The NCLAT, Principal Bench New Delhi opined that that during Liquidation period, an application under Section 12A is not permissible. It was ruled that Regulation 31A of the IBBI (Liquidation Process) Regulations, 2016, did not require constitution of SCC with regard to the Liquidation which has commenced years ago from the provision for SCC came into the Regulation.
Brief Facts:
Corporate Insolvency Resolution Process (`CIRP’) of the Corporate Debtor M/s. Hind Motors India Ltd. was commenced on an Application filed by the Corporate Debtor itself.
The NCLT passed an order of liquidation. The Respondent No. 2 , the Promoter and former Director challenged the Liquidation Order, which appeal was dismissed by the NCLAT.
Liquidator issued an e-Auction Notice, former Director also filed an Application seeking stay of the sale.
The NCLT rejected the application filed by the Appellant holding that application was not maintainable under 12A of the Insolvency and Bankruptcy Code, 2016 (‘IBC’).
Hence, the appeals.
Contentions of the Appellants:
It was argued that Liquidator was proceeding to sell the Assets of the Corporate Debtor without constituting a Stakeholders Consultation Committee (‘SCC’).
Contentions of the Liquidator:
It was contended that Regulation requiring Constitution of SCC applies when Liquidation commencement is subsequent to the amendment in the Regulation.
Observations of the Tribunal:
It was observed that under IBC, withdrawal of Application is permissible only during CIRP period with the approval of 90% vote shares of the CoC. The Scheme of Liquidation and the Liquidation Regulations do not contemplate any withdrawal under Section 12A.
Therefore, in the Liquidation Process, Compromise or Arrangement is contemplated as per Regulation 2B which clearly negated the submission of the Appellant that withdrawal is permissible only under Section 12A.
The Bench opined that that during Liquidation period, an application under Section 12A is not permissible. It was ruled that Regulation 31A of the IBBI (Liquidation Process) Regulations, 2016, did not require constitution of SCC with regard to the Liquidation which has commenced years ago from the provision for SCC came into the Regulation.
The decision of the Tribunal:
Based on aforementioned facts and findings, appeal was rejected.
Case Title: Asha Chopra & Ors. v. M/s. Hindu Motors India limited & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 1425 – 1428 of 2024 &
Coram: Justice Ashok Bhushan, Barun Mitra (Technical Member), Arun Baroka (Technical Member)
Advocates for Appellants: Advs. Mr. Saket Sikri, Ms. Anannya Ghosh, Mr. Ajay and Mr. Brian Moses
Advocate for Respondents: Adv. Mr. Kamal Satija
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