TMI Blog2019 (7) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed by order of liquidation, Shri Kailash Kumar Rathi, as liquidator with certain directions. 2. By other order dated 23rd January, 2019, Mr. Kailash Kumar Rathi having shown his unwillingness to act as liquidator, one Mr. Chaitanya Kumar Ray has been appointed as liquidator. 3. Learned Counsel appearing on behalf of the Appellant submits that the Appellant is a Financial Creditor and filed claim before the Interim Resolution Professional but the claim was not admitted. Allegations have been made against erstwhile Interim Resolution Professional on the ground that he had not followed the procedure which resulted in liquidation. However, in the absence of the individual Interim Resolution Professional, we are not inclined to make any observation. 4. Admittedly, the Appellant has not filed any application u/s 60(5) against decision of the Interim Resolution Professional that he had not admitted the claim. Therefore, at the stage of liquidation he cannot raise all these claims. 5. During the liquidation, the liquidator is required to verify all the claims of the Creditor in terms of Section 35(1)(a) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5th 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. [See ArcelorMittal (supra) at paragraph 83, footnote 3]. (Emphasis added) 12. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters /those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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- ( a) between a company and its creditors or any class of them; or ( b) between a company and its members or any class of them, the Tribunal may, on the application of the company or of any 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 newspapers in such manner as may be prescribed: Provided further that where the notice for the meeting is also issued by way of an advertisement, it shall indicate the time within which copies of the compromise or arrangement shall be made available to the concerned persons free of charge from the registered office of the company. ( 4) A notice under sub-section (3)shall provide that the persons to whom the notice is sent may vote in the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of such notice: Provided that any objection to the compromise or arrangement shall be made only by persons holding not less than ten per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions 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 dissenting shareholders, if any, as are in the opinion of the Tribunal necessary to effectively implement the terms of the compromise or arrangement: Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company's auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under section 133. ( 8) The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt of the order. ( 9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 creditors or members or class of members in terms of Section 230 of the Companies Act, 2013. ii. On failure, the liquidator is required to take step to sell the business of the Corporate Debtor as going concern in its totality along with the employees. 14. The last stage will be death of the Corporate Debtor by liquidation, which should be avoided. 15. Learned counsel appearing on behalf of the Appellant (Promoter) submitted that the provisions under Section 230 may not be completed within 90 days, as observed in S.C. Sekaran v. Amit Gupta Ors. (Supra). 16. It is further submitted that there will be objections by some of the creditors or members who may not allow the Tribunal to pass appropriate order under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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