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TMI Blog2023 (7) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... quidation to achieve its revival as a going concern. Further Regulation 2-B of the Liquidation Process Regulations, 2016 stipulates a time period of ninety days for submission and final consideration of such a scheme of compromise or arrangement. The possibility of revival of a corporate debtor under liquidation has been considered as a valid mode of revival and during liquidation process, a scheme of compromise or arrangement in terms of section 230 of The Companies Act, 2013 is a distinct and clear possibility. It is also observed in para 68 of the Arun Kumar Jagatramka [ 2021 (3) TMI 611 - SUPREME COURT] judgment that an amendment was made on 25.7.2019 to the Liquidation Process Regulations, 2016 by the Insolvency and Bankruptcy Board of India to refer and include a process envisaged under section 230 of the Companies Act, 2013 as a valid method of revival of the corporate debtor during liquidation. As the various actions of the Appellant show, it is noted that by 4.1.2023, the Appellant had neither proposed a scheme of compromise and arrangement to the Liquidator or Stakeholders Consultation Committee or the secured creditors of the corporate debtor, and even after it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.A. No. 122/2023 filed under CP(IB) No. 1367(PB)/2018. 2. The Appellant Mr. Harish Sharma has filed this appeal in the capacity of operational creditor and lead member of the consortium which seeks to submit a scheme of arrangement under section 230 of the Companies Act, 2013 vis- -vis corporate debtor. The consortium comprises of the Appellant and Gulshan Investment Company Limited, Montage Enterprises Private Limited and Anantjeet Nutriments LLP and the Appellant is the Power of Attorney Holder of the three last named companies. 3. In brief, the case of the Appellant is that he, by virtue of two distinct Assignment Agreements both dated 15.12.2022 executed with KM Contractors and SNI Infratech respectively, became an operational creditor of the corporate debtor M/s. C.C Constructions Limited. The Appellant has stated that the corporate debtor went in Corporate Insolvency Resolution Process (in short CIRP ) and by order dated 7.10.2022, the corporate debtor was sent into liquidation and Respondent No. 2 (in short R-2 ) Mr. Navneet Kumar Gupta was appointed as the Liquidator. Further, the appellant has stated that the Liquidator published an invitation for submission of sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 should be seen harmoniously for revival of the corporate debtor. The Learned Counsel has also cited the judgment of this Tribunal in the matter of Y. Shivaram Prasad v. S. Dhanpal Ors., 2019 SCC Online NCLAT 172, which lays down that in case the liquidation process under section 230 is taking more time, it is open to the Adjudicating Authority/Tribunal to extend the period of liquidation if there is a possibility of approval of the scheme of arrangement. 7. The Learned Counsel for Appellant has further referred to the judgment of this Tribunal in the matter of Kshitiz Gupta (Liquidator in the matter of Abhishek Corporation Ltd.) v. Asset Reconstruction company (India) Limited and Ors., (2019) ibclaw.in 217 NCLAT, wherein it is held that it is open to the Adjudicating Authority to grant more than 90 days time period for approval of a scheme of arrangement and the sale of assets may be done only if the Liquidator fails to revive the company by pursuing the proceedings under section 230 of The Companies Act, 2013. The Learned Counsel for the Appellant has also sought support from the decision of this Tribunal in the matter of Bharat Sharma, Resolution Applicant Vs. Reshma Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r compromise and arrangement as provided in Regulation 2-B of the Liquidation Process Regulations expired on 4.1.2023. He has clarified that the publication of a notice on 26.10.2022 inviting submission of a scheme of compromise and arrangement was to only apprise the general public about such an opportunity, but it was not intended to serve as the start date of initiation of the process for submission of a scheme under Regulation 2-B, and therefore, the Appellant has misconstrued this notice to mean that the 90 days period for submission of scheme of compromise and arrangement started from 26.10.2022. He has further submitted that no scheme has been submitted by the Appellant till the last date of hearing before this Tribunal i.e. by 23.5.2023, either before the secured creditors, who are members of the Joint Lenders Forum or the Stakeholders Consultation Committee or the Liquidator and therefore, even though the appellant had sought extension of timeline for submission of the scheme, he has not shown any seriousness or sincerity in the submission of such a scheme. 