Arvind Garg. Liquidator Of Moser Baer ... vs Committee Of Creditors Of Moser Baer Ltd ...

(Arising out of Order dated 30th May, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in C.A. 1058(PB)/ 2018 in Company Petition No. (IB)- 272(PB)/ 2017)

IN THE MATTER OF:

Mr. Arvind Garg Liquidator of Moser Baer Solar Limited ...Appellant

Vs.

Committee of Creditors of Moser Baer Solar Limited Through Punjab National Bank ...Respondent

Present: For Appellant: - Mr. Krishnendu Datta, Mr. Abhishek Anand, Mr. Tushar Tyagi and Ms. Niharica Khanna, Advocates.

For Respondent:- None.

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

This appeal has been preferred by Mr. Arvind Garg, the 'Resolution

Professional' of 'Moser Baer Solar Limited'- ('Corporate Debtor') against

the order dated 30th May, 2019, whereby the Adjudicating Authority

(National Company Law Tribunal), Principal Bench, New Delhi, passed

order of liquidation under Section 33 (1) (a) of the Insolvency and

Bankruptcy Code, 2016 ("I&B Code" for short).

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2. Learned counsel appearing on behalf of the Appellant submitted

that the 'Corporate Debtor' is eligible for subsidies from the Central

Government, Ministry of Electronics and Information Technology, in the

light of the decision of the order passed by the Hon'ble High Court of

Delhi which is likely to be released in near future.

3. According to learned counsel for the Appellant, the order of

liquidation may affect the 'Corporate Debtor' and if the Central

Government comes to know that it has gone for liquidation, it may not

allow subsidies.

4. From the impugned order, we find that the 'Resolution Professional'

himself filed application with following relief:

"Order of liquidation of the corporate debtor

under Section 33 (1) of the Code i.e. the

automatic consequence upon completion of 270

days on non-receipt of resolution plan be kept

pending, subject to the outcome of the Writ

Petition already filed on 01.10.2018 by the

Applicant seeking disbursal of subsidy from the

Ministry of Electronics and IT before the Hon'ble

High Court of Delhi."

Company Appeal (AT) (Insolvency) No. 662 of 2019 3

5. In view of the aforesaid prayer made, more than 270 days have

already been completed and in absence of any 'Resolution Plan', the order

of liquidation was passed. We find no illegality in the said order.

6. From the record, we find that the Ministry of Electronics &

Information Technology, Government of India by its letter dated 15th

January, 2019 giving reference to the decision of the Hon'ble High Court

of Delhi informed the 'Resolution Professional' that the claim of 'Moser

Baer Solar Limited'- ('Corporate Debtor') for disbursement of subsidy of

Rs. 269.70 Crores is not being acceded for the reasons mentioned

therein.

7. The aforesaid letter was challenged by the 'Corporate Debtor'

through the 'Resolution Professional' before the Hon'ble High Court of

Delhi in W.P. (C) No. 1876/2019 impleading Ministry of Electronics &

Information Technology as party Respondent. The said Writ Petition was

dismissed on 25th February, 2019.

8. The Letter Patent Appeal (LPA) No. 225 of 2019 was thereafter filed

by the 'Corporate Debtor' through the 'Resolution Professional' before the

Hon'ble High Court of Delhi wherein vide its order dated 25th February,

2019, the Hon'ble Division Bench allowed the 'Corporate Debtor' to file a

review application before the learned Single Judge. Thereafter, the

'Corporate Debtor' filed Review Petition No. 241/2019 and CM No.

26018/2019 before the learned Single Judge of the Hon'ble High Court

Company Appeal (AT) (Insolvency) No. 662 of 2019 4

of Delhi. The said Review Petition was allowed and the order dated 25th

February, 2019 was recalled. The Ministry of Electronics & Information

Technology was directed to re-examine the claim of the 'Corporate

Debtor', as expeditiously as possible, within a specified period.

9. It was in this background, the Appellant has taken plea that the

order of liquidation should not have been passed by the Adjudicating

Authority and it should have deferred till the decision of the Ministry of

Electronics & Information Technology. However, we are not inclined to

interfere with the order of liquidation on such ground.

10. In "Y. Shivram Prasad Vs. S. Dhanapal & Ors.─ Company

Appeal (AT) (Insolvency) No. 224 of 2018", this Appellate Tribunal by

its order dated 27th February, 2019 while directed the Liquidator to

ensure that the 'Corporate Debtor' remains a going concern even during

the period of liquidation, observed and directed as follows:

"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

Company Appeal (AT) (Insolvency) No. 662 of 2019 5

may not allow the Tribunal to pass appropriate order

under Section 230 of the Companies Act, 2013.

17. Normally, the total period for liquidation is to

be completed preferably within two years. Therefore,

in "S.C. Sekaran v. Amit Gupta & 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.

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

Company Appeal (AT) (Insolvency) No. 662 of 2019 6

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 Creditors' and

'Unsecured Creditors' without any discrimination.

Before approval of an arrangement or Scheme, the

Adjudicating Authority (National Company Law

Tribunal) should follow the same principle and should

allow the 'Liquidator' to constitute a 'Committee of

Creditors' for its opinion to find out whether the

arrangement of Scheme is viable, feasible and having

appropriate financial matrix. It will be open for the

Adjudicating Authority as a Tribunal to approve the

arrangement or Scheme in spite of some irrelevant

objections as may be raised by one or other creditor

or member keeping in mind the object of the

Insolvency and Bankruptcy Code, 2016.

19. In view of the observations aforesaid, we hold

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.

Company Appeal (AT) (Insolvency) No. 662 of 2019 7

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. On failure, as observed above, steps should

be taken for outright sale of the 'Corporate Debtor' so

as to enable the employees to continue.

20. Both the appeals are disposed of with

aforesaid observations and directions. No cost."

11. The said decision and direction are also binding in the present case

and the 'Resolution Professional' (now 'Liquidator') is required to follow

the procedure, as mentioned therein, and ensure that the 'Corporate

Debtor' remains a going concern during the period of liquidation.

12. In view of the aforesaid position of law, we are of the view that it is

still open to the Ministry of Electronics & Information Technology to

release subsidies, if otherwise permissible, as in spite of the order of

Company Appeal (AT) (Insolvency) No. 662 of 2019 8

liquidation, the 'Corporate Debtor' is to continue as a going concern to

ensure revival and resolution even during the liquidation process.

13. We are of the considered view that the Competent Authority of the

Ministry of Electronics & Information Technology will consider the case

of the 'Corporate Debtor' in terms with the direction of the Hon'ble High

Court of Delhi, as referred to above, uninfluenced by the order of

liquidation, as the 'Corporate Debtor' is to continue as a going concern.

The appeal stands disposed of with the aforesaid observations. No

costs.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) Member(Judicial)

(Kanthi Narahari) Member(Technical)

NEW DELHI 23rd July, 2019 AR

Company Appeal (AT) (Insolvency) No. 662 of 2019