Alerts & Updates

IBC | Case Law Alert | Liquidation Order not a bar to pass appropriate orders u/s 230 of the Companies Act, 2013

Banking & Finance | Jul 18, 2018

The National Company Law Appellate Tribunal (“NCLAT”) has in the matter of Arun Kumar Jagatramka vs Gujarat NRE Coke Ltd., order dated 10 July 2018 (available here), held that a liquidation order passed by the National Company Law Tribunal (“NCLT”) under the Insolvency and Bankruptcy Code, 2016 (“Code”) will not come in the way of the NCLT to pass appropriate order in accordance with law on the petition filed under Section 230 of the Companies Act, 2013 (power to compromise or make arrangements with creditors and members) which should not be in conflicted with the provisions of the Code.

Factual Matrix:

1. A liquidation order dated 11 January 2018 (“Liquidation Order”) was passed by the NCLT Kolkata against Gujarat NRE Coke Limited (“Corporate Debtor”) in absence of approval of resolution plan and in want of time beyond 270 days, under Section 33 of the Code.

2. The promoters of the Corporate Debtor filed an appeal before the NCLAT against the Liquidation Order on the submissions for exclusion of time period from 270 days and plea under Section 230 of the Companies Act, 2013 that even during the period of liquidation, the corporate debtor can compromise with the creditors or shareholders or other members.

3. Learned counsel for the appellant also submitted that application under Section 230 of the Companies Act, 2013 is pending before the NCLT, Kolkata Bench, which is likely to be taken up in near future and the meeting of shareholders will take place on 16 July 2018.

Observations of NCLAT:

1. The NCLAT declined to exclude any period for the purpose of counting the period of 270 days of ‘insolvency resolution process’ in absence of any valid ground and thereby did not interfere with the Liquidation Order.

However, it made it clear that the instant order passed by the NCLAT and Liquidation Order passed by the NCLT Kolkata will not come in the way of the NCLT to pass appropriate order in accordance with law on the petition filed under Section 230 of the Companies Act, 2013 which should not be in conflicted with the provisions of the Code.

Related Articles

Alerts & Updates Litigation, Arbitration & Dispute Resolution

ELP Arbitration Weekly Update 26 September 2018

SC Rules: When a dispute resolution clause provides that...

Alerts & Updates Litigation, Arbitration & Dispute Resolution

ELP Arbitration Weekly Update 23 August 2018

In this week’s alert we update our readers on what has...

Alerts & Updates Litigation, Arbitration & Dispute Resolution

ELP Arbitration Weekly Update 13 October 2018

In this week’s update, we analyse a recent judgment of...

Alerts & Updates Litigation, Arbitration & Dispute Resolution

ELP Arbitration Update 23 August 2018

This week, we have analyzed the Bombay High Court’s...