K G Somani Liquidator vs Rajnish Gupta & Anr

K.G. Somani, Liquidator for Delicious Coco Water Pvt. ...Appellant Ltd.

Versus

Rajnish Gupta & Anr. ...Respondents

Present: For Appellant: Mr. Abhishek Anand, Mr. Nipun Gautam, Mr. Sajal Jain, Mr. Karan Kohli, Advocates For Respondent: Mohd. Moonis Ammasi, Advocate for R-2

ORDER

22.12.2022: Heard Learned Counsel for the Appellant as well as

Learned Counsel appearing for the Respondent-Small Industries

Development Bank of India (SIDBI).

2. This Appeal has been filed against the Order dated 09.11.2022 passed

by the Adjudicating Authority (National Company Law Tribunal, New Delhi

Bench, Court-II) in I.A. No. 2308/ND/2022 filed by the Liquidator of the

Corporate Debtor who is the Appellant herein. In the Application

2308/ND/2022, following prayers were made:

"a) Allow the present application and to pass appropriate orders dispensing with holding of any meetings of the creditors and meeting of the shareholders for the approval of scheme in view of affidavit executed by Small Industrial Development Bank of India in terms of Section 230 (9) of Companies Act, 2013;

-2- b) Allow the scheme for Arrangement and Compromise proposed by Mr. Rajnish Gupta under Section 230 of Companies Act, 2013 in the liquidation process of Delicious Coco Water Private Limited;

c) Pass an order directing that the Liquidator fee to be paid in accordance with Regulation 4 of Insolvency and Bankruptcy Board of India (Liquidation Process Regulations, 2016 as applicable; and

d) Pass an order directing the Prosper of the scheme to pay the Liquidation Costs in priority as per Section 53 of the Insolvency and Bankruptcy Code 2016;"

3. By the impugned order, the Adjudicating Authority has directed to file

the second motion application for approval of the scheme, which order was

challenged in this Appeal and while entertaining the Appeal, following order

was passed on 05.12.2022:

"Learned counsel for the Appellant submits that the Adjudicating Authority has directed for filing of application for second motion whereas the only Secured Creditor having given consent to the scheme there was no occasion to direct for second motion, in view of invocation of Section 230 Sub-section 9 of the Companies Act, 2013.

Issue notice. Requisite alongwith process fee be filed within three days. Appellant may serve the Respondents personally also.

List this Appeal on 22.12.2022."

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4. Learned Counsel for the Appellant submits that in the present case, the

sole Financial Creditor is Small Industries Development Bank of India who

has already filed an Affidavit dated 10th May, 2022 where Bank has approved

the scheme. It is submitted that in paragraph 7 of the Affidavit there is a clear

averment to that effect. It is submitted that in view of the sole Financial

Creditor having approved the scheme, there was no occasion for issuing any

notice under Section 230(5) of the Companies Act and Adjudicating Authority

had ample jurisdiction to dispense the notice under Section 230(9) of the

Companies Act.

5. Learned Counsel for the Bank (SIDBI) submits that Bank has already

approved the scheme and there was no requirement of issuing notice for

Second Motion.

6. We have considered the submissions of Learned Counsel for the parties

and have perused the record.

7. The scheme was propounded by the Suspended Management which

was considered by the Adjudicating Authority and it is useful to extract

paragraph 6,7 and 8 of the Affidavit filed by the Financial Creditor before the

Adjudicating Authority dated 10th May, 2022:

"6. I say that the scheme submitted by the promoter under Section 230 of the Companies Act, 2013 was placed before the competent authority of Small

Company Appeal (AT) (Insolvency) No. 1460/2022 -4-

Industries Development Bank of India for their Consent/approval.

7. I say Small Industries Development Bank of India, being the sole secured creditor gave its consent/approval to the scheme submitted by the promoter under Section 230 of Companies Act, 2013.

8. I say that in terms of Section 230(9) of Companies Act, 2013, this Hon'ble Adjudicating Authority is empowered to dispense with calling of a meeting of a creditor of class of creditors where such creditor having at least ninety per cent value, agree and confirm by way of affidavit, to the scheme of compromise or arrangement."

8. Section 230(5) and Section 230(9) of the Companies Act are as follows:

"230(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.

Company Appeal (AT) (Insolvency) No. 1460/2022 -5-

...

230(9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety per cent value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement.

9. The sole Financial Creditor having approved the scheme, the condition

as provided in Section 230(9) were clearly met and the Tribunal can very well

dispense with the calling of a meeting of creditor or class of creditors. Present

is a case where hundred per cent of the Financial Creditor has approved the

scheme.

10. We thus are of the view that direction of the Tribunal in paragraph 15-

16 needs to be set aside and the Adjudicating Authority is required to consider

the dispensation of the second motion notice in view of the facts of the present

case as per Section 230(9) of the Companies Act, 2013.

The Appeal is disposed of, accordingly.

[Justice Ashok Bhushan] Chairperson

[Ms. Shreesha Merla] Member (Technical)

Basant/nn

Company Appeal (AT) (Insolvency) No. 1460/2022