Skip to main content

NCLAT:Law on maintainability of Compromise and Arrangement application by Promoter during pendency of Liquidation under IBC clarified

In Company Appeal (AT) No. 221 of 2018, IN THE MATTER OF Jindal Steel and Power Limited vs Arun Kumar Jagatramka, appeal was preferred under Section 421 of the Companies Act, 2013  against order passed by National Company Law Tribunal, Kolkata Bench by which the Tribunal in an application under Section 230 to 232 of the Companies Act, preferred by Promoter – Arun Kumar Jagatramka ordered for taking steps for Financial Scheme of Compromise and Arrangement between Applicant - Arun Kumar Jagatramka (Promoter) and the Company (‘Corporate Debtor’) through the ‘Liquidator’, after holding the debts of shareholders, creditors etc. in terms of Section 230 of the Companies Act.

The Appellant has challenged the same on following grounds:-
(i) Whether in a liquidation proceeding under IBC, the Scheme for Compromise and Arrangement can be made in terms of Sections 230 to 232 of the Companies Act?
(ii) If so permissible, whether the Promoter is eligible to file an application for Compromise and Arrangement, while he is ineligible under Section 29-A IBC to submit a ‘Resolution Plan’?

The Appellate Tribunal answered the first question in affirmative. It relied on the earlier decision in T. Shivram Prasad v. Dhanapal, Company Appeal (AT) (Insolvency) No. 224 of 2018, decided on 27-2-2019, to hold that: “In a Liquidation proceeding under IBC, a petition under Sections 230 to 232 of the Companies Act is maintainable.”.
For answering the second question, the Appellate Tribunal relied on the decision of the Supreme Court in Swiss Ribbons (P) Ltd. v. Union of India, Writ Petition (Civil) No. 99 of 2019, and held that: “Even during the period of Liquidation, for the purpose of Sections 230 to 232 of the Companies Act, the Corporate Debtor is to be saved from its own management, meaning thereby — the Promoters, who are ineligible under Section 29-A, are not entitled to file application for Compromise and Arrangement in their favour under Sections 230 to 232 of the Companies Act.”.

Reference was also made to the proviso to clause (f) of Section 35 IBC, which makes it clear that the Promoter, if ineligible under Section 29-A, cannot make an application for Compromise and Arrangement for taking back the immovable and movable property or the actionable claims of the Corporate Debtor.

The NCLAT finally held that rom the aforesaid provision, it is clear that the Promoter, if ineligible under Section 29A cannot make an application for Compromise and Arrangement for taking back the immovable and movable property or actionable claims of the ‘Corporate Debtor’.

Comments

Post a Comment

Most viewed this month

Merits and the terms of contract are irrelevant for invoking of the bank guarantees

In Sabarkantha Annuity Pvt. Ltd. Vs. NHAI and Ors, the Petitioner filed before the Delhi High Court  petition under Section 9 of the Arbitration and Conciliation (Amendment) Act, 2015 with a prayer that, Respondents be restrained from acting upon the letter dated 15th September, 2017 or from invoking the Bid securities of the Petitioner to the tune of Rs. 10.93 Crores and also restraining the banks from honouring the invocation of said bank guarantees on behalf of Respondent No. 1 acting in terms of letter dated 3rd November, 2007. Petitioner has relied upon Clauses Nos. 9.1.1, 9.1.2 and 4.3 of the agreement dated 28th April, 2017 entered into between the parties to say the claim for damages since is not a claim for a sum presently due and payable and the respondent would be entitled to damages only on proof of loss, per Clause 4.3 of the agreement and hence is not entitle to the entire sum of bid security.  The Court found that Clause No. 9.1.2 speaks of an exclusiv...
Post a Comment
Read more

Right of pre-emption under West Bengal Land Reform Act

In Rabindra Nath Kundu & Anr vs Sudhir Hira, Bijoy Krishna Hira being the owner in the suit plot, gifted to Santosh Kumar Hira demarcated 11 decimals of land vide deed of gift dated 27.4.2004 and the latter sold 9 decimals out of 11 decimals of land to Sudhir Hira the preemptor/opposite party no. 1 and well demarcated 1.65 decimals of land in the said plot along with several other plots were sold, transferred and conveyed to the preemptees/petitioners herein by a registered deed of sale dated 10.8.2010, the subject matter of preemption. It is argued on behalf of the preemptees that  the present opposite party no. 1/preemptor Sudhir Hira has no relationship of co-sharership with Santosh Kumar Hira opposite party no. 2 as the demarcated portion of land has been purchased. It is settled principle of law that partial preemption is not permissible and this was what the view adopted by this Hon'ble High Court is Surendra Vs. Abhimannu reported in (1980) 1 Cal LJ 135 whe...
Post a Comment
Read more

CBI has no jurisdiction to probe affairs of medical college:HC

The Madras High Court has quashed charges against administrators of a medical college and dismissed CBI's petitions opposing discharge of officials of two other medical colleges, saying the investigation agency, or any other external agency for that matter, has no jurisdiction to probe the affairs of a medical college. Quashing the charges against the administrators of a medical college and dismissing CBI's petitions opposing the discharge of officials of two other medical colleges, Justice Aruna Jagadeesan said "contravention of rules and regulations may be an offence against the statute but is not a crime. There is no room or jurisdiction for any external agency to investigate the affairs of any medical institution coming within the purview of the Medical Council of India." In identical set of orders, all delivered on August 6, Justice Jagadeesan said "the shortfall in faculties and submissions of fake/forged documents would only disentitle the institution...
Post a Comment
Read more