Tribunal upholds decision on ineligibility for scheme of arrangement under Companies Act.

The Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision that the Appellant was ineligible to submit a scheme of compromise or arrangement under Sections 230-232 of the Companies Act, 2013, due to statutory bars under Section 29A and Regulation 2B. The Tribunal found no procedural irregularity and referenced previous judgments, including the Supreme Court's ruling in Arun Kumar Jagatramka, to support its decision. The appeal was therefore dismissed, affirming the original ruling on preferential transactions and ineligibility under the IBC.

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Issues Involved:
1. Preferential transactions under Section 43 of the IBC, 2016.
2. Ineligibility under Section 29A of the IBC, 2016.
3. Application of Regulation 2B of the Liquidation Process Regulations, 2016.
4. Convening of the Meeting of Creditors.
5. Applicability of previous judgments and orders.

Detailed Analysis:

Preferential Transactions under Section 43 of the IBC, 2016:
The Adjudicating Authority found the ex-Promoters/ex-Directors guilty of preferential transactions under Section 43 of the IBC, 2016. Specifically, the transaction amounting to Rs. 10,09,360 with Respondent No.5 was held as a preferential transaction. This finding was not stayed by any higher authority, thus remaining in effect.

Ineligibility under Section 29A of the IBC, 2016:
The core issue was whether the Appellant, being ineligible under Section 29A, could make an application for a scheme of compromise and arrangement under Sections 230-232 of the Companies Act, 2013. The Tribunal referred to precedents, including the Supreme Court's judgment in Arun Kumar Jagatramka v. Jindal Steel and Power Ltd., which clarified that ineligibilities under Section 29A extend to schemes of compromise and arrangement during liquidation. This is to prevent promoters from re-entering the company through a back-door mechanism.

Application of Regulation 2B of the Liquidation Process Regulations, 2016:
Regulation 2B(1) explicitly states that a person ineligible under the IBC to submit a resolution plan cannot participate in any compromise or arrangement. The Tribunal upheld the constitutional validity of this regulation, reinforcing that the Appellant, found guilty of preferential transactions, was barred from proposing a scheme of compromise or arrangement.

Convening of the Meeting of Creditors:
The Appellant argued that the Liquidator had wrongly excluded the 4th Respondent from the Meeting of Creditors. However, the Tribunal noted that the previous order directed the matter to be placed before the creditors, which was complied with, and the scheme was rejected. The Tribunal found no procedural irregularity in this process.

Applicability of Previous Judgments and Orders:
The Tribunal referenced multiple judgments, including the Supreme Court and previous NCLAT decisions, to substantiate its findings. The judgment in Arun Kumar Jagatramka was particularly pivotal, as it reinforced that promoters ineligible under Section 29A could not propose schemes during liquidation. The Tribunal also noted that the Appellant's reliance on the order allowing recourse under Section 230 was misplaced, as it did not override the statutory ineligibilities.

Conclusion:
The Tribunal dismissed the appeal, concluding that the Appellant was ineligible to submit a scheme of compromise or arrangement under Sections 230-232 of the Companies Act, 2013, due to the statutory bar under Section 29A and Regulation 2B. The dismissal of the interlocutory application by the Adjudicating Authority was upheld, and no material irregularity or patent illegality was found in the impugned order.

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