Ramesh Kumar Chaudhary vs Anju Agarwal Liquidator Of M/S Shree ...

[Arising out of Order dated 01.11.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Allahabad Bench, Allahabad, in IA No. 314 of 2021 in CP No. (IB)- 110/ALD/2017]

In the matter of:

1. Ramesh Kumar Chaudhary Through its Authorised Representative Gautam Chaudhary D 66 Chandrika Colony, Sigra, Varanasi- 221002, India

2. Interweave Polytex Private Limited B-Block, 8th Floor, Vinayak Plaza Maldahiya Crossing ...Appellants Varanasi- 221002 Vs.

1. Anju Agarwal, Liquidator of M/s. Shree Bhawani Paper Mills Ltd. 73, National Park, Lajpat Nagar, IV, New Delhi- 110024

2. Akshat Tondon 5000 C Marine Parade Road #21-11, Laguna Park, Singapore- 449286

3. Ecofirst Pte. Ltd. 19, Tanglin Road, Unit 05-18 Tanglin Shopping Centre Singapore- 247909

4. Stakeholder Consultation Committee appointed under the Insolvency and Bankruptcy Code, 2016 ...Respondents (Proforma Respondent)

For Appellants: Mr. Arun Kathpalia, Senior Advocate with Mr. Anuj Tiwari, Advocates. For Respondents: Mr. Abhishek Anand and Mr. Samriddh Bindal, Advocates for R1. Mr. Tarun Gulati, Senior Advocate with Mr. Pulkit Deora, Mr. Harsh Gurbani and Mr. Kumar 2

Sambhav, Advocates for R2&3.

JUDGMENT

(15th March, 2022)

Ashok Bhushan, J.

1. This Appeal has been filed against order dated 01.11.2021 passed by

the Adjudicating Authority (National Company Law Tribunal), Allahabad

Bench, Allahabad in I.A No. 314 of 2021 filed by the Respondent Nos. 2 & 3.

The Adjudicating Authority by order dated 01.11.2021 directed the

Liquidator to consider the Scheme under Section 230 of the Companies Act,

2013 submitted by the Respondent Nos. 2 & 3 and in the meantime, no

further steps were directed to be taken with regard to the auction of the

assets of the Corporate Debtor. The brief facts of the case and sequence of

the events necessary to be noted for deciding the issue raised in this Appeal

are:

The Liquidation Process was initiated against the Corporate Debtor i.e.

'M/s. Shree Bhawani Paper Mills Limited' by order dated 07.07.2021 passed

by the Adjudicating Authority in CP(IB) No. 110/ALD/2017. The Ex-

Managing Director of the Corporate Debtor Shri Badri Vishal Tandon died

on 12.07.2021. On 18.09.2021, Smt. Meenu Tandon, wife of late Badri

Vishal Tandon, wrote to Liquidator informing that her husband Badri Vishal

Tandon was the largest shareholder of the Corporate Debtor holding 14.6%

shares and as per his WILL she has inherited all his shares and has now

Company Appeal (AT) (Ins.) No.957 of 2021 3

become the largest shareholder of the Company. Liquidator was requested to

appoint Smt. Meenu Tandon as member of the Stakeholders Consultation

Committee (SCC). Liquidator vide e-mail dated 20.09.2021 informed Smt.

Meenu Tandon that Shri Badri Vishal Tandon was holding 12.97 percent of

shares in individual capacity and holding 1.63 percent of shares as HUF,

hence, the largest shareholder is Shri O.P. Goenka holding 13.48 percent of

shares who has been included in the Stakeholders Consultation Committee.

On 25.09.2021, the Liquidator issued e-auction notice. On 30.09.2021,

Respondent No.2 sent an e-mail to the Liquidator communicating that

members of shareholder of the Corporate Debtor is proposing a Scheme of

Compromise or Arrangement under Section 230 of the Companies Act,

2013, hence, she is requested to withdraw e-auction Sale Notice as

published in the newspapers on 25.09.2021. It was also communicated that

the Corporate Debtor is a Medium Enterprise under the provisions of Micro,

Small & Medium Enterprises Development Act, 2016 and the Respondent

No.2 was eligible to submit the Scheme for the resolution of insolvency. On

04.10.2021, a Scheme of Compromise or Arrangement under Section 230 of

the Companies Act, 2013 was submitted to the Liquidator. The Liquidator

vide her e-mail dated 14.10.2021 provisionally declared the Respondent

No.2 & 3 ineligible to submit scheme. Challenging the decision dated

14.10.2021 declaring Respondent Nos. 2 and 3 ineligible, an I.A No. 314 of

2021 was filed before the Adjudicating Authority praying that the Scheme of

Compromise or Arrangement submitted by Respondent Nos. 2 and 3 be

considered and auction be stopped. On 21.10.2021, the Liquidator sent an

e-mail to the Respondent Nos.2 and 3 communicating that the Liquidator

Company Appeal (AT) (Ins.) No.957 of 2021 4

has now changed her opinion and the Respondent Nos. 2 and 3 are declared

eligible under Section 29A. The Liquidator further informed that she has

called meeting of the Stakeholders Consultation Committee on 22.10.2021

for deliberations on the Scheme. An urgent meeting of the Stakeholders

Consultation Committee of the Corporate Debtor was convened on

22.10.2021. The meeting was convened only on 21.10.2021 for the next day.

On 22.10.2021, an e-mail was sent by Respondent No.2 at 11.05 A.M. to the

Liquidator in response to her e-mail 21.10.2021 requesting that he may be

provided reasonable time to clarify any matters arising on the Scheme and

before taking any decision on the Scheme. It was further requested that

Respondent No.2 has filed an Application before the Adjudicating Authority

and till the time Application is not decided, the Liquidator should refrain

from dealing with the assets of the Corporate Debtor. Meeting of the

Stakeholders Consultation Committee took place on 22.10.2021 where the

Liquidator informed about the eligibility of the Respondent Nos. 2 and 3 to

propose a Scheme of Compromise or Arrangement. Liquidator sought views/

vote of the members present on the Scheme. According to the minutes,

59.66% voted against the Scheme and it was recorded in the minutes that in

terms of Section 230(6) of the Companies Act, 2013, an approval of 75% in

value of the creditors is required. Hence, on the basis of the voting,

Liquidator declared that the Scheme has not been approved by the Creditors

during the Stakeholders Consultation Committee meeting. After declaring

that Scheme has not been approved, the Liquidator sought permission of the

Stakeholders Consultation Committee members to call Mr. Akshat Tandon

for presentation and took vote and according to minutes, 91.35% voted

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against the presentation of the Scheme by Respondent No.2. It was further

resolved by the Stakeholders Consultation Committee that e-auction for

25.10.2021 be continued. The Liquidator informed that only one person has

given Expression of Interest along with EMD.

