In Brief
A promoter ineligible under the Insolvency and Bankruptcy Code to propose a resolution plan cannot circumvent this bar by proposing a compromise and arrangement under the Companies Act during liquidation. The Supreme Court held that schemes of compromise under Section 230 of the Companies Act, 2013, proposed during IBC liquidation are part of the liquidation process and must comply with the Code's prohibition on ineligible persons. The Court upheld Regulation 2B of the Liquidation Process Regulations, which bars persons ineligible under Section 29A of the IBC from proposing such schemes, finding it clarificatory and constitutionally valid.", <parameter name="cited_cases">[{"raw_citation": "Chitra Sharma v. Union of India (2018) 18 SCC 575", "case_name": "Chitra Sharma v. Union of India", "cited_year": "2018", "paragraph": "47", "treatment": "relied", "treatment_by": "this_court", "treatment_quote": "Parliament has introduced Section 29A into IBC with a specific purpose. The provisions of Section 29A are intended to ensure that among others, persons responsible for insolvency of the corporate debtor do not participate in the resolution process."}, {"raw_citation": "Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors. (2019) 2 SCC 1", "case_name": "Arcelormittal India Private Limited v. Satish Kumar Gupta", "cited_year": "2019", "paragraph": "49", "treatment": "relied", "treatment_by": "this_court", "treatment_quote": "A purposive interpretation of Section 29A, depending both on the text and the context in which the provision was enacted, must, therefore, inform our interpretation of the same."}, {"raw_citation": "Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors. (2019) 4 SCC 17", "case_name": "Swiss Ribbons Pvt. Ltd. v. Union of India", "cited_year": "2019", "paragraph": "50, 51, 72", "treatment": "relied", "treatment_by": "this_court", "treatment_quote": "The primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The legislative purpose which permeates Section 29A continues to permeate the section when it applies not merely to resolution applicants, but to liquidation also."}, {"raw_citation": "Brilliant Alloys (P) Ltd. v. S Rajagopal 2018 SCC OnLine SC 3154", "case_name": "Brilliant Alloys (P) Ltd. v. S Rajagopal", "cited_year": "2018", "paragraph": "29, 72", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta (2020) 8 SCC 531", "case_name": "Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta", "cited_year": "2020", "paragraph": "29, 73", "treatment": "relied", "treatment_by": "this_court", "treatment_quote": "Section 31 of the IBC results in a clean slate, with the successful resolution applicant starting to run the business of the corporate debtor on a fresh slate."}, {"raw_citation": "Meghal Homes Pvt. Ltd. v. Shree Niwas Girni K. K. Samiti (2007) 7 SCC 753", "case_name": "Meghal Homes Pvt. Ltd. v. Shree Niwas Girni K. K. Samiti", "cited_year": "2007", "paragraph": "31, 62, 63", "treatment": "relied", "treatment_by": "this_court", "treatment_quote": "Where a scheme of compromise and arrangement is proposed in respect of the company in liquidation, additional requirements need to be established, namely that the scheme must be for the revival of company."}, {"raw_citation": "SBI v. V. Ramakrishnan (2018) 17 SCC 394", "case_name": "SBI v. V. Ramakrishnan", "cited_year": "2018", "paragraph": "73", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Y Shivram Prasad v. S Dhanapal 2019 SCC OnLine NCLAT 172", "case_name": "Y Shivram Prasad v. S Dhanapal", "cited_year": "2019", "paragraph": "67", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Phoenix ARC Private Limited v. Spade Financial Service 2021 SCC OnLine SC 51", "case_name": "Phoenix ARC Private Limited v. Spade Financial Service", "cited_year": "2021", "paragraph": "52", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Ramesh Kymal v. M/s Siemens Gamesa Renewable Power Pvt Ltd. C.A. No. 4050 of 2020", "case_name": "Ramesh Kymal v. M/s Siemens Gamesa Renewable Power Pvt Ltd.", "cited_year": "2021", "paragraph": "52", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited v. Axis Bank Limited (2020) 8 SCC 401", "case_name": "Anuj Jain v. Axis Bank Limited", "cited_year": "2020", "paragraph": "52", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Miheer H Mafatlal v. Mafatlal Industries Ltd. (1997) 1 SCC 579", "case_name": "Miheer H Mafatlal v. Mafatlal Industries Ltd.", "cited_year": "1997", "paragraph": "62", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Salomon v. A. Salomon & Co. Ltd., 1897 AC 22 (HL)", "case_name": "Salomon v. A. Salomon & Co. Ltd.", "cited_year": "1897", "paragraph": "49", "treatment": "referred", "treatment_by": "this_court"}, {"raw_citation": "Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388", "case_name": "Standard Chartered Bank v. Satish Kumar Gupta", "cited_year": "2019", "paragraph": "73", "treatment": "referred", "treatment_by": "this_court"}]
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