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TMI Blog2022 (2) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, New Delhi Court II) while passing the impugned order in IA No.3879/2021 in CP(IB) No.197/ND/2018 (Filed by the Applicant/Petitioner) at paragraph 3 to 9 has observed the following: 3. "Considering the submissions and the averments made in the application, we observe that the vide order dated 30th July, 2021, this Adjudicating Authority has found the ex-Promoters/ex-Directors guilty for the preferential transactions under Section 43 of the IBC, 2016 and passed the following order "So far as the transaction of amount of Rs. 10,09,360 with Respondent No.5 is concerned, we hold that it is a preferential transaction under Section 43 of the IBC 2016. Therefore, it is admitted fact that the ex-Promoters/Directors held guilty for the preferential transactions under Section 43 of the IBC, 2016. 4. In the course of hearing, Ld. Counsel for the Applicant also submitted that against this order, the Applicant has preferred an appeal before the Hon'ble NCLAT but the said order has not been stayed. Therefore, the order dated 30th July, 2021 is still in operation. 5. In terms of this order, now we consider the submission of the Applicant as well as the decision of the Hon'ble NCLAT i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the above analysis, we find that the prohibition placed by the Parliament in Section 29A and Section 35(1)(f) of the IBC must also attach itself to a scheme of compromise or arrangement under Section 230 of the Act of 2013, when the company is undergoing liquidation under the auspices of the IBC. As such, Regulation 2B of the Liquidation Process Regulations, specifically the proviso to Regulation 2B(1), is also constitutionally valid. For the above reasons, we have come to the conclusion that there is no merit in the appeals and the writ petition. The civil appeals and writ petition are accordingly dismissed." 9. At this juncture, we also refer to Regulation 2(B)(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which is quoted below: "2B. Compromise or arrangement. (1) Where a compromise or arrangement is proposed under section 230 of the Companies Act, 2013 (18 of 2013), it shall be completed within ninety days of the order of liquidation under sub-sections (1) and (4) of section 33. 6 [(Provided that a person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Appellant' was barred to place to 'Scheme of Compromise'. In fact, the Learned Counsel for the Appellant points out that the question whether the 'Appellant' was barred or not has not arisen in the Interlocutory Application, dismissal order passed by the 'Adjudicating Authority'. 9. The Learned Counsel for the Appellant contends that the Judgment of Hon'ble Supreme Court in Arun Kumar Jagatramka V. Jindal Steel and Power Ltd. & Anr reported in (2021) 7 SCC 474 does not apply to the facts of the present case. 10. The Learned Counsel for the Appellant prays for allowing the instant Appeal by setting aside the impugned order passed by the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi, Bench-II). THE FIRST RESPONDENT'S SUBMISSIONS: 11. The Learned Counsel for the 1st Respondent contends that the Applition I.A. No. 3879 of 2021 in IB NO. 197(ND)/2018 was filed by one Brij Mohan Sahni (Applicant/Petitioner before the 'Adjudicating Authority against the 1st Respondent/Pawan Buildwell Private Limited wherein a direction was sought to be issued to the "Liquidator' to convene the meeting of the Creditors (inclusive of all the Creditors i.e. Respondent NO. 2 and pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Company Appeal(AT)(INS) No. 748 of 2021 and by an order dated 16.09.2021, a 'Notice' was issued on the 'Appeal', but no stay was granted of the order dated 30.07.2021 16. The Learned Counsel for the 1st Respondent points out that I.A. No. 3879 of 2021 in IB 197/ND/2018 was filed before the 'Adjudicating Authority' by the Applicant/Petitioner (Brij Mohan Sahni) seeking to re-convene the Meeting of Creditors to consider the Appellant's Scheme afresh and the said Application on 04.01.2022 by the 'Adjudicating Authority' who held the 'Appellant' being ineligible to submit a 'Scheme' in the light of order dated 30.07.2021 in I.A. No. 2499 of 2020 (filed by the 1st Respondent), in and by which, the 'Appellant' was found guilty of undertaking 'Preferential Transaction' under Section 43 of the I & B. Code. In fact the 'Statutory Bar' under Regulation 2B of the IBBI (Liquidation Process, Regulation 2016) read with Section 21(g) of the Code is applicable and will disqualify 'Appellant' for submitting a 'Scheme of Compromise' 17. The Learned Counsel for the 1st Respondent adverts to the Regulation 2B 'Compromise or arrangement of the IBBI (Liquidation Process) Regulations, 2016 read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory jurisdiction to amend the provision of Section 230 of the Act of 2013 or to impose a restriction which operates under the purview of Section 230. The position in our view can be considered from two perspectives, independent of the provisions of Regulation 2B. We have indicated in the discussion earlier that even in the absence of the Regulation 2B, a person ineligible under Section 29A read with Section 35(1)(f) is no permitted to propose a scheme for revival under Section 230, in the case of a company which is undergoing a liquidation under the IBC. We have come to the conclusion, as noted for the reasons indicated earlier, that in the case of a company which is undergoing liquidation pursuant to the provision of Chapter III of the IBC, a scheme of compromise or arrangement proposed under Section 230 is a facet of the liquidation process. The object of the scheme of compromise or arrangement is to revive the company. The principle was enunciated in the decision in Meghal Hones (supra) while construing the provisions of erstwhile Section 391. The same rationale which permeates the resolution process under Chapter II (by virtue of the provisions of Section 29A) permeates the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-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, reported in (2018) 146 CLA 293 (SC). 21. As far as the present case is concerned, even though in I.A. NO. 387/2021 in IB 197(ND) 2018 before the 'Adjudicating Authority' [National Company Law Tribunal, New Delhi Court II], the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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