Scheme approval process under section 230 cannot justify blanket restraint on creditors' contractual and regulatory rights.

At the first-motion stage of a scheme under section 230 of the Companies Act, 2013, the Tribunal may facilitate convening meetings of creditors or members and appoint officers for that purpose. It should not impose blanket restraints that interfere with creditors' contractual rights or regulatory obligations, including status quo directions, NPA classification, or coercive action, because the approval process depends on the creditors' independent consideration of the scheme. The order directing meetings was upheld, but the restrictive directions were set aside as unnecessary and beyond the proper scope of first-motion proceedings.

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Issues: Whether, while ordering convening of creditors' meetings under a scheme of arrangement, the Tribunal could also direct the creditors to maintain status quo, refrain from classifying the debtor's account as NPA, and avoid coercive steps pending consideration of the scheme.

Analysis: In proceedings under section 230 of the Companies Act, 2013, the first motion is meant to consider convening meetings of creditors or members so that the proposed arrangement may be placed before them for approval by the prescribed majority. The Tribunal was justified in directing convening of the meetings and appointing the necessary officers for that purpose. However, the further direction restraining creditors from acting in accordance with their contractual rights and regulatory obligations, including classification of the account under the RBI framework and taking coercive steps, was found to be unnecessary and beyond the proper scope of the first-motion stage. The approval process itself depends on the creditors' independent decision, and such a blanket restraint was not warranted.

Conclusion: The direction imposing status quo and restraining NPA classification and coercive action was set aside, while the rest of the impugned order was sustained.

Ratio Decidendi: At the first-motion stage of a scheme under section 230 of the Companies Act, 2013, the Tribunal may facilitate convening of meetings but should not impose blanket restraints that interfere with creditors' regulatory and contractual rights pending consideration of the scheme.

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