As per the aforesaid decision in meeting of 22.10.2021, Liquidator

proceeded with the e-auction and the Appellant before us who was the only

bidder whose bid was accepted by the Liquidator, has given a bid of Rs.

45.30 Crores.

Application I.A. 314 of 2021 was taken up and heard by the

Adjudicating Authority. After hearing the Applicants i.e. Respondent Nos. 2

and 3 before us as well as Learned Counsel for the Liquidator, on

01.11.2021, the Adjudicating Authority permitted the Applicants-

Respondent Nos. 2 and 3 to file the Scheme with the Liquidator on or before

08.11.2021 by placing all relevant information on record to enable the

Liquidator to assess the eligibility of the Applicants in terms of Section 29A

of the IBC and to consider whether an application for directions under

Section 230(1) of the Companies Act, 2013 should be filed before the

Tribunal/ Adjudicating Authority for appropriate directions. The

Adjudicating Authority further directed "In the meantime no further steps in

regard to the auction shall be taken without leave of this Adjudicating

Authority". Aggrieved by the order dated 01.11.2021, the Appellant who is

Successful Bidder has filed this Appeal. This Tribunal entertained the

Appeal on 23.11.2021 and passed an order staying the order dated

01.11.2021 on the Application I.A No. 314 of 2021.

Company Appeal (AT) (Ins.) No.957 of 2021 6

2. Shri Arun Kathpalia, Learned Senior Counsel for the Appellants

submits that the Adjudicating Authority erred in directing the Liquidator to

consider filing the Scheme proposed by the Respondent No.2 under Section

230 of the Companies Act, 2013 whereas the Scheme was rejected by the

Stakeholders Consultation Committee not being commercially viable in its

meeting dated 22.10.2021. The Adjudicating Authority had no jurisdiction to

direct the Liquidator to consider the Scheme proposed by the Respondent

Nos. 2 and 3. It is submitted that the Scheme filed by the Respondent Nos. 2

and 3 ought to have been presented only after consent of seventy-five per

cent of the secured creditors as required by Section 230 (2) (c) and there

being no consent by 75% of the secured creditors which is the condition

precedent, Scheme was not required to be considered by the Liquidator. The

Adjudicating Authority committed error in permitting Respondent Nos. 2

and 3 to file a revised scheme before the Liquidator. Further, no scheme

could have been entertained beyond the period of 90 days prescribed for

completion of entire process under Section 230 of the Companies Act, 2013.

It is submitted that the impugned order has been passed in violation of

principles of natural justice since the Appellant was not arrayed as a party

to the proceeding and I.A No. 314 of 2021 had become infructuous at the

time of passing of the impugned order. It is submitted that the Sale

Certificate was issued on 30.12.2021 in favour of the Appellant who has

made all payments.

3. Shri Tarun Gulati, Learned Senior Counsel appearing for Respondent

Nos. 2 and 3 refuting the submissions of Counsel for the Appellants

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contends that entire process adopted by the Liquidator with regard to

Scheme of Compromise or Arrangement submitted by Respondent Nos. 2

and 3 is contrary to the provisions of the Code and Insolvency and

Bankruptcy Board of India (Liquidation Process) Regulations, 2016. When a

Scheme of Compromise or Arrangement was submitted to the Liquidator

well within 90 days from initiation of liquidation process, it was incumbent

on the Liquidator to file an Application before the Adjudicating Authority for

consideration and passing appropriate order. The Liquidator was not

required to obtain votes on the Scheme in the Stakeholders Consultation

Committee. It was the Liquidator who ought to have examined the Scheme

and file appropriate Application. The whole premise of the Liquidator that

Stakeholders Consultation Committee in its meeting dated 22.10.2021 has

disapproved the Scheme is fallacious. Section 230(6) which has been relied

by the Liquidator for holding that Scheme has been disapproved by the

Creditors is wholly misconceived. Applicability of Section 230(6) arises only

when meeting is called by order of the Adjudicating Authority. Section

230(2) (c) was also not attracted nor there was any requirement of consent

by not less than 75% of the secured creditors for consideration of the

Scheme of Compromise or Arrangement submitted by the Applicant. It is

submitted that the Liquidator from very beginning has been making efforts

to defeat consideration of the Scheme. After Scheme was submitted, on

14.10.2021, she has declared Respondent Nos. 2 and 3 ineligible which

decision was reversed on 21.10.2021 when Respondent Nos. 2 and 3 had

filed an Application I.A. No. 314 of 2021 before the Adjudicating Authority.

On 21.10.2021, when the Liquidator held Respondent Nos. 2 and 3 as

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eligible, it was incumbent on her to examine the Scheme and submit an

Application before the Adjudicating Authority. The Liquidator has abdicated

her duties as required under the Code and Regulations and trying to shield

her illegalities on the strength of alleged decision by the Stakeholders

Consultation Committee dated 22.10.2021. Applicants- Respondent Nos. 2

and 3 on 30.09.2021 have requested the Liquidator not to proceed with the

auction notice, hence, it was incumbent on the Liquidator not to proceed

especially when she herself found Respondent Nos. 2 and 3 eligible to

submit a Scheme. The advice of Stakeholders Consultation Committee is

neither binding nor mandatory to be followed by the Liquidator. Further 90

days period for completion of Compromise or Arrangement as provided

under Section 2B of the Liquidation Regulations is not mandatory. Further,

a bidder who is a party to a process for sale of the Corporate Debtor as a

going concern which process also did not conclude within 90 days cannot be

heard to contend that the Scheme was not sanctioned within 90 days.

