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TMI Blog2019 (5) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... or to constitute a Committee of Creditors for its opinion to find out whether the arrangement of Scheme is viable, feasible and having appropriate financial matrix. It will be open for the Adjudicating Authority as a Tribunal to approve the arrangement or Scheme in spite of some irrelevant objections as may be raised by one or other creditor or member keeping in mind the object of the Insolvency and Bankruptcy Code, 2016. 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. - Company Appeal (AT) (Insolvency) No. 224 of 2018 And Company Appeal (AT) (Insolvency) No. 286 of 2018 - - - Dated:- 27-2-2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to set-up this paper plant. The plant and machinery of the company is fully automated with advanced quality control system, and with a capacity to produce 300 tonnes per day (TPD) i.s. 90,000 MTPA, along with a 15 MW multi-fuel power plant, which is one of the largest single plants in India and ranks within fifteen major plants in India (Source- Paper Mart MAGAZINE Edition April-May 2010). Excess capacity of 5 MW of power is being sold to third parties. Due to the promoters expertise and knowledge in setting up paper plants, the company could achieve the project implementation within short span of 3 years (From 2007 to 2010) period using latest technology and rich experience personnel in the respective areas to complete project implementation and start production from April 2010. The paper manufacturing unit is providing livelihood directly for more than 300 employees and indirectly for 200 employees, in and around a 50 kilometer area of the village where the plant is situated. 120 ancillary industrial units are also dependent on the paper and power plant. After the plant commenced its commercial production from April 2010, it has provided economies of benefits in daily life to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be specified. 8. In absence of any settlement, if no withdrawal is made at the aforesaid three stages then Resolution Process continues and if any Resolution Plan is found to be viable, feasible and having financial matrix and qualifies in terms of sub-section (2) of Section 30 and approved by 66% of voting shares of the Committee of Creditors , the Adjudicating Authority may pass order approving the plan under Section 31. This is how the Corporate Debtor can be saved from the liquidation. 9. In the present case, as more than 270 days having passed and in absence of any approved Resolution Plan , the Adjudicating Authority had to pass order of liquidation. 10. The question arises for consideration as to what step should be taken by the Liquidator during the Liquidation . 11. During the liquidation stage, Liquidator required to take steps to ensure that the company remains a going concern and instead of liquidation and for revival of the Corporate Debtor by taking certain measures. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Pvt. Ltd. vs. Satish Kumar Gupta Ors. at paragraph 83, footnote 3 is mentioned. The Hon ble Supreme Court noticed that : 3. Regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, states that the liquidator may also sell the corporate debtor as a going concern. 6. In Meghal Homes Pvt. Ltd. vs. Shree Niwas Girni K.K. Samiti Ors. (2007) 7 SCC 753 the Hon ble Supreme Court observed and held as follows: 33 . The argument that Section 391 would not apply to a company which has already been ordered to be wound up, cannot be accepted in view of the language of Section 391(1) of the Act, which speaks of a company which is being wound up. If we substitute the definition in Section 390(a) of the Act, this would mean a company liable to be wound up and which is being wound up. It also does not appear to be necessary to restrict the scope of that provision considering the purpose for which it is enacted, namely, the revival of a company including a company that is liable to be wound up or is being wound up and normally, the attempt must be to ensure that rath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny; ( b) reduction of share capital of the company, if any, included in the compromise or arrangement; ( c) any scheme of corporate debt restructuring consented to by not less than seventy-five per cent. of the secured creditors in value, including- ( i) a creditor s responsibility statement in the prescribed form; ( ii) safeguards for the protection of other secured and unsecured creditors; ( iii) report by the auditor that the fund requirements of the company after the corporate debt restructuring as approved shall conform to the liquidity test based upon the estimates provided to them by the Board; ( iv) where the company proposes to adopt the corporate debt restructuring guidelines specified by the Reserve Bank of India, a statement to that effect; and ( v) a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer. ( 3) Where a meeting is proposed to be called in pursuance of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia established under sub-section (1)of section 7 of the Competition Act, 2002, if necessary, and such other sectoral regulators or authorities which are likely to be affected by the compromise or arrangement and shall require that representations, if any, to be made by them shall be made within a period of thirty days from the date of receipt of such notice, failing which, it shall be presumed that they have no representations to make on the proposals. ( 6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing three-fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator appointed under this Act or under the Insolvency and Bankruptcy Code, 2016, as the case may be, and the contributories of the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in case of listed companies, takeover offer shall be as per the regulations framed by the Securities and Exchange Board. ( 12) An aggrieved party may make an application to the Tribunal in the event of any grievances with respect to the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on application, pass such order as it may deem fit. Explanation.-For the removal of doubts, it is hereby declared that the provisions of section 66 shall not apply to the reduction of share capital effected in pursuance of the order of the Tribunal under this section. 8. In view of the provision of Section 230 and the decision of the Hon ble Supreme Court in Meghal Homes Pvt. Ltd. and Swiss Ribbons Pvt. Ltd. , 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 under Section 35 of the I B Code. The Liquidator will access in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. During proceeding under Section 230, if any, objection is raised, it is open to the Adjudicating Authority (National Company Law Tribunal) which has power to pass order under Section 230 to overrule the objections, if the arrangement and scheme is beneficial for revival of the Corporate Debtor (Company). While passing such order, the Adjudicating Authority is to play dual role, one as the Adjudicating Authority in the matter of liquidation and other as a Tribunal for passing order under Section 230 of the Companies Act, 2013. 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. Before approval of an arrangement or Scheme, the Adjudicating Authority (National Company Law Tribunal) should follow the same principle and should allow the Liquidator to constitute a Committee of Creditors for its opinion to find out w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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