2019 (6) TMI 77 - AT - Companies Law

Appellate Tribunal allows consolidation of scheme and liquidation proceedings, High Court intervention possible.

Rasiklal S. Mardia Versus Amar Dye Chem Limited (In Liquidation), The Regional Director, Registrar of Companies, Maharashtra

The Appellate Tribunal set aside the NCLT's order, allowing the Appellant to move the High Court to ensure consolidation of the scheme and liquidation ... Approval of the scheme of compromise/arrangement - Sections 391/394 read with Sections 80, 81, 100 and 103 of The Companies Act, 1956 - whether or not the promoter directors or some of the shareholders of a company in liquidation can file an application under Section 391(1) of the Companies Act, 1956/Section 230(1) of the Companies Act, 2013 seeking arrangement as sought in this application? HELD THAT:- Liquidator is only an additional person and not exclusive person who can move application under Section 391 of the old Act when the company is in liquidation. Looking to these Judgements, we are unable to support the view taken by NCLT that the Appellant could not have filed the Petition under Section 391 of the old Act. In the present matter, the Appellant had filed the proceedings before Hon’ble Company Court but it appears to have got transferred to NCLT by an Office letter dated 7th January, 2017 (Page – 77). It does not appear that there was any Judicial Order to transfer. The Appellant cannot be held responsible for the transfer. However, now when the issue appears to be going to the root of jurisdiction, although we propose to remand back the matter to the NCLT, it appears to us that the present proceedings in NCLT should remain stayed giving opportunity to the Appellant to move the Hon’ble High Court to ensure that Scheme filed in Liquidation/winding up proceeding and Liquidation/winding up proceeding should be before same forum. A scheme of compromise and arrangement can be filed even when liquidation proceeding is pending but if such application/petition is filed, it would be a proceeding relating to the winding up going on and the same has to be in the same forum. The Impugned Order of NCLT is set aside and TCSP 1 of 2017 restored on the file of the National Company Law Tribunal, Mumbai Bench with a further direction that the NCLT will give one opportunity to the Appellant to move the Hon’ble High Court of Bombay – Company Court to ensure that the Scheme and Liquidation/winding up proceedings are before one and same forum. Interim Order dated 01.10.2018 passed in this appeal at the stage of admission shall stand lapsed. Issues Involved:1. Locus Standi of the Appellant to file a scheme of compromise/arrangement.2. Jurisdiction of NCLT to adjudicate the application for the scheme of compromise/arrangement.3. Merits of the scheme of compromise/arrangement proposed by the Appellant.Issue-wise Detailed Analysis:1. Locus Standi of the Appellant to file a scheme of compromise/arrangement:The Appellant, an ex-chairman and shareholder of Amar Dye Chem Limited (In Liquidation), challenged the NCLT’s dismissal of his petition for approval of a scheme of compromise/arrangement under Sections 391/394 of the Companies Act, 1956. The NCLT dismissed the petition on the ground of locus standi, asserting that only the liquidator could file such a petition once the company was in liquidation. The Appellant argued that the Hon’ble High Court had previously given him liberty to submit a revival scheme, which implied his locus to file the scheme. The Appellant cited judgments indicating that the liquidator is an additional, not exclusive, person who can move an application under Section 391 of the old Act.2. Jurisdiction of NCLT to adjudicate the application for the scheme of compromise/arrangement:The NCLT’s jurisdiction was questioned based on the Notification No. GSR 1119(E) dated 7th December 2016, which transferred certain proceedings to NCLT. The Respondent argued that the transfer of proceedings from the High Court to NCLT was incorrect, as winding-up proceedings should remain with the High Court to avoid conflicting orders. The Appellant contended that the NCLT misinterpreted the law by concluding that only the liquidator could file the petition. The Appellate Tribunal referenced the judgment in “Sunil Gandhi and Ors. Vs. A.N. Buildwell Private Limited and Ors.” which stated that the Company Court has exclusive jurisdiction over such matters, even after the notification.3. Merits of the scheme of compromise/arrangement proposed by the Appellant:The NCLT did not delve into the merits of the scheme proposed by the Appellant, focusing instead on the locus standi issue. The Respondent Official Liquidator opposed the scheme, suggesting that the Appellant was merely delaying the liquidation process. The Tribunal noted that objections to the scheme were raised by various stakeholders, including the Official Liquidator, Regional Director, workmen, and creditors. The Appellate Tribunal acknowledged that the merits of the scheme should be examined by the appropriate forum, which, according to the judgment in “Sunil Gandhi,” should be the Company Court.Conclusion:The Appellate Tribunal set aside the NCLT’s order, restoring the petition on NCLT’s file but directing that the Appellant be given an opportunity to move the High Court to ensure that both the scheme and liquidation proceedings are before the same forum. If the High Court issues an order, NCLT is to act accordingly; otherwise, NCLT should reject the petition for the reasons discussed. The interim order preventing the sale/auction of the company's assets was allowed to lapse.