Tribunal Upholds Appeal, Stresses Company Revival Over Liquidation

The Tribunal condoned a six-day delay in filing the appeal and upheld the exclusion of only 100 out of 129 days during liquidation. Emphasizing the Liquidator's duty to ensure the company's revival, the Tribunal directed adherence to Sections 230-232 of the Companies Act, 2013 for the Corporate Debtor's revival. It stressed that liquidation should be a last resort and instructed the Liquidator to explore compromise or arrangement with creditors before resorting to asset sales. The appeal was disposed of with instructions for the Liquidator to follow the specified procedures for revival.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Exclusion of time period during liquidation.
3. Process and steps to be taken by the Liquidator during liquidation.
4. Revival of the Corporate Debtor under Sections 230-232 of the Companies Act, 2013.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The Tribunal condoned the delay of six days in preferring the appeal, stating, "Having heard learned counsel for the appellant and being satisfied with the grounds, the delay of six days in preferring the appeal is condoned." This was followed by the disposal of Interlocutory Application No.3935 of 2019.

2. Exclusion of Time Period During Liquidation:
The appeal was filed against the order of the Adjudicating Authority (NCLT), which excluded only 100 days out of the requested 129 days during the liquidation process. The Tribunal noted, "We find no reason to interfere with the impugned order dated 14th October, 2019." The appellant's argument for an additional 29 days due to the previous Liquidator's inaction was dismissed, as it was not considered a valid ground for exclusion.

3. Process and Steps to be Taken by the Liquidator During Liquidation:
The Tribunal emphasized that during liquidation, the Liquidator must ensure the company remains a going concern and take steps for its revival. Citing previous cases, it was noted, "During the liquidation stage, ‘Liquidator’ required to take steps to ensure that the company remains a going concern and instead of liquidation and for revival of the ‘Corporate Debtor’ by taking certain measures." The Tribunal reiterated the Supreme Court’s stance that liquidation should be a last resort and highlighted the Liquidator's duties under Section 35 of the I&B Code, including verifying claims, taking control of assets, and carrying on the business for beneficial liquidation.

4. Revival of the Corporate Debtor under Sections 230-232 of the Companies Act, 2013:
The Tribunal directed the Liquidator to follow the procedure under Sections 230-232 of the Companies Act, 2013, for the revival of the Corporate Debtor. It was noted, "The Liquidator will take steps in terms of Section 230 of the Companies Act, 2013." The Tribunal acknowledged that the process might take more than 90 days and allowed for an extension if there was a chance of approval of the arrangement or scheme. The Tribunal also instructed the Adjudicating Authority to play a dual role in overseeing liquidation and passing orders under Section 230, ensuring the scheme maximizes the Corporate Debtor's assets and balances stakeholders' interests. It was emphasized that the Liquidator should first attempt revival through compromise or arrangement with creditors before proceeding with asset sales.

Conclusion:
The appeal was disposed of with directions for the Liquidator to act in accordance with the decision in Y. Shivram Prasad by following the procedure of Sections 230-232 of the Companies Act, 2013, and to attempt the revival of the Corporate Debtor as a going concern before proceeding with the sale of assets.

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