT - Section 29A (c) of the I B Code, 2016 relates to persons not eligible to be Resolution Applicant and in fact, the Code has bifurcated such persons into two groups as seen sub clauses (c) (g) of Section 29A of the I B Code, 2016. Moreover, if an individual was a promoter/in the management, or control of a Corporate Debtor , in which a preferential transaction, undervalue transaction and extortionate credit transaction or a fraudulent transaction had taken place and in respect of which an Order was passed by the Adjudicating Authority in terms of the I B Code, 2016, such person was ineligible to submit a Resolution Plant under 29A (g) of the Code. In effect, only such individuals who do not come under sub-clause (g) of Section 29A of the I B Code, 2016, are eligible to furnish Resolution Plan under (c) of Section 29A, if they happen to be individuals, who are in the erstwhile management or control of the Corporate Debtor , as per decision of the Hon ble Supreme Court in Arcelormittal India Private Limited V. Satish Kumar Gupta, 2018 (10) TMI 312 - SUPREME COURT . Applicant/Petitioner had sought a direction to be issued to the Liquidator to convene the Meeting of the Creditors (inclusive of all the Creditors i.e., Respondent No. 2) and place before them the Scheme of Compromise/Settlement for their consideration , this Tribunal taking note of the fact that if the Promoter is ineligible under Section 29A of I B Code, 2016 cannot make an Application for Compromise and Arrangement for taking the immovable property and actionable claim of the Corporate Debtor coupled with Regulation 2B(1) of the Insolvency of Bankruptcy Board of India (Liquidation Process) Regulations 2016 comes to a resultant conclusion that the Applicant in I.A. No. 387/2021 in IB 197(ND) 2018 before the Adjudicating Authority is ineligible to prefer an Application under Section 230-232 of the Companies Act, 2013 and viewed in that perspective, the impugned order of dismissal passed by the Adjudicating Authority does not suffer from any material irregularity or patent illegality in the eye of law. Appeal dismissed.
Issues Involved:
1. Preferential transactions under Section 43 of the IBC, 2016. 2. Ineligibility under Section 29A of the IBC, 2016. 3. Application of Regulation 2B of the Liquidation Process Regulations, 2016. 4. Convening of the Meeting of Creditors. 5. Applicability of previous judgments and orders. Detailed Analysis: Preferential Transactions under Section 43 of the IBC, 2016: The Adjudicating Authority found the ex-Promoters/ex-Directors guilty of preferential transactions under Section 43 of the IBC, 2016. Specifically, the transaction amounting to ?10,09,360 with Respondent No.5 was held as a preferential transaction. This finding was not stayed by any higher authority, thus remaining in effect. Ineligibility under Section 29A of the IBC, 2016: The core issue was whether the Appellant, being ineligible under Section 29A, could make an application for a scheme of compromise and arrangement under Sections 230-232 of the Companies Act, 2013. The Tribunal referred to precedents, including the Supreme Court's judgment in Arun Kumar Jagatramka v. Jindal Steel and Power Ltd., which clarified that ineligibilities under Section 29A extend to schemes of compromise and arrangement during liquidation. This is to prevent promoters from re-entering the company through a back-door mechanism. Application of Regulation 2B of the Liquidation Process Regulations, 2016: Regulation 2B(1) explicitly states that a person ineligible under the IBC to submit a resolution plan cannot participate in any compromise or arrangement. The Tribunal upheld the constitutional validity of this regulation, reinforcing that the Appellant, found guilty of preferential transactions, was barred from proposing a scheme of compromise or arrangement. Convening of the Meeting of Creditors: The Appellant argued that the Liquidator had wrongly excluded the 4th Respondent from the Meeting of Creditors. However, the Tribunal noted that the previous order directed the matter to be placed before the creditors, which was complied with, and the scheme was rejected. The Tribunal found no procedural irregularity in this process. Applicability of Previous Judgments and Orders: The Tribunal referenced multiple judgments, including the Supreme Court and previous NCLAT decisions, to substantiate its findings. The judgment in Arun Kumar Jagatramka was particularly pivotal, as it reinforced that promoters ineligible under Section 29A could not propose schemes during liquidation. The Tribunal also noted that the Appellant's reliance on the order allowing recourse under Section 230 was misplaced, as it did not override the statutory ineligibilities. Conclusion: The Tribunal dismissed the appeal, concluding that the Appellant was ineligible to submit a scheme of compromise or arrangement under Sections 230-232 of the Companies Act, 2013, due to the statutory bar under Section 29A and Regulation 2B. The dismissal of the interlocutory application by the Adjudicating Authority was upheld, and no material irregularity or patent illegality was found in the impugned order.
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