A two-member NCLAT bench, whereas dismissing a petition filed by Vallal RCK, mentioned if the National Company Law Tribunal (NCLT) is just not in receipt of a resolution plan after the expiry of the utmost interval of 330 days, then the liquidation of the company debtor is to ensue.
“If the time period for Corporate Insolvency Resolution Period (CIRP) was extended but the Resolution Plan was not accepted by NCLT then liquidation of the company can be ordered under Section 33 of the I & B Code. Timely liquidation is preferred over fruitless and endless Resolution proceeding,” the NCLAT mentioned.
The Chennai bench of the NCLT had on August 12, 2021 rejected a settlement plan supplied by the promoters beneath Section 12A of the Insolvency and Bankruptcy Code (IBC) and directed initiating liquidation proceedings towards Siva Industries.
This order was challenged by Vallal RCK, father of Siva group founder C Sivasankaran.
Under Section 12A of the IBC, the NCLT can allow withdrawal of an ongoing insolvency course of towards an organization topic to sure situations. Such utility is filed by the corporate with 90 per cent votes of the Committee of Creditors (CoC).
In his petition, Vallal had contended that his settlement proposal initially obtained 70.63 per cent votes.
However, International Assets Reconstruction Co Ltd, having 23.60 per cent voting share, later determined to alter its vote to approve the promoter’s settlement proposal.
After that, one other assembly of CoC was held, which on April 6, 2021 accepted the Rs 333.21 crore settlement provide with a haircut of 93.5 per cent.
Following this, the resolution skilled of the corporate filed an utility beneath Section 12A to withdraw insolvency proceedings towards Siva Industries.
However, passing an order on August 12, 2021, the NCLT not solely dismissed the proposal but additionally directed to provoke liquidation proceedings towards the corporate.
“There is no finality reached between the promoter of the Corporate Debtor and the CoC as per clause…of the Settlement proposal; hence based on ambiguity of terms of settlement, we cannot order for withdrawal of the CIRP,” NCLT had mentioned.
This was challenged by Vallal earlier than the appellate insolvency tribunal NCLAT, which final week dismissed his plea and upheld the order to provoke insolvency proceedings.
Insolvency proceedings towards Siva Industries and Holdings Ltd was initiated in July 2019 after a default of almost Rs 5,000 crore.