4. It is further submitted that against the order dated 01.11.2021 passed

by the Adjudicating Authority, this Court on 23.11.2021 passed only an

interim order. It was not open for the Liquidator during the pendency of the

Appeal to issue Sale Certificate in favour of the Appellant. The Appeal filed

by the Appellant has not yet allowed and the Liquidator to unduly benefit

the Appellant has proceeded to issue Sale Certificate as well as assets to the

Appellants. It is submitted that in the auction notice the reserve price

mentioned was Rs.45 crore. In the scheme, which was submitted on

04.10.2021, the Respondent No.2 has valued the Scheme as Rs.45.21 Crore

Company Appeal (AT) (Ins.) No.957 of 2021 9

and the sole bid placed by the Appellants was for Rs. 45.30 Crores. It was

submitted by the Learned Counsel for the Appellants that information

regarding value of the Scheme was leaked to the Appellant that is why he

gave an offer of Rs.45.30 Crores. The auction which was held on 25.10.2021

was against the provisions of the Code and Regulations and is a result of

illegalities committed by the Liquidator.

5. Shri Abhishek Anand, Learned Counsel for the Liquidator submits

that the order passed by the Adjudicating Authority suffers from infirmity

and contrary to the Code. It is submitted that the Scheme was submitted by

Respondent Nos. 2 and 3 one day before expiry of 90 days. However, Shri

Abhishek Anand does not dispute that the Scheme for Compromise or

Arrangement was received on 04.10.2021 submitted by Respondent Nos. 2

and 3. It is submitted that in the third Stakeholders Consultation

Committee meeting held on 22.10.2021, the Scheme with 75% in value of

the Creditors was disapproved. The Stakeholders Consultation Committee

also opined that Respondent Nos. 2 and 3 are eligible for submitting the

Scheme. The Stakeholders Consultation Committee having already rejected

the Scheme of Respondent Nos. 2 and 3, the Liquidator has transferred the

physical possession of the assets of the Corporate Debtor to the Appellant.

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

parties and perused the record.

7. Liquidation Regulations 2016 were amended by inserting Regulation

2B w.e.f. 06.01.2020. Regulation 2B is as follows:-

Company Appeal (AT) (Ins.) No.957 of 2021 10

"2B. Compromise or arrangement. (1) Where a compromise or arrangement is proposed under section 230 of the Companies Act, 2013 (18 of 2013), it shall be completed within ninety days of the order of liquidation under sub-sections (1) and (4) of section 33. Provided that a person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, shall not be a party in any manner to such compromise or arrangement.

(2) The time taken on compromise or arrangement, not exceeding ninety days, shall not be included in the liquidation period.

(3) Any cost incurred by the liquidator in relation to compromise or arrangement shall be borne by the corporate debtor, where such compromise or arrangement is sanctioned by the Tribunal under sub-section (6) of section 230:

Provided that such cost shall be borne by the parties who proposed compromise or arrangement, where such compromise or arrangement is not sanctioned by the Tribunal under sub-section (6) of section 230."

8. By insertion of the Regulation 2B of the Liquidation Regulation, the

statutory Scheme is clear that within 90 days of the order of the liquidation

the Scheme of Compromise or Arrangement be completed. Further, by virtue

of sub-regulation (2) of Regulation 2B, the period of 90 days is not to be

included in the liquidation period. This Tribunal in several judgments has

emphasised that before taking steps to sell the assets of the Corporate

Debtor, the Liquidator is to take steps in terms of Section 230 of the

Company Appeal (AT) (Ins.) No.957 of 2021 11 Companies Act, 2013. This Tribunal in "S.C. Sekaran vs. Amit Gupta-

Company Appeal (AT) (Ins.) No. 495 & 496 of 2018" laid down following:-

"Before taking steps to sell the assets of the 'corporate debtor(s) (companies herein), the Liquidator will take steps in terms of Section 230 of the Companies Act, 2013. The Adjudicating Authority, if so required, will pass appropriate order. Only on failure of revival, the Adjudicating Authority and the Liquidator will first proceed with the sale of company's assets wholly and thereafter, if any possible to sell the company in part and in accordance with law."

9. Further, in "Y. Shivram Prasad vs. S. Dhanpal- Company Appeal

(AT) (Insolvency) No. 224 of 2018" again in paras 13 and 14, following was

held:-

"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.

Company Appeal (AT) (Ins.) No.957 of 2021 12

14. The last stage will be death of the 'Corporate Debtor' by liquidation, which should be avoided."

10. In the present case, Counsel for the Appellant has given much

emphasis on the fact that Scheme of Compromise or Arrangement was filed

one day before expiry of 90 days. The present is a case where a Scheme for

Compromise or Arrangement by Respondent Nos. 2 and 3 was filed well

before 90 days and on 30.09.2021, Respondent No.2 has already intimated

the Liquidator that they are submitting a Scheme for Compromise or

Arrangement and further steps pursuant to auction notice dated 25.09.2021

be not taken. The mere fact that it was filed one day before expiry of 90 days

in no way attaches any ineligibility in consideration of the Scheme.

11. The sequence of the events as noted above indicates that after

submission of the Scheme on 04.10.2021, at no point of time there was

proper consideration of the Scheme submitted by the Respondent Nos. 2

and 3. On 14.10.2021, the Liquidator declared Respondent Nos. 2 and 3

ineligible to submit a Scheme which decision was reversed by Liquidator

herself on 21.10.2021 holding that Respondent Nos. 2 and 3 are eligible.

After holding the Respondent Nos. 2 and 3 eligible there was no impediment

in consideration of the Scheme by the Liquidator. The only consideration of

the Scheme, as is the case of the Liquidator, is that the Scheme was

considered in Stakeholders Consultation Committee on 22.10.2021 and was

not accepted. Hence, the Liquidator treated herself absolved from

consideration of the Scheme any further and proceeded with the e-auction

Company Appeal (AT) (Ins.) No.957 of 2021 13

on 25.10.2021 of the assets of the Corporate Debtor. The minutes of the

Stakeholders Consultation Committee have been brought on the record of

the Appeal as Annexure A/11. Part-2 of the Minutes is with regard to the

"Matters Discussed". The entire consideration regarding the Scheme

submitted by the Respondent Nos.2 and 3 is contained in para-A which is to

the following effect:-

"A. Eligibility under Section 29 A of proposers of the scheme of Compromise & Arrangement i.e. Mr. Akshat Tandon and Ecofirt PTE. Ltd. and Presentation of the scheme to SCC

The Liquidator apprised that as per the provisional eligibility report forwarded by the Liquidator vide email dated 14th October, 2021, the Liquidator had formed an opinion that both the above proposers of the scheme were not eligible due to the reasons mentioned in the said report. Subsequently, Mr. Akshat Tandon had sent to the Liquidator relevant circulars of MSME ministry and RBI mentioning that on the basis of these circulars they are eligible. Thereafter, the Liquidator had conducted its own due diligence and after examination, the Liquidator on the basis of additional information declared that both the proposers of the scheme eligible under Section 29A in terms of Section 240 A of the Code. A complete revised report of the Liquidator is enclosed for perusal of the Stakeholders.

