NCLAT Rightly Upheld AA’s Order Rejecting Stay of Auction as Appellant Couldn’t Submit Compromise Scheme Within Time

Case Details: Bankey Bihari Infrahomes (P.) Ltd. v. Alok Kumar Kuchchal - [2023] 154 taxmann.com 516 (SC)

Judiciary and Counsel Details

• Sanjay Kishan Kaul & Manoj Misra, JJ.
• Abhimanyu Bhandari, Adv., Ms Rooh-e-hina Dua, AOR, Pranav Gupta & Harshit Khanduja, Advs. for the Appellant. 
• Sumeer Sodhi, AOR, Devashish Tiwari, Akshay Sharma, Advs., Mritunjay Kumar Sinha, AOR, Sameer Rohtagi, Kartikeya Singh, Rukban Tyagi, Ms Snehal Sharda, Advs., Alok Kumar Kuchhal, Pulkit Deora, Adv., Pranay Maheshwari, Dr Amardeep Gaur, Pardeep Kumar Gupta, Advs., Aadil Singh Boparai, Ms Srishti Khanna, Advs. & Nar Singh, AOR for the Respondent.

Facts of the Case

In the instant case, the CIRP was initiated against the corporate debtor by the Adjudicating Authority (NCLT) on an application filed under section 7 of the IBC. After the unsuccessful completion of CIRP, the NCLT ordered for liquidation of the corporate debtor and the respondent was appointed as the Liquidator.

The appellants filed an application u/s 60(5) before the NCLT seeking direction to the RP to place a scheme of compromise and arrangement submitted by the appellants under section 230 of the Companies Act, 2013. However, the said application was disposed of by the NCLT directing the liquidator to consider a scheme of compromise and arrangement submitted by the appellants within three weeks i.e., till 4-5-2022.

Thereafter, the liquidator published a public announcement to initiate the auction process of the corporate debtor’s assets. Since, the liquidator continued with the auction process, the appellants filed an application before the NCLT seeking a stay of the auction process.

However, the NCLT rejected the said application on the ground that the appellants neither submitted the scheme of compromise and arrangement within the stipulated time i.e., 4-5-2022 nor did they inform the liquidator about the delay in submitting the scheme or requested any extension of the time limit from the NCLT.

Aggrieved by the NCLT’s order, the appellants filed an application before the National Company Law Appellate Tribunal (NCLAT). The NCLAT by the impugned order stated that the NCLT provided reasonable and sufficient opportunity to the appellants to submit a credible scheme of compromise and arrangement and, therefore, the appeal filed by the appellants was to be dismissed.

Supreme Court Held

Thereafter, the appellants filed an instant appeal before the Supreme Court. It was noted that the bottom line to submit payment under the scheme had not been brought in as assured on the last date. Therefore, an instant appeal filed against the order of the NCLAT was to be dismissed.

List of Cases Reviewed

• Bankey Bihari Infrahomes (P.) Ltd. v. Alok Kumar Kuchchal [2023] 154 taxmann.com 515 (NCLAT – New Delhi) (para 5) affirmed