It set aside an August 7, 2018 order of the Mumbai bench of the National Company Law Tribunal that dismissed erstwhile promoters’ plea for revival of the Amar Dye Chem.
The National Company Law Appellate Tribunal (NCLAT) has held that the erstwhile promoter of a company undergoing liquidation under the old Companies Act among its other members — and not just the liquidator — can make an attempt for its revival.
It set aside an August 7, 2018 order of the Mumbai bench of the National Company Law Tribunal (NCLT) that dismissed erstwhile promoters’ plea for revival of the Amar Dye Chem.
Citing a Delhi High Court order, NCLAT said: “The judgment in the matter of National Steel & General Mills Versus Official Liquidator makes it quite clear that liquidator is only an additional person and not exclusive person who can move application under Section 391 of the old (Companies Act) when the company is in liquidation.”
Liquidation of companies now takes place under the Insolvency and Bankruptcy Code (IBC). Legal experts denied any mismatch between Section 29 (A) of the Insolvency and Bankruptcy Code (IBC) that prohibits a defaulting promoter from submitting a resolution plan for an insolvent firm and Section 391 (1) of the Companies Act that allows an ex-promoter to seek revival of a company in liquidation.
The NCLT had said: “When it comes to a company in liquidation, it has been clearly said that liquidator alone is authorised to file company petition either for compromise or arrangement in respect of the company in liquidation.”
Amar Dye Chem was incorporated in May, 1954. It was referred to the Board of Industrial and Financial Reconstruction (BIFR) in April 1993. The high court admitted the winding up petition in December 1998.
Coming to a conclusion that NCLT did not examine the matter on its merits, the NCLAT directed the NCLT to give one opportunity to the appellant to move the Bombay High Court to “ensure that the scheme and liquidation/ winding up proceedings are before one and same forum.” It asked related parties to appear before NCLT on July 26, 2019.
“The NCLAT judgment clarifies that in the cases where companies are undergoing liquidation as per the Companies Act, then in addition to the liquidator, under Section 391 of the Companies Act even the members of such companies can also file an application for compromise or arrangements with creditors and members. It clarifies that liquidator is an additional person,”said Ashish Pyasi, principal associate with Dhir and Dhir Associates.
“This judgment would be of some help for the members of the companies which are undergoing liquidation under the companies act and not to the companies in liquidation under the IBC.
“The IBC is a code in itself and there is no such provision for compromise provided under the IBC for such companies,” he added.