The Liquidator thought it pertinent to convey that the said scheme was to be submitted within 90 days of the Liquidation Commencement dated (i.e. by 4th October, 2021- LCD date being 7th July, 2021) and the email

Company Appeal (AT) (Ins.) No.957 of 2021 14

proposing the scheme was also received by the Liquidator on the 90th day.

SCC also took note of the opinion of Mr. Abhishek Anand as put up in the Agenda and also the voting share of the creditors as put up in the Agenda.

The SCC took note that proposers of the scheme of Compromise & Arrangement i.e. Mr. Akshat Tandon and Ecofirst PTE. Ltd. are eligible under Section 29A, subject to Section 240A of the Code being MSME.

At this point, the Liquidator stated that the full copy of the said scheme had already been circulated to all the stakeholders for their perusal, however, the Liquidator for the benefit of the stakeholders understanding, presented the salient features of the said scheme to the SCC members and sought views/ vote of the members present one by one on the scheme. The result of the members present and voting is given below in the chart-

S. Category Secured/Unsecured Voting % of Voted in Reasons for vote No. claims/ debt favour/ against 1 Financial Creditor- JM Secured 55.86% Voted Commercially not Financial Asset against viable Reconstruction Company Limited 2 Financial Creditor- Secured 33.91% Did not vote Will put up the Bank of Baroda matter to competent authority 3 Representatives of Orion I.T. Parks Pvt. Voted in Can be considered Unsecured Financial Ltd. favour Creditors

Suchitra Tandon 3.93% Voted in Should give a favour chance

4 Representative of Unsecured 1.58% Voted No faith in Tandon Employees and against Family Workmen

Company Appeal (AT) (Ins.) No.957 of 2021 15

5 Representatives of M/s Ashirwad Voted No reason given Operational creditors Industries against other than Workmen, employees and Raja Ram Gupta & Not available - Governments Co- Proprietor- Gyan during the Prakash Gupta 2.22% voting*

6 Government Employees Provident Not present Not Present Fund Organisation Regional Office- Lucknow 2.51% 7 Operational Creditors Mr. Om Prakash - Not present Not Present other than Workmen, Goenka employees and Governments Total 100.00%

*not possible to split the voting share therefore taken as voted against

Result for voting-

Voted against- 59.66%

Voted in favour- 3.93%

Did Not vote- 33.91%

Not Present- 2.51%

Since in terms of Section 230 (6) of the Companies act 2013, an approval of 75% in value of the creditors is required for approval of the scheme, the Liquidator on the basis of the above voting results declared that the said scheme has not been approved by the creditors during the SCC meeting. The legal Counsel present in the meeting apprised the stakeholders about the provisions of Section 230 of the Companies Act, 2013 as well as the requisite voting share required for approval of a Scheme of Compromise of Arrangement.

The Liquidator presented before the SCC and sought their advice for inviting Mr. Akshat Tandon to make his presentation on the scheme to SCC.

Company Appeal (AT) (Ins.) No.957 of 2021 16

Since one of the major objector raised by Mr. Akshat Tandon in his email dated 22nd October, 2021 was that the Liquidator has not given him the opportunity to present the said scheme to SCC, the Liquidator sought permission of the SCC members to call Mr. Tandon for presentation and took the vote one by one and the results of voting is as under:-

S. Category Secured/Unsecured Voting % of Voted in No. claims/ debt favour/against the presentation by Mr. Akshat Tandon 1 Financial Creditor- JM Secured 55.86% Voted against Financial Asset Reconstruction Company Limited 2 Financial Creditor- Bank of Secured 33.91% Voted against Baroda 3 Representatives of Orion I.T. Parks Pvt. 3.93% Voted in favour Unsecured Financial Ltd.

Creditors Suchitra Tandon Voted in favour 4 Representative of Unsecured 1.58% Voted against Employees and Workmen 5 Representatives of M/s Ashirwad 2.22% Not available during Operational creditors other Industries the voting than Workmen, employees and Governments Raja Ram Gupta & Not available during Co- Proprietor- Gyan the voting Prakash Gupta 6 Government Employees Provident 2.51% Not Present Fund Organisation Regional Office- Lucknow 7 Operational Creditors other Mr. Om Prakash - Not Present than Workmen, employees Goenka and Governments Total 100.00%

Since 91.35% of voting share of the Creditors had voted against the presentation of the scheme before the SCC to

Company Appeal (AT) (Ins.) No.957 of 2021 17

me made by Mr. Akshat Tandon, the Liquidator decided not to invite Mr. Tandon accordingly."

12. We may first notice the purpose and object of the Stakeholders

Consultation Committee. Regulation 31A deals with 'Stakeholders'

Consultation Committee'. Regulation 31A (1) is as follows:-

"31A. Stakeholders' consultation committee. (1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on the matters relating to sale under regulation 32."

13. The Stakeholders Consultation Committee is only to advise the

Liquidator on the matters relating to sale under Regulation 32. Sub-

regulations (9) and (10) are also relevant which are to the following effect:-

"(9) The consultation committee shall advise the liquidator, by a vote of not less than sixty-six percent of the representatives of the consultation committee, present and voting.

(10) The advice of the consultation committee shall not be binding on the liquidator: Provided that where the liquidator takes a decision different from the advice given by the consultation committee, he shall record the reasons for the same in writing."

