2022 (8) TMI 233 - AT - Insolvency and Bankruptcy

Tribunal allows appeal, dispenses with meeting of creditors, sets aside NCLT order, grants liberty for scheme sanctioning process.

The Tribunal allowed the appeal, dispensed with the meeting of unsecured creditors, set aside the NCLT order, and granted liberty to the Appellants to ... Dispensing with meeting of unsecured creditors - convening of creditors' meeting - scheme of arrangement under Sections 230 to 232 of the Companies Act, 2013 - solvency of the company - payment to unsecured creditors before convening meetingDispensing with meeting of unsecured creditors - solvency of the company - payment to unsecured creditors before convening meeting - Whether the direction of the NCLT to convene a meeting of unsecured creditors of the demerged company required continuation when all unsecured creditors had been fully paid after the impugned order. - HELD THAT: - The NCLT had directed convening of a meeting of the 49 unsecured creditors of the demerged company. The appellants produced a solvency certificate and particulars showing 49 unsecured creditors with the stated aggregate outstanding as on 31.12.2021. Subsequent to the NCLT order, the appellants furnished material showing that the outstanding dues to all unsecured creditors were settled by 06.06.2022 and confirmed in the Notes on Submission filed during the appeal. Given that there was no longer any outstanding liability to the unsecured creditors and without addressing the merits of the scheme itself, the Tribunal concluded that a creditors' meeting was no longer warranted and that the NCLT direction to convene the meeting should be set aside. [Paras 7, 8, 9, 10]The direction to convene the meeting of unsecured creditors is dispensed with and the NCLT order directing such meeting is set aside.Final Conclusion: The appeal is allowed: the NCLT direction to convene the meeting of unsecured creditors of the demerged company is dispensed with and the impugned order is set aside; appellants have liberty to proceed to seek sanction of the scheme in accordance with law; no order as to costs. Issues:- Appeal filed under Section 421 of the Companies Act, 2013 against NCLT order directing convening of unsecured creditors' meeting.- Dispensing with meetings of equity shareholders, secured and unsecured creditors in a scheme of demerger.- Appellant's contention of being financially sound and solvent without compromising stakeholders.- Settlement of outstanding dues of unsecured creditors after the NCLT order.- Tribunal's decision based on full payment to unsecured creditors and dispensing with the meeting.Analysis:Issue 1: The appeal challenged the NCLT order directing the convening of a meeting of unsecured creditors of the Appellant No.1 Company. The Appellant argued that the company was financially sound, solvent, and the scheme did not compromise any stakeholders. The NCLT had directed the meeting despite the company's positive net worth and solvency.Issue 2: The Appellant cited a previous judgment and argued for dispensing with meetings of equity shareholders, secured, and unsecured creditors. The Appellant emphasized that the company had 49 unsecured creditors with a total value of Rs.1,09,49,683, and no compromise was made with any creditors.Issue 3: The Appellant presented evidence of settling outstanding dues of unsecured creditors after the NCLT order was passed. The list of unsecured creditors showed that all 49 creditors had been fully paid, indicating the company's commitment to meeting its obligations.Issue 4: After considering the submissions and evidence, the Tribunal found that all unsecured creditors had been fully paid. As a result, the Tribunal concluded that no meeting of unsecured creditors was necessary. The Tribunal dispensed with the direction to convene the meeting, set aside the impugned order, and allowed the Appellants to proceed with filing a petition for sanctioning the scheme.In conclusion, the Tribunal allowed the appeal, dispensed with the meeting of unsecured creditors, set aside the NCLT order, and granted liberty to the Appellants to proceed with the scheme sanctioning process.