The liquidator is only an additional person and not an exclusive person to file a scheme of arrangement under section 230 of the Companies Act, 2013
By INSOL India Editorial Team Posted On : May 13, 2019
In an effort to explore the possibility of revival of debt ridden companies and address the interests of various stakeholders, instead of directing such companies under liquidation on failure of the corporate insolvency resolution process, the National Company Law Tribunal (“NCLAT”), in the case of Rasiklal S. Mardia v. Amar Dye Chem Limited, allowed the promoter director of Amar Dye Chem Limited (“Corporate Debtor”) to approach the High Court of Delhi with a plea to initiate a scheme of arrangement under Section 230 of the Companies Act, 2013.
The ex-chairman and shareholder (“Rasiklal”) of the Corporate Debtor, which was ordered to be liquidated under the Insolvency and Bankruptcy Code, 2016, had filed an appeal before the NCLAT being aggrieved by an order passed by the National Company Law Tribunal (“NCLT”) dismissing the scheme of arrangement proposed by Rasiklal between the Company, its creditors and members under Section 391 and394 of the Companies Act, 1956 and observing that for a company in liquidation, it is the liquidator alone who is authorised to file company petition either for compromise or arrangement in respect of the company in liquidation and such a petition should be exclusively dealt with by the High Court of Bombay.
On appeal, the NCLAT referred to the judgement of National Steel & General Mills Versus Official Liquidator which stated that the consensus of various High Courts is that the liquidator is an additional person and not an exclusive person who can move an application under Section 391 of the Companies Act, 1956. Such a general power of the liquidator cannot prevail or deprive the special power of the member, creditor and the company itself to move the court for compromise/arrangement under Section 391 of the Companies Act, 1956. Accordingly, while the NCLAT observed that the correct forum for such scheme is the NCLT, the NCLAT stayed the proceedings pending before the NCLT and granted an opportunity to Rasiklal to move the High Court of Bombay to ensure that the liquidation proceedings and the scheme filed in liquidation proceedings are filed before the same forum.