Company Appeal (AT) (Ins.) No.957 of 2021 18

14. Sub-regulation (9) of Regulation 31A provides that the advice of the

Stakeholders Consultation Committee shall be taken by a vote of not less

than sixty-six percent and further sub-regulation (10) states that said advice

is not binding on the Liquidator. The action of the Liquidator in placing the

Scheme of Compromise or Arrangement before the Stakeholders

Consultation Committee was uncalled for and is not in accordance with the

provisions of the Code and the Regulations. Section 230 of the Companies

Act read with Regulation 2B of the Liquidation Regulations indicates that it

is the Liquidator who is to take a decision as to whether Scheme for

Compromise or Arrangement is to be placed before the Tribunal by an

Application or not. When sub-regulation (1) of Regulation 31 specifically

refers to advice of Stakeholders Consultation Committee on the matters

relating to sale under Section 32, the Stakeholders Consultation Committee

was not any competent forum for obtaining any advice with regard to

Scheme for Compromise or Arrangement submitted under Section 230.

15. Apart from the above, we now need to notice the minutes of the

Stakeholders Consultation Committee dated 22.10.2021 to find out the

decision taken by the Stakeholders Consultation Committee and the

Liquidator. After taking views and votes of all members present in the

Stakeholders Consultation Committee, it is recorded in the minutes that

59.66% voted against the Scheme. After noting the voting percentage,

following is recorded in the minutes:-

"Since in terms of Section 230 (6) of the Companies act 2013, an approval of 75% in value of the creditors is

Company Appeal (AT) (Ins.) No.957 of 2021 19

required for approval of the scheme, the Liquidator on the basis of the above voting results declared that the said scheme has not been approved by the creditors during the SCC meeting. The legal Counsel present in the meeting apprised the stakeholders about the provisions of Section 230 of the Companies Act, 2013 as well as the requisite voting share required for approval of a Scheme of Compromise of Arrangement."

16. Section 230(6) of the Companies Act, 2013 has been relied by the

Liquidator for holding that the Scheme has not been approved by the

Creditors. We may at this stage notice Section 230 (1) as well as Section 230

(6), which are to the following effect:-

"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, 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

Company Appeal (AT) (Ins.) No.957 of 2021 20

classes or by the division of shares into shares of different classes, or by both of those methods.

xxx xxx xxx

(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing threefourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator and the contributories of the company."

17. Section 230 (6) refers to a meeting held in pursuance of sub-section

(1) i.e. in pursuance of meeting directed by the Tribunal on an Application

filed by the Liquidator. In the present case, no meeting was convened under

Section 230(1), hence, there is no applicability of Section 230(6). Reliance on

Section 230(6) was wholly out of place and was uncalled for. The above

holding that the Scheme of Compromise or Arrangement submitted by the

Respondent Nos. 2 and 3 has not been approved by the Creditors during the

Stakeholders Consultation Committee meeting, referring to Section 230(6)

indicates misconception of the whole statutory procedure by the Liquidator.

Further, we have already noticed that under sub-regulation (9) of Regulation

31A, the advice of Stakeholders Consultation Committee is to be taken by a

vote of not less than 66%. Thus, the advice of Stakeholders Consultation

Company Appeal (AT) (Ins.) No.957 of 2021 21

Committee with regard to the Scheme was not 66% since voting percentage

noticed by the Liquidator is following:-

"Result for voting-

Voted against- 59.66%

Voted in favour- 3.93%

Did Not vote- 33.91%

Not Present- 2.51%"

18. When an advice of rejection of the Scheme is not by 66%, there was no

question of following the said advice of the Stakeholders Consultation

Committee by the Liquidator and act of Liquidator in relying on the said

advice amounts to abdication of her own duty to consider the Scheme and

shield herself on misconception of law rejecting the Scheme submitted by

Respondent Nos. 2 and 3.

19. At this stage, we may notice one more aspect with regard to which

there appear to be misconception in the mind of Liquidator and

Stakeholders Consultation Committee. What is mandated by sub-regulation

(9) of Regulation 31A is that Stakeholders Consultation Committee shall

advice the Liquidator by a vote of not less than sixty-six percent of the

representative of the Consultation Committee, present and voting. Thus,

percentage has to be computed on the members of the Stakeholders

Consultation Committee present and voting and not from value of claims of

the Financial Creditor. When we look into the Regulation 31A (2) which

provides composition of the Consultation Committee, it is clear that the

Company Appeal (AT) (Ins.) No.957 of 2021 22

number of representatives have been provided in Column-3. The percentage

of voting computed by the Liquidator is not on the basis of votes of members

present in the voting rather on the value of the claim. This is wholly contrary

to the statutory Scheme under Regulation 31A (9).

20. From the above discussion, it is clear that the meeting of the

Stakeholders Consultation Committee and its minutes is not in accordance

with the statutory Scheme nor it can be held that Stakeholders Consultation

Committee had given any advice to reject the Scheme. Consequently, the

Liquidator's decision to reject the Scheme submitted by the Respondent Nos.

2 and 3 based on such advice also falls on ground. Hence, we conclude that

there was neither any consideration of the Scheme nor there any valid

reason for rejecting the Scheme by the Liquidator and consequential action

after rejection of the Scheme to proceed with the auction is also

unsustainable since the decision to proceed with auction was consequent to

rejection of the Scheme submitted by Respondent Nos. 2 and 3 which also

held to be contrary to the statutory Scheme and statutory requirements.

21. During the submissions before us as well as in the meeting of the

Stakeholders Consultation Committee, reliance has been placed by the

Appellants as well as the Liquidator on Section 230(2)(c). Shri Arun

Kathpalia, Learned Senior Counsel for the Appellants submits that any

scheme for corporate debt restructuring is to be consented by not less than

75% of the secured creditors and unless there is consent of 75% of secured

creditors, no Application for compromise or arrangement can be entertained

by the Liquidator. He submits that fulfilment of requirement under Section

Company Appeal (AT) (Ins.) No.957 of 2021 23

230(2)(c) is a condition precedent for consideration of any scheme or to

make arrangement. Learned Counsel for the Respondent Nos. 2 and 3

submitted that Section 230(2) (c) i.e. requirement of not less than 75% of the

consent of the Corporate Debtor is not a condition precedent. Section 230(2)

is as follows:

"230. Power to compromise or make arrangements with creditors and members.-- .................(2) The company or any other person, by whom an application is made under subsection (1), shall disclose to the Tribunal 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--

(i) a creditor's responsibility statement in the prescribed form;

(ii) safeguards for the protection of other secured and unsecured creditors;

(iii) report by the auditor that the fund requirements of the company after the corporate debt restructuring as approved shall conform to the liquidity test based

Company Appeal (AT) (Ins.) No.957 of 2021 24

upon the estimates provided to them by the Board;

(iv) where the company proposes to adopt the corporate debt restructuring guidelines specified by the Reserve Bank of India, a statement to that effect; and

(v) a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer."

