Section 230 compromise cannot obstruct liquidation under the Insolvency and Bankruptcy Code once the company is already in liquidation.

A scheme of compromise and arrangement under Section 230 of the Companies Act, 2013 was considered unavailable at the liquidation stage under the Insolvency and Bankruptcy Code. The Tribunal treated liquidation as a last-resort regime and held that Section 230 cannot be used to obstruct or delay liquidation once the corporate debtor is already in liquidation, particularly where the proposal would amount to a bypass of the insolvency framework. The proposed MSME classification and Section 29A objections were left unanswered because they were unnecessary in light of the Section 230 conclusion. The challenge to the rejection of the scheme application therefore did not succeed.

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Issues: Whether a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013 could be pursued at the liquidation stage under the Insolvency and Bankruptcy Code, and whether the appeals were liable to be dismissed.

Analysis: The liquidation stage under the Insolvency and Bankruptcy Code was treated as a regime of last resort, and the attempt to revive the corporate debtor through a Section 230 scheme was found to be inconsistent with the scheme of the Code when the company was already in liquidation. Reliance was placed on the binding principles that the Code and Section 230 must be read harmoniously, but that such compromise or arrangement cannot be used by the very management that led to liquidation to bypass the insolvency framework or cause delay in liquidation. The Tribunal also declined to enter into the proposed MSME classification and Section 29A debate, holding that it was unnecessary to do so in view of the conclusion on Section 230.

Conclusion: The attempt to invoke Section 230 of the Companies Act, 2013 at the liquidation stage was not accepted, and the appeals failed.

Final Conclusion: The liquidation proceedings were allowed to continue without interference, and the challenge to the rejection of the scheme application and related reliefs did not succeed.

Ratio Decidendi: A scheme of compromise or arrangement under Section 230 of the Companies Act, 2013 cannot be pressed into service to obstruct or delay liquidation under the Insolvency and Bankruptcy Code when the corporate debtor is already in liquidation.

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