ARUN KUMAR JAGATRAMKA versus JINDAL STEEL AND POWER LTD. & ANR.

ARUN KUMAR JAGATRAMKA versus JINDAL STEEL AND POWER LTD. & ANR.

When a scheme of compromise or arrangement under Section 230 of the Companies Act is proposed in respect of a company undergoing liquidation under the IBC, the prohibitions and ineligibilities enacted by Parliament in Section 29A and the proviso to Section 35(1)(f) of the IBC apply to that scheme; accordingly Regulation 2B(1) proviso of the IBBI Liquidation Process Regulations (prohibiting parties ineligible under the IBC from being parties to such compromises or arrangements) is constitutionally valid and clarificatory; appeals and the writ petition are dismissed.

Parties
Appellant; Promoter of Gujarat NRE Coke Limited: Arun Kumar Jagatramka; Respondent; Unsecured Creditor of Gujarat NRE Coke Limited: Jindal Steel and Power Ltd.; Corporate Debtor: Gujarat NRE Coke Limited
Jurisdiction
India
Judgment Date
15 March 2021
Procedural Posture
Civil Appeal (and Related Writ Petition) to the Supreme Court of India / Appeal From NCLAT and Challenge to IBBI Regulations; Judgment Delivered by Supreme Court
Outcome
Civil appeals and writ petition dismissed
Legal Topics
Section 29 a IBC (ineligibility of Resolution Applicants), Section 35(1)(f) IBC (liquidator Restrictions), Section 230 Companies Act 2013 (compromise or Arrangement), IBBI (liquidation Process) Regulations 2016, Regulation 2 B, Section 12 a IBC (withdrawal of Application), Interplay Between CIRP, Liquidation and Scheme Under Companies Act, Purposive Statutory Interpretation
Insolvency and Bankruptcy Law Company Law Administrative/regulatory Law Constitutional Law Section 29 a IBC (ineligibility of Resolution Applicants) Section 35(1)(f) IBC (liquidator Restrictions) Section 230 Companies Act 2013 (compromise or Arrangement) IBBI (liquidation Process) Regulations 2016, Regulation 2 B +3 more

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Parties

Arun Kumar Jagatramka

Appellant; Promoter of Gujarat NRE Coke Limited

Jindal Steel and Power Ltd.

Respondent; Unsecured Creditor of Gujarat NRE Coke Limited

Gujarat NRE Coke Limited

Corporate Debtor

Procedural Posture

Civil Appeal (and Related Writ Petition) to the Supreme Court of India / Appeal From NCLAT and Challenge to IBBI Regulations; Judgment Delivered by Supreme Court

Legal Issues

  1. 1 Whether a scheme under Section 230 Companies Act can be proposed in liquidation proceedings under the IBC and, if so, whether persons ineligible under Section 29A IBC may propose such a scheme
  2. 2 Whether the proviso to Regulation 2B of the IBBI (Liquidation Process) Regulations is constitutionally valid and intra vires IBBI’s powers
  3. 3 Whether the ineligibilities under Section 29A and Section 35(1)(f) IBC attach to compromise/arrangement proceedings under Section 230 when the company is under IBC liquidation

Ratio Decidendi

When a scheme of compromise or arrangement under Section 230 of the Companies Act is proposed in respect of a company undergoing liquidation under the IBC, the prohibitions and ineligibilities enacted by Parliament in Section 29A and the proviso to Section 35(1)(f) of the IBC apply to that scheme; accordingly Regulation 2B(1) proviso of the IBBI Liquidation Process Regulations (prohibiting parties ineligible under the IBC from being parties to such compromises or arrangements) is constitutionally valid and clarificatory; appeals and the writ petition are dismissed.

Court Disposition

Civil appeals and writ petition dismissed

Orders

  • Appeals and writ petition dismissed
  • Pending applications, if any, disposed of