AI Structured Summary
Not yet generated for this judgment
Judgment
Ashok Bhushan, J
These two Appeals have been filed by the same Appellant-Suspended Director of the Corporate Debtor challenging two separate and different decisions of the Adjudicating Authority (National Company Law Tribunal, Allahabad Bench, Prayagraj).
Company Appeal (AT) Ins. No. 333 of 2022 has been filed against the Order dated 31st January, 2022 by which the Adjudicating Authority has allowed CA No. 86/ALD/2019 filed by the Resolution Professional seeking liquidation of the Corporate Debtor-Shamken Cotsyn Limited. By the same Order, CA No. 64/ALD/2019 filed by the Appellant praying to stay the decision of the CoC to liquidate the Corporate Debtor taken in 11th CoC Meeting held on 18th February, 2019 has been rejected. Appellant aggrieved by the Order dated 31st January, 2022 has come up in this Appeal.
Company Appeal (AT) No. 157 of 2022 has been filed against the Order dated 14th June, 2022 passed by the National Company Law Tribunal, Allahabad Bench, Prayagraj in T.P. No. 01/ALD/2017 (earlier CP No. 10/ALD/2010). By which Order, petition filed under Section 391/394 of Companies Act, 1956 which was transferred from the High Court of Allahabad in terms of Section 434 of the Companies Act, 2013 has been dismissed as infructuous in view of the initiation of ‘Corporate Insolvency Resolution Process’ (CIRP in short) on 29th May, 2018 and subsequently liquidation order passed on 31.01.2022.
Learned Counsel for the Appellant – Mr. Arun Saxena in support of Company Appeal (AT) Ins. No. 333 of 2022 submits that the scheme under Section 391 & 394 of the Companies Act, 1956 was filed before the Companies Judge of Allahabad High Court where an Order was passed on 15th May, 2008 for convening the Meeting of Secured Creditors. An application was filed by ING Vysya Bank Ltd. objecting convening of the meeting of the creditors on the ground that ING Vysya Bank Ltd. is a secured creditor. The case of ING Vysya Bank Ltd. was that proceedings are pending before the AAIFR. Application under Section 391 & 394 is not maintainable. Against the Order dated 18th January, 2010, Special Appeal 1396/2010 was also dismissed by the Division Bench of High Court on 08th September, 2010 which matter was taken to before the Hon’ble Supreme Court in SLP Civil Appeal No. 121 of 2011 and the matter is still pending before the Hon’ble Supreme Court hence the Adjudicating Authority ought not to have rejected the petition filed under Section 391 & 394 of the Companies Act, 1956.
It is stated that scheme or arrangement being already submitted and under consideration, the Adjudicating Authority ought not to have passed the Impugned Order dated 31st January, 2022 directing for liquidation of the Corporate Debtor.
In support of Company Appeal (AT) No. 157 of 2022, Mr. Arun Saxena submits that Adjudicating Authority erred in rejecting the T.P. No. 01/ALD/2017 on 14th June, 2022 on the ground that Corporate Debtor is already under Liquidation. It is submitted that the scheme or arrangement ought to have been considered on merits and in event the scheme or arrangement is approved, there was no occasion for sending the Corporate Debtor into liquidation.
Learned Counsel appearing for the liquidator refuting the submissions of Learned Counsel for the Appellant submits that CIRP against the Corporate Debtor was initiated by Order dated 29th May, 2018 which Order was never challenged by the Appellant and became final. In CIRP, Form-G was issued on two occasions but no Resolution Plan could be submitted or approved by the CoC. The period of CoC was coming to an end on 23rd February, 2019 hence CoC passed a Resolution on 18.02.2019 in its 11th CoC Meeting to liquidate the Corporate Debtor. In CIRP, no plan having been approved, CoC rightly had taken a decision to liquidate the Corporate Debtor.
Replying the submissions of Appellant in Company Appeal (AT) No. 157 of 2022, Learned Counsel submits that when CIRP has begun on 29th May, 2018, no scheme or arrangement, no proceeding for approval of the scheme or arrangement under Companies Act could have proceeded with and the scheme or arrangement if any could be submitted only by the Liquidator. Adjudicating Authority has rightly dismissed the Company Petition filed under Section 391 & 394 on the ground of initiation of Corporate Insolvency Resolution Process and Liquidation by Order dated 31st January, 2022.
We have considered the submissions of Learned Counsel for the parties and have perused the record.
