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TMI Blog2019 (8) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... al is condoned. " I.A. No. 1690 of 2019 stands disposed of. " Learned counsel for the Appellant submitted that if the opportunity is given to the 'Promoter', they could have settled the matter with the 'Creditors' but no such opportunity was given. However, such ground cannot be taken once the 'resolution plan' has been called for and in view of above settlement u/s 12A of the I&B Code. " For the reasons aforesaid, while we are not inclined to interfere with the impugned order of 'Liquidation' dated 25th March, 2019, we direct the 'Liquidator' to take steps of 'Liquidation' in terms of the order of this Appellate Tribunal in 'Y. Shivram vs. S. Dhanapal & Ors.' in 'Company Appeal (AT) (Insolvency) No. 224 of 2018' vide order dated 27th February, 2019 observed and held as follows : " "12. The aforesaid issue fell for consideration before this Appellate Tribunal in "S.C. Sekaran v. Amit Gupta & Ors.─ Company Appeal (AT) (Insolvency) Nos. 495 & 496 of 2018" wherein this Appellate Tribunal having noticed the decision of the Hon'ble Supreme Court in "Swiss Ribbon Pvt. Ltd. & Anr. v. Union of India & Ors. (Supra) and "Meghal Homes Pvt. Ltd." observed and held: " "5. We have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 rather than dissolving a company it is allowed to revive. Moreover, Section 391(1)(b) gives a right to the liquidator in the case of a company which is being wound up, to propose a compromise or arrangement with creditors and members indicating that the provision would apply even in a case where an order of winding up has been made and a liquidator had been appointed. Equally, it does not appear to be necessary to go elaborately into the question whether in the case of a company in liquidation, only the Official Liquidator could propose a compromise or arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve 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 debenture-holders of the company, individually at the address registered with the company which shall be accompanied by a statement disclosing the details of the compromise or arrangement, a copy of the valuation report, if any, and explaining their effect on creditors, key managerial personnel, """promoters and non-promoter members, and the debenture-holders and the effect of the compromise or arrangement on any material interests of the directors of the company or the debenture trustees, and such other matters as may be prescribed: " Provided that such notice and other documents shall also be placed on the website of the company, if any, and in case of a listed company, these documents shall be sent to the Securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in cash or accept equity shares equal to the value of the dividend payable; " (b) the protection of any class of creditors; " (c) if the compromise or arrangement results in the variation of the shareholders' rights, it shall be given effect to under the provisions of section 48; " (d) if the compromise or arrangement is agreed to by the creditors under sub-section (6), any proceedings pending before the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall abate; " (e) such other matters including exit offer to dissenting shareholders, if any, as are in the opinion of the Tribunal n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 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." " 13. Therefore, it is clear that during the liquidation process, step required to be taken for its revival and continuance of the 'Corporate Debtor' by protecting the 'Corporate Debtor' from its management and from a death by liquidation. Thus, the steps which are required to be taken are as follows: "" i. By compromise or arrangement with the creditors, or class of creditors or members or class of members in terms of Section 230 of the Companies Act, 2013. " ii. On failure, the liquidator is required to take step to sell the business of the 'Corporate Debtor' as going concern in its totality along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 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, in terms of the observations as made in above. On failure, as observed above, steps should be taken for outright sale of the 'Corporate Debtor' so as to enable the employees to continue. " 20. Both the appeals are disposed of with aforesaid observations and directions. No cost." " The appeal stands disposed of with aforesaid observations and dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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