National Company Law Appellate Tribunal
K G Somani Liquidator vs Rajnish Gupta & Anr on 22 December, 2022
Author: Ashok Bhushan
Bench: Ashok Bhushan
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Insolvency) No. 1460 of 2022
IN THE MATTER OF:
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."
Company Appeal (AT) (Insolvency) No. 1460/2022 -3-
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