Section 230 of Companies Act not to be pursued at liquidation stage under IBC

Ashish Mohan Gupta Vs The Liquidator of Hind Motors India Ltd (In Liquidation) (NCLAT)

Conclusion: MSME certificate was required to take benefit of Micro Small and Medium Enterprises (MSME) under Section 240A of Insolvency and Bankruptcy Code and it was not necessary to pursue Section 230 of the Companies Act at the stage of Liquidation, the same not being part of Procedure of IBC when the Corporate Debtor was in Liquidation.

Held:  The company appeal related to Liquidation Proceedings against Corporate Debtor M/s. Hind Motors India Limited. Appellant was promoter and director of the said Company which was engaged in sale and service of cars and had certain immovable assets as well as plant and machinery and stock of spare parts of cars. The Order of Liquidation with regard to this Company was passed on 12th September, 2017. Appellant claimed that the Liquidator instead of reviving the Company through Settlement under Section 230 of the Companies Act, 2013 sought to close the business of the Company.  The grievance of Appellant was that in spite of such order passed by this Tribunal the Liquidator had not taken steps to ensure scheme under Section 230 of the Companies Act, 2013. Appellant was relying on Section 240 A of IBC to submit that the Companies of the Appellant are either Micro or Medium Enterprises according to the definitions of such industries in the Micro Small and Medium Enterprises (Development Act), 2016 (Act in short). Appellant accepted that appellant did not have memorandum or certificate from the Government authorities showing that the Companies of the Appellant were Micro Small or Medium Enterprises. It was argued that such certificate or memorandum was not necessary and going by the definitions in the Act and balance sheet, this Tribunal must find if it was Micro, Small or Medium Industry. It was held that  basically Section 230 of the Companies Act was not part of the scheme of IBC where Liquidation was concerned. As such, in the present matter, the question of Section 29A of IBC need not to be decided. Alternatively, even if the said Section was to be considered,  in the absence of memorandum under MSME Act and for reasons recorded in Judgment in the matter of “Amit Gupta Vs. Yogesh Gupta” in Company Appeal (AT) (Ins.) No. 903 of 2019 dated 20.12.20 19 it was not necessary to pursue Section 230 of the Companies Act at the stage of Liquidation, the same not being part of Procedure of IBC when the Corporate Debtor was in Liquidation, both the Appeals must fail, not having substance in the contentions raised. The Company Appeal (AT) No. 07/2020 also needs to be dismissed as the Appellant was pushing forward a scheme of amalgamation compromise and arrangement for three companies which were already in Liquidation under IBC.

FULL TEXT OF ORDER OF NATIONAL COMPANY LAW APPELLATE TRIBUNAL

Heard.

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