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The National Company Law Appellate Tribunal (NCLAT) has dismissed serial entrepreneur C Sivasankaran’s plea against the National Company Law Tribunal (NCLT) order on liquidation of Siva Industries. Sivasankaran is the founder of Siva Industries.
Justice M Venugopal, Member (Judicial) and VP Singh, Member (Technical), NCLAT, in the order on January 28, said, “this Tribunal comes to a resultant conclusion that the Adjudicating Authority had rightly come to the legitimate and reasonable conclusion that the Corporate Debtor was required to be ordered for liquidation, in terms Section 33(1)(a) of the Code, 2016 and the same requires no interference. Viewed in that perspective, the Company Appeal fails.”
“In fine, the Company Appeal is dismissed. No costs. Connected pending Application, if any, is closed,” the order said after hearing the case of RCK Vallal (appellant), promoter of Siva Industries and father of Sivasankaran, versus Siva Industries (in liquidation and the first respondent).
The NCLT in September ordered liquidation of Siva Industries and rejected lenders’ proposal to withdraw the company from bankruptcy proceedings. It had also rejected the application filed by Resolution Professional of Siva Industries.
The promoters of Siva Industries had proposed to pay ₹328.21 crore to IDBI Bank-led consortium of lenders as a one-time settlement plan to withdraw the company from proceedings under the IBC at NCLT. Siva Industries’ debt is about ₹4,863 crore and the settlement plan amounted to a haircut of about 93.5 per cent for banks. Under the offer, which was approved by the lenders in early April, the promoters would pay only ₹5 crore upfront and the balance within 180 days of approval.
Liquidation allowed
The NCLAT in its order said that the I & B Code, 2016 is not permitting ‘Liquidation Of a Corporate Debtor’ in a direct manner. Upon failure of the ‘Corporate Insolvency Resolution Process’, the Code allows liquidation.
If the ‘Adjudicating Authority’ is not in receipt of Resolution Plan on or before the expiry of the Maximum Period allowed for completion of the Insolvency Resolution Plan, then, liquidation of the ‘corporate debtor’ is to ensue.
If at any time prior to the confirmation of a Resolution Plan, the ‘committee of creditor’ resolve by a 66 per cent majority of voting shares where the ‘corporate debtor’ is to be liquidated, then, the liquidation may follow suit.
In the instant case on hand, the Applicant/Resolution Profession of the First Respondent had filed the resolution plan at NCLT after the lapse of 330 days period of CIRP pertaining to the corporate debtor. A mere cursory perusal of the contents shows that the applicant/Resolution Professional had not made mention of the ‘liquidation value’ concerning the ‘corporate debtor, the order said.
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