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The National Company Law Appellate Tribunal (NCLAT) has held the former promoter of Gujarat NRE Coke Company, Arun Kumar Jagatramka, to enter into negotiations with the creditors of the company on the plea of Jindal Power and Steel Company. A two-member bench of the National Company Law Appellate Tribunal headed by Justice S Mukhopadhaya held that since Arun Kumar Jagatramka was not eligible to be a Resolution Applicant under the Insolvency and Bankruptcy Code (IBC), he would not be eligible to enter into negotiation with the creditors of the debt-ridden company as well.
Jindal Power and Steel had challenged an order passed by the National Company Law Tribunal (NCLT) which gave permission to the promoter of the company to negotiate and settle the debts with the creditors. Jindal Power and Steel is an unsecured creditor of Gujarat NRE Coke Company. National Company Law Tribunal had allowed Jagatramka to formulate a Financial Scheme of Compromise and Arrangement between him and the company through the Official Liquidator after holding the debts of shareholders, creditors etc.
However, the Appellate Tribunal set aside this order passed on May 15th, 2018 by Kolkata bench of the National Company Law Tribunal. The Appellate Tribunal said that if the promoter is not eligible under section 29A of IBC, then he is also not eligible to take back the movable and immovable properties or actionable claims of the Corporate Debtor through Financial Scheme of Compromise and Arrangement.
Gujarat NRE Coke had voluntarily approached NCLT for initiation of insolvency proceedings against it as it had committed various defaults. However, the company failed to attract any submission of bids for the company within the stipulated time period of 270 days. Hence, the Kolkata bench of NCLT ordered for the liquidation of the company. The Coke Company challenged this order of NCLT and also his ineligibility to negotiate with the creditors of the company for settlement of debts before NCLAT. However, NCLAT allowed the liquidation proceedings to commence.
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