S.C. Sekaran v. Amit Gupta & Ors., [Company Appeal (AT) (Insolvency) No. 495 and 496 of 2018] - Synopsis
Team SoOLEGAL 2 Dec 2020

In the case of S.C. Sekaran v. Amit Gupta & Ors., [Company Appeal (AT) (Insolvency) No. 495 and 496 of 2018], Hon'ble National Company Law Tribunal (NCLAT), giving regard to the rules of Section 230 of the Companies Act, 2013, read with the judgement of the Hon'ble Supreme Court in the case of Meghal Homes Pvt. Ltd. v. Shree Niwas Girni K.K. Samiti & Ors.; 7 SCC 753 and Swiss Ribbons Pvt. Ltd. v. Union of India & Ors.; (2019) SCC OnLine SC 73 instructed the Liquidator to act in compliance with the statute, likely enabling the development of the Achilles heel in Section 29A of the Code. National Company Law Appellate Tribunal (NCLAT) in the case of Sekaran vs. Amit Gupta, such promoters can make a sneaky back-door entrance to retake possession of their company at a drop-off price. The case concerns the appeals brought by Hindustan Dorr-Oliver and HDO Technologies against the liquidation order passed by NCLAT in June 2018, following failure to act. The NCLAT ordered the 'liquidator' (insolvency professional) to act in compliance with the law and to check the claims of all creditors, to take control of all accounts, assets and to carry on the business of the 'corporate debtor' as required by Section 35 of the Code. However, before taking action to sell the properties, the liquidator was instructed to consider the provisions of Section 230 of the Companies Act 2013, which deals with the right to negotiate or make agreements with creditors and members. Essentially only on failure to revive pursuant to Section 230, can the liquidator continue with the disposal of the assets of the company. Although Section 29A prohibits errant promoters from engaging in the resolution process under IBC, a liquidator proposing an arrangement scheme under Section 230 of the Companies Act can give an entry to promoters who are otherwise ineligible to acquire assets under IBC.


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