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2022 (8) TMI 425 - AT - Companies LawMaintainability of application - Scheme of Compromise and Arrangement - independent Non-Government Director - application was dismissed on the ground that he is disqualified to submit a Compromise or arrangement as he is one of the Directors of company of Corporate Debtor and the Applicant, being a related person - HELD THAT:- Meaning of the word “control” is defined under the Companies Act and it shall include the right to appoint majority of the Directors or to control the management or policy decision exercisable by a person or person acting individually or in concert directly or indirectly including by virtue of their shareholding or management rights or shareholder’s arrangements of voting agreement or any other mean - Here in this case, the Appellant being an independent Non- Executive Director is neither having control as defined under the Companies Act, 2013 nor in the management of the company affairs. No disqualification can be attached to him as per Regulation 2B of Liquidation Process Regulations as amended, to submit Scheme of Compromise and Arrangement. In the judgment of Arun Kumar Jagatramka [2021 (3) TMI 611 - SUPREME COURT], Arcelor Mittal India Private Limited [2018 (10) TMI 312 - SUPREME COURT] was considered only to the extent of intendment of IBC and not for any other principle however concluded that some scheme mentioned in Section 29A of IBC is applicable to Section 35(1)(f) of IBC. The Apex Court went on to consider the disqualification clause under Section 230(1) of the Companies Act, 2013 amended provisions i.e., proviso to the Regulation 2-B- Liquidation Regulation Act. The Apex Court undertook clarificatory exercise and concluded in the judgment that rationale which permeates the resolution process under Chapter-2 (by virtue of Section 29A of IBC) permeates the liquidation process under Chapter-3 of Section 35(i)(f). There can be no doubt that the proviso to Regulation 2B of Liquidation Process Regulation, a person who is ineligible under Section 29A of IBC would not be permitted to propose a Compromise or Arrangement under Section 230 of the Companies Act, 2013. At the end of the judgment, the Hon’ble Supreme Court concluded that the disqualification placed by the Parliament in Section 29A and 35(i)(f) of IBC must also attach itself to Scheme of Compromise and Arrangement under Section 230 of the Companies Act, and when the Company is undergoing liquidation under the auspicious of IBC. As such, Regulation 2B of Liquidation Process Regulation, especially, proviso to 2B is also constitutionally valid. Since, the dispute relates to pre-amendment to Regulation 2B of Liquidation Process Regulation and that no disqualification be attached to independent non-executive Director as per Regulation 2-B of Liquidation Process Regulation r/w Section 29-A and 35(1)(f) of IBC to submit Scheme of Compromise and Arrangement. The Appellant being independent non-executive is not disqualified to propose Compromise and Arrangement in the pendency proceedings relating to liquidation prior to commencement of amended proviso to Regulation 2-B of Liquidation Regulation. Application is hereby set aside holding that the Appellant being independent nonexecutive Director to submit Scheme of Compromise and Arrangement during liquidation process - appeal allowed.
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