Corporate Entity Starts in Clean State on Rejuvenation on Approval of Resolution Plan by NCLT: Calcutta HC [Read Order]
The High Court struck off the names of Defendant No. 1 and Defendant No. 5 from the list of parties involved in the case
Calcutta High Court – Approval of Resolution Plan by NCLT – Corporate Entity Starts in Clean State – Calcutta High Court held that after the insolvency proceeding is over – taxscan
Calcutta High Court – Approval of Resolution Plan by NCLT – Corporate Entity Starts in Clean State – Calcutta High Court held that after the insolvency proceeding is over – taxscan
The Calcutta High Court held that after the insolvency proceeding is over and the resolution plan is duly approved by the National Company Law Tribunal ( NCLT ), the corporate entity starts with a clean slate on rejuvenation.
The department contended that M/s Ramswarup Lohh Udyog & Ors, Defendant No. 1 merged with Defendant No. 5 in the year 2008 in terms of the Order dated 30th June 2008 passed by this Court. Therefore, Defendant No. 1 ceased to exist.
Defendant No.5’s operation was shut down for more than fourteen years and the Corporate Insolvency Resolution Process was initiated National Company Law Tribunal, Kolkata Branch under the Insolvency and Bankruptcy Code, 2016. The resolution plan was subsequently approved in the meeting of the Committee of Creditors on March 16, 2019, which was approved more or less by the NCLT, Kolkata Branch in terms of an Order dated 04/09/2019. In terms of the Order dated 06/04/2022, the NCLT directed the parties to implement the approved resolution plan within thirty days.
The Counsel for the Petitioner submitted that it is no longer res integra that after the insolvency proceeding is over and the resolution plan is duly approved, the corporate entity starts with a clean slate on rejuvenation.
The division bench of Justice Sugato Majumdar held that once insolvency proceedings are concluded and a corporate resolution plan is approved, the affected companies commence operations with a clean slate. It was held that once the resolution plan for Defendant No. 5 was approved and implemented as directed by the National Company Law Tribunal, Kolkata Branch, the company was legally regarded as starting anew, free from prior claims.
The High Court struck off the names of Defendant No. 1 and Defendant No.5 from the list of parties involved in the case. Defendant No.1 ceased to exist following its merger with Defendant No.5, and the claims against Defendant No.5 became non-existent post the resolution process.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
