NCLAT Permits Participation of Erstwhile Promoter In CIRP Despite CoC's Disqualification
It was found that the Respondent had previously engaged in negotiations with the CoC and the RP and had also revised his plan. Therefore, he had the right to challenge the procedure of application
NCLAT-NCLAT-Chennnai-National-Company-Law-Appellate-Tribunal-Erstwhile-Erstwhile-Promoter-CIRP-TAXSCAN
NCLAT-NCLAT-Chennnai-National-Company-Law-Appellate-Tribunal-Erstwhile-Erstwhile-Promoter-CIRP-TAXSCAN
The National Company Law Appellate Tribunal (NCLAT) permitted participation of erstwhile promoter in Corporate Insolvency Resolution Process ( CIRP) despite CoC's disqualification.
Application under section 7 of the Insolvency was filed by the Punjab National Bank and on the basis of this on 24th July, 2022, Corporate Insolvency Resolution Process was initiated against the company. The Resolution Professional (RP) appointed to handle the insolvency process, started to call for applications from prospective resolution applicants.
The Respondent also decided to participate in the resolution process of Meir Commodities. But the Committee of Creditors in their meeting decided to disqualify the Respondent from participating in the resolution process, claiming that he defaulted in the payments and was responsible for the demise of the company.
Get a Copy of Become a PF & ESIC expert with our comprehensive course - Enroll Now, Click here
The Appellant challenged the same before the NCLT, Hyderabad. The Telangana High Court before the meeting of the CoC stated that the Appellant should not be considered as a wilful defaulter. Upholding the decision of the High Court, the tribunal stated that the Respondent should not be considered as a defaulter and should be allowed to participate in the Corporate Insolvency Resolution Process (CIRP).
Aggrieved by the order of the tribunal, the Appellant challenged the same before the National Company Law Tribunal (NCLAT), Chennai.
The bench presided by Justice Sharad Kumar Sharma, Member (Judicial) and Jatindranath Swain Member (Technical) upheld the decision of High Court of Telangana and state the respondent should not be termed as “wilful defaulter” and should be allowed to participate in the Resolution process.
Get a Copy of Become a PF & ESIC expert with our comprehensive course - Enroll Now, Click here
It was found that the Respondent had previously engaged in negotiations with the CoC and the RP and had also revised his plan. Therefore, he had the right to challenge the procedure of application. The NCLAT dismissed the Application.
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