22. We have considered the submissions of the parties in the above regard

and perused the statutory scheme under Section 230.

23. Section 230(2)(c) uses expression 'any scheme of corporate debt

restructuring consented to by not less than seventy-five per cent of the

secured creditors in value'. Sub-clause (c) of sub-section (2) of Section 230 is

attracted when there is a scheme of corporate debt restructuring. The

expression used in sub-clause (c) is 'corporate debt restructuring'. Debt

restructuring is well known concept. Debt given by a lender can be

restructured by the lender by any scheme issued by the lender or Reserve

Bank of India or Central Government. Debt restructuring scheme which are

issued by the Reserve Bank of India or Central Government from time to

time are to mitigate the hardship of the borrowers. The word 're-structuring'

has been defined in 'P Ramanatha Aiyar, Advanced Law Lexicon, 6th Edition,

Volume 4' in following words:-

Company Appeal (AT) (Ins.) No.957 of 2021 25

"Generically in context of financial instruments, refers to the rescheduling or alteration of terms of the instrument, generally adversely affecting the interest of the instrument holder. For example, elongating the repayment terms of a loan, or reducing security. In ISDA definitions, restructuring as a credit event is defined as events as a result of which the terms, as agreed by the reference entity or governmental authority and the holders of the relevant obligation, governing the relevant obligation have become less favourable to the holders that they would otherwise have been. These events include a reduction in the principal amount or interest payable under the obligation, a postponement of payment, a change in ranking in priority of payment or any other composition of payment."

24. Learned Counsel for the Appellant has also relied on the definition of

'corporate debt restructuring' in "Glossary of Key Terms and Concepts" from

the Development Co-operation Report, which is to the following effect:-

"Definition:

Any action officially agreed between creditor and debtor that alters the terms previously established for repayment. This may include forgiveness (extinction of the loan), or rescheduling which can be implemented either by revising the repayment schedule or extending a new refinancing loan."

25. Learned Counsel further submits that the Hon'ble Supreme Court in

"Commissioner of Income Tax VII New Delhi vs. Punjab Stainless Steel

Industries- (2014) 15 SCC 129" has laid down that when a term is not

defined in statutes and circulars, its meaning can be taken as in prevalent

Company Appeal (AT) (Ins.) No.957 of 2021 26

in ordinary, common or commercial parlance amongst persons concerned

with it.

26. When lenders restructure the debt i.e. permit the borrower to make

the payment debt in different time schedule or different instalment as per

any Scheme, the said will be debt restructuring. The statutory scheme

required consent by not less than 75% of the secured creditors for such debt

restructuring which indicate that debt restructuring is to be consented by

specific majority of secured creditors and it is secured creditors who are

generally banks and the financial institution who can restructure the debt.

27. We accept the submission of Shri Arun Kathpalia, learned Senior

Counsel for the Appellant that the Scheme proposed by Respondent Nos.2

and 3 is an arrangement by Respondents, wherein alternations have been

proposed in the terms of the loan and lesser amount have been proposed to

be paid for settling the claim, which is restructuring of corporate debt.

Hence, the Scheme under Section 230 submitted by Respondent Nos.2 and

3 ought to have consent of not less than 75% of the Secured Creditors, and

an affidavit to that effect ought to accompany with the Scheme.

28. Obligation to obtain the consent of 75% of the Creditors is on the

person who proposes the Scheme. When the Scheme was submitted by

Respondent Nos.2 and 3 to the Liquidator, the Liquidator was required to

intimate the Respondent Nos.2 and 3 to obtain consent by 75% of creditors

and it was for Respondent Nos. 2 and 3 to present the Scheme before

Creditors and impress them to give their consent. The Liquidator in the

Company Appeal (AT) (Ins.) No.957 of 2021 27

present case, after holding Respondent Nos.2 and 3 to be eligible to submit

the Scheme on 21st October, 2021, placed the Scheme before Stakeholder

Consultation Committee on the next day, that is, 22nd October, 2021 and

refused Respondent Nos.2 and 3 to present and clarify the Scheme before

the Stakeholder Consultation Committee. The procedure adopted by the

Liquidator for getting the Scheme rejected by Stakeholder Consultation

Committee was not a proper procedure. Respondent No.2 after receiving the

email from Liquidator on 21st October, 2021 that the Liquidator has

changed her opinion and held Respondent Nos.2 and 3 eligible to submit

Scheme on the same day, that is, 21st October, 2021, Respondent No. 2 sent

an email to Liquidator requesting to give reasonable opportunity to clarify

the Scheme before Members of the Stakeholder Consultation Committee. By

the email dated 21st October, 2021 following was communicated to the

Liquidator by Respondent Nos.2 and 3:

"Without prejudice to the rights and remedies of the undersigned as available under the law of the land, the undersigned states that -

a) You being the Liquidator of the CD did not explore revival of the CD with 90 days of liquidation commencement date as mandated under Regulation 2B of IBBI (Liquidator Process) Regulations, 2016. Also, in view of catena of judgments rendered by the Hon'ble Supreme Court of India and Hon'ble NCLAT and NCLT, it has been stressed that revival of the CD is paramount in place of rigorous of liquidation of the CD. Further, preference shall always be given to the Scheme, if any submitted by the Shareholders/

Company Appeal (AT) (Ins.) No.957 of 2021 28

creditors of the CD. However, you have gone ahead with auction of assets of the CD.

b) Even after submission of the Scheme on 04.10.2021, which is within the period allowed for submission of the Scheme, you deliberately took time to convene the meeting of the SCC and also delayed the process of verification of eligibility of the undersigned u/s 29A of the Code to justify your action of initiation of auction of assets of the CD in place of exploring revival of the CD.

