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TMI Blog2019 (5) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... dator 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. - Mr S. J. Mukhopadhaya, Chairperson, Mr A. I. S. Cheema, Member (Judicial) And Mr Kanthi Narahari, Member (Technical) For The Appellant : Mr. Abhijeet Sinha with Mr. Saikat Sarkar, Mr. M.Roshan Atia, Mr. Rohit Rajershi, Advocates ORDER This appeal has been preferred by M. Palanisamy who is Director / Shareholder of M/s. Senthil Papers and Boards Pvt. Ltd. against order dated 12th February, 2019 whereby the application under Section 60(5)of Insolvency Bankruptcy Code ( I B ) Code, 2016 filed by Appellant has been rejected on the ground that the Appellant is ineligible in terms of Section 29A (c) (h) of the Code. When the matter was taken up, learned Counsel for the Appellant submitted that the Adjudicating Authority in the meantime has also passed the order of liquidation on the same day i.e. 12th February, 2019 which the Appellant could come to know later on. In the fact and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate debtor s assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends. In Arcelormittal India 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the company; ( 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 order of the Tribunal under sub-section (1), a notice of such meeting shall be sent to all the creditors or class of creditors and to all the members or class of members and the debe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade 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. ( 7) An order made by the Tribunal under sub-section (6) shall provide for all or any of the following matters, namely:- ( a) where the compromise or arrangement provides for conversion of preference shares into equity shares, such preference shareholders shall be given an option to either obtain arrears of dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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. 19. In view of the observations aforesaid, we hold 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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