CIRP against the Corporate Debtor-Shamken Cotsyn Limited commenced on 29th May, 2018. Resolution Professional issued Form-G twice but no Resolution Plan was either submitted or approved by the CoC. The CIRP period was coming to an end on 23rd February, 2019. In 11th CoC Meeting held on 18th February, 2019, CoC passed a Resolution to liquidate the Corporate Debtor after noticing that no Resolution Plan has been received in the CIRP and the Plan which was submitted in pursuance of issuance of Form-G, was withdrawn by the Resolution Applicant. In 11th CoC meeting, Mr. Pravin Bansal was appointed as liquidator of the Corporate Debtor. Resolution Professional in pursuance of the Resolution dated 11.02.2019 filed an CA No. 86 of 2019 seeking liquidation which has been allowed by the Impugned Order. CoC having resolved by 100% voting share to liquidate the Corporate Debtor, we do not find any error in the decision of the CoC to liquidate the Corporate Debtor. When no Resolution Plan was received even after issuance of Form-G twice, the Adjudicating Authority had no option except to resolve for liquidation of the Corporate Debtor.
Learned Counsel for the Appellant has placed reliance on 12th CoC Meeting held on 22nd July, 2021 in item no. 6 it was noticed by the CoC that Resolution Plan on 23rd March, 2021 through an email from Mr. S.N. Sharma has been received which email was forwarded to all members of CoC. The email by which Resolution Plan was claimed to be sent, the Resolution Applicant was noticed but CoC did not decide to revisit its earlier decision to liquidate the Corporate Debtor.
When no Resolution Plan having been deliberated or received in the 11th CoC meeting, any email by the Resolution Applicant after close of the period of CIRP, is meaningless and could not have put the clock back. We thus do not find any substance in the submission of Learned Counsel for the Appellant that the email received by the Resolution Applicant which was placed in CoC Meeting dated 22nd July, 2021 ought to have considered. The decision of the liquidation is validly taken by the CoC. We thus do not find any good ground to interfere with the Order passed by the Adjudicating Authority in C.A. No. 86/ALD/2019 filed by the Resolution Professional for liquidation. C.A. No. 64/ALD/2019 as filed by the Suspended Director of the Corporate Debtor-Mr. Sanjay Chaturvedi, was rightly rejected. There is no merit in the Appeal. Company Appeal (AT) Ins. No. 333 of 2022 is dismissed.
Now coming to Company Appeal (AT) No. 157 of 2022 filed by the Appellant, ex-Director of the Corporate Debtor, the Adjudicating Authority held Company Petition filed under Section 391/394 of the Companies Act, 1956 as infructuous. In paragraph 8 and 9 of the Order, following has been observed.
“8. It is noted that the present case is pending before this Adjudicating Authority from 2017 and in the meantime the company has went into CIRP on 29.05.2018 and subsequently liquidation order was also passed on 31.01.2022. The pendency of appeal before the Hon’ble Supreme Court will not have any bearing in the present matter as the liquidation order has already been passed. In any case, any scheme or arrangement with the creditors can now be brought only by the Liquidator once the Liquidator is appointed by this Adjudicating Authority under IBC.
Therefore, no useful purpose would be served in keeping this petition pending as the liquidation has already been initiated, thus, the present petition is dismissed as infructuous. Liberty is, however, available to the Liquidator to move the Adjudicating Authority in case there is a viable scheme and the same meets with the requirements of law.”
CIRP has been initiated against the Corporate Debtor on 29.05.2018 which Order was never challenged and subsequently the Order of Liquidation has been passed on 31st January, 2022. There is no occasion for consideration of any scheme or arrangement which was pending consideration since the year 2008. After a moratorium has been imposed on Section 14, all the proceedings have to keep in abeyance. Further when Order of Liquidation has been passed on 31st January, 2022, any scheme or arrangement can only be placed by the Liquidator for consideration before the Adjudicating Authority. Adjudicating Authority in paragraph 8 has made following observation:
““8. …. In any case, any scheme or arrangement with the creditors can now be brought only by the Liquidator once the Liquidator is appointed by this Adjudicating Authority under IBC.”
We have already upheld the Order of the Liquidation dated 31st January, 2022 while considering Company Appeal (AT) Ins. No. 333 of 2022. We thus do not find any merit in Company Appeal (AT) No. 157 of 2022 as observed by the Adjudicating Authority, any scheme or arrangement with the creditors can now be brought only by the Liquidator.
In view of the foregoing discussion, we do not find any merit in both the Appeals. Both the Appeals are dismissed.