c) During the 2nd meeting of SCC held on 12.10.2021, the legal advisor apprised to you and the members of the SCC to take decision whether to consider the Scheme or pursue auction of assets of the CD scheduled to be held on 25.10.2021. Deliberately, you circulated provisional report on eligibility of the undersigned u/s 29A of the Code on 14.10.2021 to stakeholders of the CD and kept the undersigned in dark as to his eligibility to propose the Scheme for the reason best known to you.

d) It is understood that you have exposed the Scheme of the undersigned to the Potential Bidder/s during the ongoing auction of assets of the CD, which action is unethical.

e) You have deliberately excluded the promoter group from Stakeholders committee, to restrict their participation. The irregularities in constitution of Committee was pointed out well in time and is now pending before the Hon, NCLT in petition filed by Mrs. Meenu Tandon.

f) The undersigned humbly states that he should be provided reasonable time to clarify any matters arising on the Scheme and before taking

Company Appeal (AT) (Ins.) No.957 of 2021 29

any decision on the Scheme, the undersigned be allowed reasonable opportunity to discuss and clarify on the Scheme to the members of the SCC.

Please note that the undersigned has already filed an application before the Hon'ble NCLT, Allahabad Bench seeking appropriate direction and till the time the said application is not decided, you should refrain from dealing with the assets of the CD in any manner, including concluding auction of assets of the CD."

29. As noted above no opportunity was given to Respondent Nos.2 and 3

to explain and clarify their Scheme before Financial Creditors and Members

of Stakeholder Consultation Committee on 22nd October, 2021, on which

date the meeting was convened by the Liquidator. The Liquidator first put

the Agenda consideration of the Scheme submitted by Respondent Nos.2

and 3 and when it was disapproved, the Liquidator submitted another

proposal before the Committee as to whether the Respondent Nos. 2 and 3

be permitted to present their Scheme before the Stakeholder Consultation

Committee, which obviously got rejected since Scheme had already been

disapproved by the Stakeholder Consultation Committee, prior to this item

being taken for consideration. It was incumbent to the Liquidator to first

put the Resolution before the Stakeholder Consultation Committee as to

whether Respondent Nos. 2 and 3 be permitted to present and clarify their

Scheme, which was not done to the prejudice of Respondent Nos.2 and 3.

The persons, who submitted the Scheme that is Respondent Nos.2 and 3

could not get any opportunity to present their Scheme before the Financial

Company Appeal (AT) (Ins.) No.957 of 2021 30

Creditors and obtain their consent. The Liquidator after declaring the

Respondent Nos.2 and 3 eligible on 21st October, 2021, got the Scheme

disapproved on the next day in the meeting dated 22nd October, 2021

without giving any opportunity to Respondent Nos.2 and 3 to appear before

Stakeholder Consultation Committee or to approach the Financial Creditors

for getting their consent to the Scheme. Prior to 21st October, 2021,

Respondent Nos.2 and 3 had no opportunity to approach the Financial

Creditors for their consent, since the Liquidator has declared Respondent

Nos.2 and 3 ineligible to submit the Scheme under Section 29A of the Code.

The person submitting Scheme under Section 230, sub-section (1) of the

Companies Act, 2013 is entitled to place the Scheme before Financial

Creditors and make efforts to obtain their consent, which was denied to

Respondent Nos.2. and 3, in the present case, due to the course adopted by

the Liquidator as noted above. We thus are of the view that Respondent

Nos.2 and 3 are entitled to an opportunity to place and explain their revised

Scheme before Financial Creditors and it is for the Financial Creditors to

consider the Scheme for purposes of giving consent as contemplated by

Section 230, sub-section (2) (c) of the Companies Act. The learned Counsel

for the Appellant has submitted that Scheme submitted after the order of

the Adjudicating Authority proposes a higher amount as compared to one

which was offered by Appellant in auction held on 25th October, 2021.

30. One more aspect we notice with regard to claim of the Respondent

Nos. 2 and 3 that Smt. Meenu Tandon, wife of late Badri Vishal Tandon, was

the largest stakeholder and was entitled to participate in the Stakeholders

Company Appeal (AT) (Ins.) No.957 of 2021 31

Consultation Committee meeting. The relevant e-mails with regard to claims

submitted by Smt. Meenu Tandon has been brought on the record by the

Appellant himself in the Appeal. On 18.09.2021, Smt. Meenu Tandon, wife

of late Badri Vishal Tandon, has informed the Liquidator about the death of

Chairman and to include her as the largest shareholder. On 18.09.2021,

following e-mail was sent by Smt. Meenu Tandon:-

"Dear Madam,

This is to inform you that my husband Late Badri Vishal Tandon was the largest shareholder of Shree Bhawani Paper Mills Ltd., under Liquidation.

In various folios he was holding 14.6 percent of shares and per his Will I have inherited all the shares and have become the largest shareholder of the company.

You are therefore informed to appoint me as a member of the Stake Holder committee in place of any person you may have already appointed.

Details of holding of various folios is being attached. In the meanwhile, no meeting of Stakeholder committee be held till the matter is resolved. Please confirm.

Thanking You

Meenu Tandon Annexure: as above."

31. The aforesaid claim was rejected by the Liquidator on 20.09.2021 by

following Reply:-

Company Appeal (AT) (Ins.) No.957 of 2021 32

"Dear Sir,

As per the latest shareholding pattern which was filed with BSE for quarter ending June, 2017, the largest shareholder is Mr. O.P. Goenka holding 13.48 percent of shares in Individual capacity.

Also be informed that Mr. Badri Vishal Tandon was holding 12.97 percent of shares in Individual capacity and holding 1.63 percent of shares as HUF.

Accordingly, the shareholder with highest shareholding in individual capacity is being included in the SCC.

