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TMI Blog2019 (9) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Sections 35,37,38, 39 and 40 of the I B Code and decide the claim. Thereafter, it will ensure that instead of liquidating the assets of the Corporate Debtor steps are taken for Arrangement / Scheme to frame u/s 230 of the Companies Act, 2013. If Promoters / Members of the Corporate Debtors including the Appellant give any proposal for entering into an Agreement or Scheme in terms of Section 230 of the Companies Act, 2013 or any other Creditors, the liquidator is required to act in accordance with the directions of this Appellate Tribunal in Y. Shivram Prasad Vs. S. Dhanapal Ors. The Liquidator in the meantime will also ensure that the Corporate Debtor remains a going concern and the work do not suffer. It will make payment of salary and wages to the officers, employees and workmen of the Corporate Debtor and also to the suppliers of goods, services, electricity charges, water charges etc. Appeal disposed off. - Company Appeal (AT) (Insolvency)No. 185 of 2017 - - - Dated:- 27-8-2019 - Mr S. J. Mukhopadhaya, Chairperson, Mr. A. I. S. Cheema, Member (Judicial) And Mr Kanthi Narahari, Member (Technical) For The Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal Y. Shivram Prasad Vs. S. Dhanapal Ors., wherein this Appellate Tribunal held and directed 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 heard the learned counsel for the parties and perused the record. The Hon ble Supreme Court in Swiss Ribbons Pvt. Ltd. Anr. vs. Union of India Ors. Writ Petition (Civil) No. 99 of 2018 by its judgment dated 25th January, 2019, observed as follows: 11. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 arrangement with the creditors and members as contemplated by Section 391 of the Act or any of the contributories or creditors also can come forward with such an application. 7. Section 391 of the Companies Act, 1956 has since been replaced by Section 230 of the Companies Act, 2013, which is as follows 230. Power to compromise or make arrangements with creditors and members ( 1) Where a compromise or arrangement is proposed- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and Exchange Board and stock exchange where the securities of the companies are listed, for placing on their website and shall also be published in ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate 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 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 cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) 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 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 obse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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