TMI Blog2019 (5) TMI 1969X X X X Extracts X X X X X X X X Extracts X X X X ..... (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS [ 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] where it was held that the liquidator is required to act in terms of the aforesaid directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members or the Corporate Debtor or the creditors or a class of creditors like Financial Creditor or Operational Creditor approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the Adjudicating Authority i.e. National Company Law Tribunal, Chennai Bench, in terms of the observations as made in above. The appeal is disposed off with direction to the Liquidator to act in accordance with observations and decision of this Appellate Tribunal. - Company Appeal (AT) (Insolvency) No. 195 of 2019 - - - Dated:- 14-5-2019 - Justice S.J. Mukhopadhaya Chairperson and A.I.S. Cheema) Member(Judicial) For the Appellant: - Mr. Vikas Dhawan, Mr. Satyabrata Panda, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r shall issue a public notice inviting interested investors from across the globe, in National level newspaper having all India circulation, in all the editions, stating that the Corporate Debtor is in liquidation. The maximum period applicable for trying the sale on a going concern basis of the Corporate Debtor will be only six months from the date of the order. 104 In case the efforts to sell the company as a going concern fails during the' stipulated period of six months, then the process of the sale ofFhe assets of the company will be undertaken by the liquidator a prescribed under Chapter- III of IBC, 2016 and the relevant regulations of IBBI. 105 The Designated Registrar is directed to send a copy of this order, to RoC under which this Company is registered. 106 All powers of the Board of Directors, key managerial persons and the partners of the Corporate Debtor shall cease to affect and at this moment vest in the Liquidator. The personnel of the Corporate Debtor are directed to extend all co-operation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor. The Insolvency Professional appointed as Liquidator will charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal was not independent as prior to initiation of the Corporate Insolvency Resolution Process proceedings his partnership firm was providing services to the Resolution Applicant in relation to the Corporate Debtor . 5. The Corporate Debtor held license from the Ministry of Defence to build defence warships and had substantial orders under execution such as, 24 vessels, 9 interceptor, 5 fast speed boats, 9 water and sevage barges and 1 tank clearing vessels from Indian Navy, Indian Coast Guards and Defence Research and Development Organization. 6. In view of the fact that the order of liquidation has been passed, the shareholders alleged bias against the Resolution Professional and request to pass appropriate order. 7. The employees and workmen of Bharti Defence and Infrastructure Ltd. - ( Corporate Debtor ) have appeared and taken plea that there are more than 850 employees working whose salaries have not been paid. 8. It was submitted that on the one hand Resolution Applicant is proposing to right size the workforce by cancelling all the existing contracts with employee/ workmen/ consultants and in addition to it, the Resolution Applicant sought permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contracts from Gov.t of India. It is also proposed in the plan that any corporate guarantee provided by the company shall turn null and void on approval of this plan. 48. It is pertinent to mention that in the proposed plan, it is stated that the company shall continue with the existing defence warship license in its current farm. The company would also bid for new orders from Indian Coast Guard and Ministry of Defence depending on its operational and financial strength. In the plan, it is also provided that all existing registration with Director General Foreign Trade, Ship Builders Association shall continue in its normal course. It is important to point out that Defence Warship License is itself a Premium asset and can be a tradable commodity, and value of that has not been taken into consideration for determination of liquidation value. 49. It is also proposed that various shell companies, details of which are given in Schedule 9 of this plan, primary asset and liabilities of these company are loans to and loans from the company and other related parties of the company. There is no disclosure of the amount of loan to and from the subsidiary company in the plan. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor s assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends. In Arcelormittal India Pvt. Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 consented to by not less than seventy-five per cent. of the secured creditors in value, including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne 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. of the shareholding or having outstanding debt amounting to not less than five per cent. of the total outstanding debt as per the latest audited financial statement. (5) A notice under sub-section (3) along with all the documents in such form as may be prescribed shall also be sent to the Central Government, the income-tax authorities, the Reserve Bank of India, the Securities and Exchange Board, the Registrar, the respective stock exchanges, the Official Liquidator, the Competition Commission of India established under sub-section (1)of section 7 of the Competition Act, 2002, if necessary, and such other sectoral regulators or authorities which are likely to be affected by the compromise or arrangement and shall require that representations, if any, to be made by them shall be made within a period of thirty days from the date of receipt of such notice, failing which, it shall be presumed that they have no representations to make on the proposals. (6) Where, at a meeting held in pursuance of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st ninety per cent. value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement. (10) No compromise or arrangement in respect of any buy-back of securities under this section shall be sanctioned by the Tribunal unless such buy-back is in accordance with the provisions of section 68. (11) Any compromise or arrangement may include takeover offer made in such manner as may be prescribed: Provided that in case of listed companies, takeover offer shall be as per the regulations framed by the Securities and Exchange Board. (12) An aggrieved party may make an application to the Tribunal in the event of any grievances with respect to the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on application, pass such order as it may deem fit. Explanation. For the removal of doubts, it is hereby declared that the provisions of section 66 shall not apply to the reduction of share capital effected in pursuance of the order of the Tribunal under this section. 8. In view of the provision of Section 230 and the decision of the Hon ble Supreme Court in Meghal Homes Pvt. Ltd. and Swiss R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 18. During proceeding under Section 230, if any, objection is raised, it is open to the Adjudicating Authority (National Company Law Tribunal) which has power to pass order under Section 230 to overrule the objections, if the arrangement and scheme is beneficial for revival of the Corporate Debtor (Company). While passing such order, the Adjudicating Authority is to play dual role, one as the Adjudicating Authority in the matter of liquidation and other as a Tribunal for passing order under Section 230 of the Companies Act, 2013. As the liquidation so taken up under the I B Code , the arrangement of scheme should be in consonance with the statement and object of the I B Code . Meaning thereby, the scheme must ensure maximisation of the assets of the Corporate Debtor and balance the stakeholders such as, the Financial Creditors , Operational Creditors , Secured C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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