Thanks & Regards,

On behalf of Anju Agarwal Liquidator- Shree Bhawani Paper Mills Limited"

32. From e-mail which was sent by the Liquidator itself, it is clear that

Late Badri Vishal Tandon was holding 12.97% of shares and holding 1.63%

shares as HUF. When these two figures are added, the figure comes 14.50%

which was more than 13.48%, whom the Liquidator has permitted in the

meeting of the Stakeholders Consultation Committee. It is further relevant

to notice that after rejection of the claim on 20.09.2021 another e-mail was

sent by Smt. Meenu Tandon where she stated that she in her personal

capacity holds 0.83% share and added to the individual shares inherited by

her of 12.97%, her total holding excluding HUF adds to 13.70% which is

Company Appeal (AT) (Ins.) No.957 of 2021 33

higher than O.P. Goenka 13.48%. It is relevant to note that after rejection of

the claim of Smt. Meenu Tandon, she filed an Application before the

Adjudicating Authority and Adjudicating Authority has accepted the claim of

Smt. Meenu Tandon. It is further relevant to notice that the claim of Smt.

Meenu Tandon was filed as shareholder which was rejected by the

Liquidator on the ground of delay vide e-mail dated 22.09.2021 against

which order I.A 320 of 2021 was filed which has been decided by the

Adjudicating Authority on 15.11.2021 condoning the delay in submission of

the claim and Liquidator was directed to adjudicate the claim on merits.

33. We have noticed that the Respondent No.2 after he was informed by

the Liquidator on 21.10.2021 that Respondent No.2 is eligible to submit a

Scheme of Compromise or Arrangement, Respondent No.2 requested the

Liquidator that he be permitted to explain the Scheme. Stakeholders

Consultation Committee minutes dated 22.10.2021 has already been

extracted above which indicates that the Liquidator first put the Scheme

before the members of the Stakeholders Consultation Committee for their

views and votes and after it was rejected, she obtained the opinion of the

Stakeholders Consultation Committee as to whether Respondent No.2 be

called for presentation and she took vote on the said issue. The aforesaid

conduct of liquidator indicates that liquidator herself never wanted to give

any opportunity to the Respondent No.2 to appear before the Stakeholders

Consultation Committee and to explain his Scheme. Had liquidator wanted

to give any opportunity and she wanted to obtain advice of the Stakeholders

Consultation Committee on the above, she ought to have put the item before

Company Appeal (AT) (Ins.) No.957 of 2021 34

Stakeholders Consultation Committee first to consider before putting their

Scheme for consideration. The hurried calling for the meeting on

22.10.2021, when she decided on 21.10.2021 that Respondent Nos. 2 and 3

are eligible, then not providing opportunity to Respondent Nos. 2 and 3 to

explain the Scheme before the Financial Creditors or other stakeholders

indicate that the liquidator never wanted the Scheme to be considered and

she took all steps to get the Scheme rejected so that she may proceed with

the auction which she has already fixed for 25.10.2021. Further conduct of

the liquidator after passing of the interim order by this Court on 23.11.2021

to proceed to issue Sale Certificate, disbursing the amount is also not an

appropriate action when the Appeal was entertained by this Tribunal and

was under consideration and the Liquidator was represented by a counsel,

even on the first day, the Liquidator could have asked for clarification and

further direction for permitting the liquidator to proceed with the finalisation

of the sale and distribution of assets, delivery of possession of the assets to

Successful Bidder, which was not done.

34. The Successful Bidder is in Appeal and his Appeal has not been

allowed, only an interim order has been passed on 23.11.2021 staying the

order dated 01.11.2021. It is further to be noted that I.A 314 of 2021 was

not finally disposed off and order dated 01.11.2021 was an interim order

passed by the Adjudicating Authority and the Application is still pending

before the Adjudicating Authority. There was no such great hurry in

proceeding to issue Sale Certificate, disburse the amount and handover the

assets of the Corporate Debtor when Application I.A 314 of 2021 was

Company Appeal (AT) (Ins.) No.957 of 2021 35

pending as well as this Appeal pending before this Tribunal. The Hon'ble

Supreme Court in "Shree Chamundi Mopeds Ltd. vs. Church or South

India Trust Ass. CSI Cinodsecretariat, Madr- 1992 SCC (3) 1" has held

that by passing of an interim order by a Court, the order impugned is not

wiped off. It only becomes in-operative. The order impugned does not die

and continue to live till it is set aside, following is the observation in the

above context:-

"While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence. This means that if an order passed by the Appellate Authority is quashed and the matter is remanded, the result would be that the appeal which had been disposed of by the said order of the Appellate Authority would be restored and it can be said to be pending before the Appellate Authority after the quashing of the order of the Appellate Authority. The same cannot be said with regard to an order staying the operation of the order of the Appellate Authority because in spite of the said order, the order of the Appellate Authority continues to exist in law so long as it exists, it cannot

Company Appeal (AT) (Ins.) No.957 of 2021 36

be said that the appeal which has been disposed of by the said order has not been disposed of and is still pending."

35. The interim order dated 23.11.2021 has put the order 01.11.2021

inoperative but the order dated 01.11.2021 was not quashed, it was

appropriate for the Liquidator to obtain any clarification from the

Adjudicating Authority or by this Tribunal for proceeding further to complete

the process which was put in question before the Adjudicating Authority as

well as before this Appellate Tribunal in Appeal.

36. In result of foregoing discussion, we dispose of this Appeal in following

manner:

(i) The order dated 1st November, 2021 passed by the Adjudicating

Authority in I.A. No.314 of 2021 is affirmed. In consequence to

affirmation of the order dated 1st November, 2021 of the

Adjudicating Authority, interim order passed in this Appeal

dated 23rd November, 2021 stands discharged and all actions

taken subsequent to the interim order dated 23rd November,

2021 stands vacated.

(ii) Respondent Nos.2 and 3 are allowed one month's time from this

date to submit the revised Scheme along with an affidavit

indicating the consent of Financial Creditors as contemplated by

Section 230, sub-section 2(c) of the Companies Act, 2017, if

any.

Company Appeal (AT) (Ins.) No.957 of 2021 37

(iii) In event, Respondent Nos.2 and 3 are able to obtain the

requisite consent of the Financial Creditors, such Scheme

submitted before the Liquidator shall be filed before the

Adjudicating Authority for taking further proceedings as per

Section 230 of the Companies Act.

(iv) The Adjudicating Authority may finally decide the IA No.314 of

2021 and also pass such consequential orders as may be

necessary in the facts of the present case. The parties may act

in accordance with the order of the Adjudicating Authority in

the proceedings.

The parties shall bear their own costs.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical) New Delhi Anjali

Company Appeal (AT) (Ins.) No.957 of 2021