NCLAT Chennai Bench granted a final opportunity to resolve insolvency despite an existing liquidation order.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice Sharad Kumar Sharma (Judicial member) and Jatindranath Swain (Technical Member) ruled that despite the finality of the liquidation order, it could allow the Appellant a last chance to deposit the owed amount under Section 60(5) of the IBC to further the objectives of the CIRP and avoid rendering the proceedings futile, given the lack of alternative resolution plans and the support of the liquidator.
In this Company Appeal, the Appellant, a successful Resolution Applicant and Promoter of M/s. Topknit Processing Mills Pvt. Ltd., challenged the Adjudicating Authority's order dated 10.05.2024, which had rejected his request to stay the liquidation order dated 26.07.2023 and permit a deposit of Rs. 9,37,50,000 into the liquidation account. The Appellant argued that the rejection was arbitrary and lacked sufficient reasoning, claiming no effective hearing was provided.
The Appellant, who had successfully proposed a Resolution Plan approved on 20.06.2022, had already deposited some amounts but failed to meet the full payment terms within the specified timelines. Consequently, the Respondent filed for liquidation due to non-compliance. Despite an undertaking to deposit the balance amount by 17.07.2023, the Appellant did not meet this commitment, leading to the liquidation order.
At the appeal stage, both the liquidator and Respondent’s counsel indicated no objection to allowing the Appellant to deposit the remaining amount, given that no buyer for the Corporate Debtor had been found since liquidation began. The NCLAT considered that, despite the order's finality, the doctrine of necessity under Section 60(5) of the IBC might permit intervention to avoid futility and advance the CIRP’s objectives. Consequently, the NCLAT granted the Appellant a final opportunity to deposit the amount within one month, emphasizing that no further extensions would be granted. The appeal was allowed subject to this condition, and the Company Appeal was disposed of accordingly.
Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines Press Release and more.
Click on the Citation/Link to access these resources
Comments