Appeal directs Liquidator to follow Companies Act 2013 for Corporate Debtor revival

The appeal was disposed of with directions for the Liquidator to act in accordance with the judgment in "Y. Shivram Prasad Vs. S. Dhanapal & Ors." and take necessary steps under Section 230 of the Companies Act, 2013. The Tribunal underscored the importance of reviving the Corporate Debtor and avoiding liquidation as much as possible. The parties were ordered to act accordingly, and the Liquidator was instructed to take necessary steps in line with the judgment.

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Issues Involved:
1. Rejection of One Time Settlement (OTS) proposal.
2. Liquidation order passed by the Adjudicating Authority.
3. Steps to be taken during the liquidation process for revival and continuation of the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Rejection of One Time Settlement (OTS) Proposal:
The appellant, Promotor/Executive Director of the Corporate Debtor, contended that despite offering Rs. 8.5 Crores to settle the dues of the Corporate Debtor, which is an MSME, the Oriental Bank of Commerce rejected the OTS proposal without assigning any reason. The appellant had already paid 5% of the amount to show bona fide. The rejection was communicated through a letter dated 03.02.2020.

2. Liquidation Order Passed by the Adjudicating Authority:
The appeal was filed against the liquidation order dated 31.07.2019 passed by the National Company Law Tribunal, Bench-III, New Delhi. The appellant sought intervention in the liquidation order, arguing that the liquidation value of the company was Rs. 1.5 Crores, and efforts were made to settle the dues through the OTS proposal.

3. Steps to be Taken During the Liquidation Process for Revival and Continuation of the Corporate Debtor:
The Tribunal referred to the judgment in "Y. Shivram Prasad Vs. S. Dhanapal & Ors." and directed the Liquidator to take steps under Section 230 of the Companies Act, 2013, read with the provisions of the Insolvency and Bankruptcy Code (IBC). The Tribunal emphasized that liquidation should be the last resort, and efforts should be made to revive and continue the Corporate Debtor. The following steps were outlined:

- Compromise or Arrangement: The Liquidator should explore the possibility of a compromise or arrangement with creditors or members under Section 230 of the Companies Act, 2013.
- Sale as a Going Concern: If the compromise or arrangement fails, the Liquidator should attempt to sell the business of the Corporate Debtor as a going concern.
- Final Liquidation: Only if the above steps fail, the liquidation process should proceed to sell the company's assets wholly or in parts.

The Tribunal highlighted the beneficial nature of the IBC, which aims to protect the Corporate Debtor from liquidation and ensure its revival. The Liquidator was directed to verify claims, take custody of assets, and carry on the business for beneficial liquidation. The Adjudicating Authority was instructed to pass appropriate orders to facilitate the revival process.

Conclusion:
The appeal was disposed of with directions for the Liquidator to act in accordance with the judgment in "Y. Shivram Prasad Vs. S. Dhanapal & Ors." and take necessary steps under Section 230 of the Companies Act, 2013. The Tribunal underscored the importance of reviving the Corporate Debtor and avoiding liquidation as much as possible. The parties were ordered to act accordingly, and the Liquidator was instructed to take necessary steps in line with the judgment.

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