11. The Learned Counsel for Respondents has also distinguished the judgment of this Tribunal in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, appointed under this Act or under the Insolvency and Bankruptcy Code, 2016, as the case may be, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs. Explanation. For the purposes of this sub-section, arrangement includes a reorganisation of the company s share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods. (2) The company or any other person, by whom an application is made under subsection (1), shall disclose to the Tribunal by affidavit (a) all material facts relating to the company, such as the latest financial position of the company, the latest auditor s report on the accounts of the company and the pendency of any investigation or proceedings 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 conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evival is in the form of CIRP elucidated in the provisions of Chapter II IBC. The second mode is where the corporate debtor or its business is sold as a going concern within the purview of clauses (e) and () of Regulation 32. The third is when a revival is contemplated through the modalities provided in Section 230 of the 2013 Act. A scheme of compromise or arrangement under Section 230, in the context of a company which is in liquidation under the IBC, follows upon an order under Section 33 and the appointment of a liquidator under Section 34. While there is no direct recognition of the provisions of Section 230 of the 2013 Act in the IBC, a decision was rendered by NCLAT on 27-2-2019 in Y. Shivram Prasad v. S. Dhanapal (herein referred to as Y. Shivram Prasad ). NCLAT in the course of its decision observed that during the liquidation process the steps which are required to be taken by the liquidator include a compromise or arrangement in terms of Section 230 of the 2013 Act, so as to ensure the revival and continuance of the corporate debtor by protecting it from its management and from a death by liquidation . The decision by NCLAT took note of the fact that while passing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, in S.C. Sekaran v. Amit Gupta 21 Company Appeal (AT) (Insolvency) Nos. 224 286 of 2018 Ors. (Supra), this Appellate Tribunal allowed 90 days' time to take steps under Section 230 of the Companies Act, 2013. In case, for any reason the liquidation process under Section 230 takes more time, it is open to the Adjudicating Authority (Tribunal) to extend the period if there is a chance of approval of arrangement of the scheme. (emphasis supplied by us). 17. Looking at the above stated judgments of Hon ble Supreme Court and Hon ble Appellate Tribunal, we note that the possibility of revival of a corporate debtor under liquidation has been considered as a valid mode of revival and during liquidation process, a scheme of compromise or arrangement in terms of section 230 of The Companies Act, 2013 is a distinct and clear possibility. It is also observed in para 68 of the Arun Kumar Jagatramka (supra) judgment that an amendment was made on 25.7.2019 to the Liquidation Process Regulations, 2016 by the Insolvency and Bankruptcy Board of India to refer and include a process envisaged under section 230 of the Companies Act, 2013 as a valid method of revival of the corporate de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d neither submitted nor shown any evidence of such a scheme of arrangement being ready for submission. Therefore, merely stating that the Appellant was ready to propose such a scheme, if it was granted extension of timeline, appears to be an empty statement not supported by the existence and readiness of such a scheme. We further, note that the Stakeholders Consultation Committee in its meeting on 12.5.2023 took a decision with 100% of the members voting to place the corporate debtor for sale as a going concern, through auction and this auction was scheduled to take place on 12.6.2023. 20. We take note of the judgments cited by the Appellant in support of this case in the matters of Kshitiz Gupta (Liquidator in the matter of Abhishek Corporation Ltd.) (supra) and Bharat Sharma, Resolution Applicant (supra), wherein the possibility of granting more time than 90 days has been accepted in view of the evidence of a scheme of compromise and arrangement, whereas in the instant matter there is no scheme under consideration of the Liquidator, or Stakeholders Consultation Committee or the secured creditors. Therefore, these judgments of this Tribunal do not provide any support to the App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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