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Judgment
This appeal is preferred by the promoter of the CD, which to emphasis is a MSME. In this appeal, the appellant challenges an order of the Adjudicating Authority, dated 04.09.2026 dismissing IA(IBC)/365/2026 in CP(IB)/76/7/AMR/2022, which the appellant has filed seeking the leave of the Adjudicating Authority for submitting a scheme in terms of Regulation 2B of the IBBI (liquidation process) regulations, 2016 read with Section 230 of the companies Act, 2013.
The learned counsel for the appellant submitted that the submission of a scheme of arrangement is enabled by Regulation 2B of the IBBI (Liquidation Process) regulation, and this precisely is what the appellant intends to do. However, the Adjudicating Authority has rejected leave to submit any such proposal inter alia on two primary grounds:
that before the resolution professional moved the Adjudicating Authority for an order of liquidation under Section 33 of the Code, the CoC has not made any recommendation for considering any such scheme of arrangement has contemplated under Regulation 39BA of IBBI (CIRP) Regulations; and
that the appellant being a promoter of a MSME, has participated in the resolution process but lost his plot as he could not furnish performance bank guarantee.
Mr. Golla Ramakantha Rao, Liquidator, appeared in person by virtual mode. Mr. Mukesh Kumar, DGM of SBI / the financial creditor also appeared through the virtual mode. Mr. Mukesh Kumar, DGM of SBI, submitted that few opportunities for settlement has earlier been given but the appellant defaulted. On our persuasion, Mr. Mukesh Kumar submitted that the bank is not wary of considering any meaningful and workable scheme of arrangement from the appellant. Afterall the bank is interested in realising at least part of money that is due to it. We record not only the statement of Mr. Mukesh Kumar but also our appreciation for his approach to the issue.
We accordingly direct the appellant to submit his scheme of arrangement on or before 31.10.2026 and the liquidator is directed not to proceed with any activities pursuant to the order of liquidation till the bank takes a decision on the scheme of arrangement which the appellant is now under direction to submit. And, if the scheme of arrangement is rejected, then the liquidator is free to proceed with the liquidation process without reference to us.
The appellant submits that the period from 17.08.2026 (date of filing of IA(IBC) No. 365/2026) till the date of the order of this Tribunal (i.e. 07.10.2026) may be excluded in the context of Regulation 2B which is stated herein under:
iii). Direct that the period from 17.08.2026 (the date of filing of IA (IBC) No. 365 of 2026) till the date of the order of this Hon'ble Appellate Tribunal be excluded from the period stipulated under Regulation 2B(l) and from the liquidation period in terms of the Regulation 2B(2) of the Liquidation Regulations, or in the alternative, extend the said period by such time as this Hon'ble Appellate Tribunal may deem fit.
When timelines are directory, given the fact it is the tribunal which has granted opportunity to the appellant to submit his scheme of arrangement, the prayer for extension of time is implied. Hence there is no need to pass any separate order.
The liquidator submits that he has issued an auction notice for an auction scheduled to be held on 11.10.2026. The liquidator is now required to wait for the bank's decision on the scheme of arrangement to be submitted by the appellant and its own decision on it.
The appeal is accordingly disposed of. No costs.