One Page Series (04) by MS Mano Ranjani, Adv & IP #Ready to Read
In matter of M/s Thiru Arooran Sugar Ltd. With regards to commercial wisdom of COC, decision to liquidate the company
COURT
NCLT, Chennai, NCLAT, Chennai.
FACT OF THE CASE
1) Appellant is the Chairman & MD of CD & Respondent is the IRP/RP of CD.
2) Appellant is aggrieved by the liquidation order passed by NCLT, Chennai and appointment of the Liquidator.
3) Only one Rplan was received after 3 rounds of invitation which was rejected COC.
4) Appellant challenged the order for liquidation on the following grounds:
a) The revised compromise settlement offer for Rs.243Cr by promoters is 12% higher than the liquidation value of 217Cr, and it works out to 42.03% of aggregate claims admitted by the RP.
b) Employees and farmers dues will be paid by 100% and there are about 13341 sugar cane farmers, who will be affected with liquidation. Being classified as operational creditors, they rank in the lowest rung of priority for distribution of proceeds u/s 53 of IB Code.
c) NCLT failed to consider the efforts at resolving the debt of the CD in the teeth of IB Code which provides for liquidation in the event of failure of CIRP or non-receipt of Rplan within the specified period.
d) NCLT passed the order for liquidation even when certain interlocutory and miscellaneous application were pending before the Adjudicating Authority.
CASE LAWS
Kalpraj Dharamsi & Anr V Kotak Investment Advisors Ltd & Anr (by Supreme Court): Though there has been material irregularity in exercise of the powers by RP, however all those actions had approval of COC. NCLAT was not correct in law in interfering with the commercial decision taken by COC by a thumping majority.
JUDGEMENT
Decision of COC takes pivotal seat based on commercial wisdom and taking notice that 76.02% voted against Rplan, the liquidation order passed by NCLT is free from legal infirmities, hence the appeal gets dismissed.
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About the Author: MS Mano Ranjani – MBA, LLM (Corporate Laws); Corporate and Commercial laws practitioner, legal and management consultant and also an Insolvency Professional qualified under provisions of the Insolvency Bankruptcy Code 2016. She is one of the partners of MetLaws, a family run legal firm based out of Hyderabad. MS Mano Ranjani has 25 years of rich and diverse experience in the corporate world associated with multinationals like Procter & Gamble India Limited, Hindustan Lever Limited and an educational institute like ICFAI University (Icfai Business School) before being qualified as Insolvency Professional and practicing Advocate. She is into Corporate and Commercial laws practicing at various courts including the National Company Law Tribunals, Debt Recovery Tribunals, Commercial Courts, High Courts etc.
She can be reached at 9848559322.
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