Petition filed before Madras HC challenging Validity of S. 230 Scheme Process for Corporate Debtors undergoing Liquidation Proceedings [Read Petition]

A writ petition has been filed before the Madras High Court challenging the validity of section 230 of the Companies Act, 2013 read with Regulation 2B of IBBI (Liquidation Process) scheme process for Corporate Debtors undergoing the liquidation proceedings.

The petition sought to declare the Application of Section 230 of the Companies Act, 2013 read with Regulation 2B of IBBI (Liquidation Process) Regulations being applied to Corporate Debtors undergoing Liquidation Proceedings as per Chapter III of I & B Code is against the objectives of the Insolvency and Bankruptcy Code, 2016, as Arbitrary and violative of Article 14 of our Constitution and becomes null and void.

The petitioner, V. Venkata Sivakumar, practicing as a Chartered Accountant for the past 30 years has filed the petition contending that the introduction of Section 230 of Companies Act, 2013, Scheme of Compromise into I & B Code by way of inserting Regulation 2B is wholly Arbitrary, unreasonable, unfair, discriminatory and is a live example of judicial overreach and in conflict with the objectives of the I & B Code.

“What is sought to be achieved through the introduction of Sec.230 could be achieved through Regulation 32(e), which is more flexible, practical and prone to less litigation whereas, the Sec.230 Scheme is rigid and exposes the Corporate Debtor, who is already suffering because of liquidation to enormous litigation costs and loss in the value of assets on account of protracted litigation. Hence the judicial intervention through Sec.230 in IBC is arbitrary and violative of Article 14 and therefore liable for declaring as unconstitutional,” the petition said.

The Petitioner further submitted that the scheme as per Sec. 230 under the Companies Act 2013, by being linked to companies undergoing Liquidation as per the provisions of I & B Code in spite of having Regulation 32(e) exposes the process to equality concept as envisaged in Article 14 of our Constitution.

M/s Khevana Securities and Finstock Ltd. vs Income Tax Officer

CITATION: 2022 TAXSCAN (HC) 224

To Read the full text of the Petition CLICK HERE

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