The main legal point established in the judgment is the focus on the revival and continuation of the corporate debtor, the need to protect the corporate debtor from liquidation, and the importance of maximizing the assets of the corporate debtor while balancing the interests of various stakeholders.

ORDER :

In the ‘Corporate Insolvency Resolution Process’ against ‘M/s. Servalakshmi Papers Ltd.’- (“SPL” for short) in absence of approved ‘Resolution Plan’ and 270 days having completed, the ‘Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai, passed order of liquidation by impugned order dated 21st June, 2017.

2. The Appellant- Y. Shivram Prasad, Promoter/ Director and Shareholder of the ‘SPL’- (‘Corporate Debtor’) has challenged the said order as arbitrary and unreasonable. According to the him, opportunity should have been given to the promoters to settle the matter.

3. The other appeal has been preferred by ‘Asset Reconstruction Company (India) Limited’- (“ARCIL” for short). Apart from being ‘Financial Creditor’, it had also filed a ‘Resolution Plan’ thereby, the Appellant- ‘ARCIL’ was one of the ‘Resolution Applicant’. The 5th Respondent- ‘Sripathi Papers and Boards (P) Limited’ (“Sripathi” for short) filed another ‘Resolution Plan’. Subsequently, both of them revised their respective ‘Resolution Plans’ commonly termed as ‘Modified ARCIL Resolution Plan’ and ‘Modified Sripathi Resolution Plan’. However, the ‘Committee of Creditors’ having not found any of them viable and feasible had not voted in their favour with its majority due to which the order of liquidation has been passed.

4. According to the Appellant- ‘ARCIL’, the ‘Committee of Creditors’ wrongly voted against their ‘Revised Resolution Plan’.

5. The Appellant- Mr. Y. Shivram Prasad (Promoter) highlighted the following facts in its affidavit:

“7.4.2. SPL was incorporated in 2005. The project was implemented with an objective to start state-of-the-art manufacturing facilities to produce printing & Writing papers and News print. The promoters of the SPL had put their maximum effort and energy for 10 years to set-up this paper plant. The plant and machinery of the company is fully automated with advanced quality control system, and with a capacity to produce 300 tonnes per day (TPD) i.s. 90,000 MTPA, along with a 15 MW multi-fuel power plant, which is one of the largest single plants in India and ranks within fifteen major plants in India (Source- Paper Mart MAGAZINE Edition April-May 2010). Excess capacity of 5 MW of power is being sold to third parties. Due to the promoters expertise and knowledge in setting up paper plants, the company could achieve the project implementation within short span of 3 years (From 2007 to 2010) period using latest technology and rich experience personnel in the respective areas to complete project implementation and start production from April 2010. The paper manufacturing unit is providing livelihood directly for more than 300 employees and indirectly for 200 employees, in and around a 50 kilometer area of the village where the plant is situated. 120 ancillary industrial units are also dependent on the paper and power plant. After the plant commenced its commercial production from April 2010, it has provided economies of benefits in daily life to the local villagers where the local people are starving for their daily lives.”

6. It was submitted that the Promoter should have been given opportunity to pay the dues. However, such submission cannot be accepted at this stage for the following reasons.

At what stage the parties can settle and with the application under Sections 7 or 9 or 10

7. Matter can be settled between the parties and an application(s) under Sections 7 or 9 or 10 can be withdrawn only at three stages:

i. Before admission of application under Sections 7 or 9 or 10

ii. After settlement if reached by Promoters / shareholders with the Applicant but before the constitution of the ‘Committee of Creditors’ in view of decision of the Hon’ble Supreme Court in “Swiss Ribbon Pvt. Ltd. & Anr. v. Union of India & Ors. Writ Petition (Civil) No. 99/2018 (2019 SCC OnLine SC 73)” and quoted below:

“52. It is clear that once the Code gets triggered by admission of a creditor’s petition under Sections 7 to 9, the pr