R. Adaikkalavan vs C.T. Ramanathan Infrastructure (P) Ltd ...

R. Adaikkalavan ...Appellant

Versus

C.T. Ramanathan Infrastructure (P) Ltd. & 2 Others ...Respondents

Present: For Appellant : Ms. Toral Banerjee, Advocate

ORDER

20.08.2019 Having heard learned counsel for the appellant and being

satisfied with the grounds, the delay of 12 days in preferring the appeal is

condoned.

I.A. No. 2538 of 2019 stands disposed of.

The Appellant - Shareholder of 'M/s. C.T. Ramanathan Infrastructure

Private Limited has preferred this appeal against order dated 3rd May, 2019

passed by the Adjudicating Authority (National Company Law Tribunal), Single

Bench, Chennai whereby order of 'Liquidation' has been passed in exercise of

powers conferred under Section 33(1) of the I&B Code on the basis of the decision

of the 'Committee of Creditors'.

Learned counsel appearing on behalf of the Appellant submits that the

Appellant submitted a 'Terms of Settlement' and it was not considered in proper

manner and the order of 'Liquidation' was passed. 2

On hearing the learned counsel for the Appellant and perusal of the record,

we find that after long period 'resolution plan' was filed which was not found to

be viable and feasible and it not effective for reviving the 'Corporate Debtor' and

as 270 days was completed, the 'Committee of Creditors' decided to request the

Adjudicating Authority to liquidate the 'Corporate Debtor', so an order of

liquidation under Section 33 of the 'I&B Code' came to be passed. For the said

reason, we are not inclined to interfere with the impugned order dated 3rd May,

2019.

However, we make it clear that while liquidating the 'Corporate Debtor'

(Company), the 'Liquidator' is required to follow the provisions of Section 230 of

the Companies Act, 2013 in terms of decision of this Appellate Tribunal in "Y.

Shivram Prasad Vs. S. Dhanapal & Ors. - Company Appeal (AT) (Insolvency)

No. 224 of 2018 etc." observed and held :

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

Section 230 of the Companies Act, 2013.

17. Normally, the total period for liquidation is to be

completed preferably within two years. Therefore,

Company Appeal (AT) (Insolvency) No. 832 of 2019 3

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 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

Company Appeal (AT) (Insolvency) No. 832 of 2019 4

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.

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

Company Appeal (AT) (Insolvency) No. 832 of 2019 5

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."

The Appellant being member of the Company may move before the

Creditors (Financial Creditors/Committee of Creditors) and the 'Liquidator' to

propose any arrangement in terms of the provisions of Section 230 of the

Companies Act. In such case, the impugned order will not come in the way of

the Appellant. The appeal stands disposed of with aforesaid observations. No

order as to costs.

[Justice S.J. Mukhopadhaya] Chairperson

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

[ Kanthi Narahari ] Member (Technical) /ns/gc

Company Appeal (AT) (Insolvency) No. 832 of 2019