2018 (10) TMI 1717 - Tri - Insolvency and Bankruptcy

Petition under Insolvency Code dismissed for lack of Central Government consent. Importance of statutory compliance highlighted.

A.J. AGROCHEM Versus DUNCANS INDUSTRIES LTD.

The Tribunal dismissed the petition under section 9 of the Insolvency and Bankruptcy Code due to the lack of consent from the Central Government as ... Admissibility of application - Initiation of Corporate Insolvency Resolution Process - inability to pay sum towards the supply of various pesticides and herbicides - requirement of consent from the Government under section 16G(1)(c) of the Tea Act, 1953 - section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Section 16G(1)(c) of the Tea Act states that no proceeding for the winding up of such company or for the appointment of receiver in respect thereof shall lie in any court except with the consent of the Central Government. This provision is applicable to tea companies of which the management is taken over by the Central Government or Tea Board before investigation of affairs of such company or otherwise. In this case, admittedly by Notification No. S. O. 260(E), dated January 28, 2016, Tea Board of India (Ministry of Commerce and Industries) has taken over the affairs and management of the corporate debtor tea company. This petition under section 9 of the I and B Code is not maintainable without consent of the Central Government - this petition under section 9 of the I and B Code cannot be admitted unless the operational creditor seeks consent from the Central Government as per section 16G(1)(c) of the Tea Act, 1953 - petition dismissed. Issues Involved:1. Maintainability of the petition under section 9 of the Insolvency and Bankruptcy Code, 2016 without consent from the Government under section 16G(1)(c) of the Tea Act, 1953.2. Impact of the Government Notification dated January 28, 2016 on the petition's maintainability.3. The second petition's maintainability when an earlier petition for the same relief was rejected by the authority.Analysis:Issue 1:The key contention revolved around whether the petition under section 9 of the I and B Code was maintainable without the consent of the Central Government as required by section 16G(1)(c) of the Tea Act, 1953. The Tea Board of India had taken over the management of the corporate debtor by a notification, making it arguable that the petition lacked the necessary consent.Analysis:The Tribunal found that the petition was not maintainable without the Central Government's consent, as the Tea Board had taken over the affairs of the corporate debtor. The argument that the Tea Act's provisions were no longer applicable due to the corporate debtor's control not being under the Government was dismissed, emphasizing the importance of the Government's notification in such matters.Issue 2:The impact of the Government Notification dated January 28, 2016 on the petition's maintainability was another crucial point of contention. The operational creditor argued that the notification was challenged in the High Court, and the affairs of the tea estates were under the corporate debtor's control as an interim measure.Analysis:The Tribunal noted that while the notification was under judicial review, the control of the affairs of the corporate debtor and the tea estates remained with the Central Government/Tea Board. This reaffirmed the view that the petition could not proceed without the Government's consent, despite interim arrangements.Issue 3:The final issue centered on the second petition's maintainability after an earlier petition for the same relief was rejected by the authority. The corporate debtor contended that the second petition should be dismissed on these grounds.Analysis:The Tribunal rejected the corporate debtor's argument, stating that the earlier petition's rejection was based on a technicality regarding the notice under section 8 of the I and B Code. It was clarified that a notice could be sent by an authorized representative of the operational creditor, as established in a Supreme Court case. Therefore, the rejection of the earlier petition did not bar the filing of a subsequent petition.In conclusion, the Tribunal dismissed the petition under section 9 of the I and B Code due to the lack of consent from the Central Government as mandated by the Tea Act, 1953. The order highlighted the necessity of complying with statutory requirements, ultimately leading to the rejection of the petition.