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2025 Supreme(Online)(NCLT) 4856
NATIONAL COMPANY LAW TRIBUNAL
Shri. Vinay Goel, Smt. Madhu Sinha, JJ
M/s. Furnace Fabrica (India) Limited – Appellant
Versus
Alok Kumar Agarwal – Respondent
IA(IBC)/93/KOB/2024 | CP(IBC)/14/KOB/2023 | INTERVENTION PETITION(IBC)/1/KOB/2025 | IA(IBC)(PLAN)/1/KOB/2025
For the Applicants: Ld. Sr. Counsel Mr. Aravind Pandian, Mr. Akhil Suresh
For R1/RP: Mr. Pulkitesh Dutt Tiwari
For R2 to R5: Mr. Rohan Kumar
MoUs claiming restructuring of assets were unenforceable due to lack of legal compliance and jurisdiction under the IBC.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 36(4), 60(5), 14(1)(b), 14(1)(d), 30(2)(e) - Matters concerning restructuring and shareholding in corporate debtor - Disputes over MoUs and asset ownership raised during CIRP were found to lack legal sanctity. (Paras 24, 29, 40)
(B) Corporate governance - The court emphasized that any restructuring or changes in shareholding must comply with Companies Act regulations, underlining the need for adherence to statutory processes. (Paras 32, 34)
Facts of the case:
The applicants sought declarations regarding asset ownership and management rights based on MoUs signed in 2014, claiming mismanagement by the respondents led to ownership disputes.
Findings of Court:
The MoUs were found unenforceable due to a lack of legal compliance with statutory requirements, casting doubt on the applicants' claims and reliefs sought.
Issues: Whether the Tribunal has jurisdiction to adjudicate disputes arising from private agreements during a corporate insolvency process, and the legal enforceability of the MoUs in question.
Ratio Decidendi: The Tribunal ruled that the MoUs were invalid as they failed to meet legal requirements, and their claims were deemed to have no standing in the CIRP context.
Result: The applications were dismissed.
| Table of Content |
|---|
| 1. consolidated hearing of ia and intervention petitions to avoid repeat discussions. (Para 1 , 2 , 3) |
| 2. overview of business operations, partnerships leading to corporate registrations. (Para 4 , 5 , 6 , 7) |
| 3. existence of delayed actions and obligations on mou implementation. (Para 8 , 9 , 10) |
| 4. legal standing and implications of private arrangements within cirp. (Para 12 , 39) |
| 5. legal potential and limitations of mous in corporate disputes. (Para 14 , 15 , 18) |
ORDER
Per Coram
1. The IA(IBC)/93/KOB/2024has been filed under Section 36 (4) & 60 (5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as Code) with the following reliefs: -
a. “Declare and direct that the assets of the Applicant Nos. 4-6 and the assets as set out in the MoU are carved out of the assets of the Corporate Debtor and do not form a part of the estate of the Corporate Debtor;
b. Direct the Respondent No. 1. i.e., the Resolution Professional of the Corporate Debtor to enforce the MoUs with retrospective effect not limited to but including the handover of the shareholding of Applicant Nos.4-6 in terms of the MoUs and the management and control of the Applicant Nos.4-6;
c. Direct the Respondents to refrain from taking any coercive steps against the Applicant Nos. 4-6 and to refrain from creating hurdles or obstacles in form or manner whatsoever and to co-operate with the Applicant and provide assistance wherever necessary while transferring the shareholding of Applicant Nos.4-6;
d. Any other order that this Hon’ble Tribunal may deem fit in the facts and circumstances of this case.”
2. In addition to the above the Applicants have filed an Intervention Petition(IBC)/1/KOB/2025 under Rule 11 and Rule 32 of NCLT Rules, 2016 read with Order 1 Rule 10 of the Code of Civil Procedure, 1908, with principal relief to Intervene the Applicants as additional respondents in IA(IBC) (PLAN)/1/KOB/2025 filed by the Resolution Professional under Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 .
3. In view of the pendency of the aforesaid application and the Intervention Petition, we deem it appropriate to decide both matters by a common order to avoid repetition and conflicting judgment.
Brief facts of the IA(IBC)/93/KOB/2024are as follows: -
4. The applicants submitted that Applicant No.1 commenced his career in refractory lining in 1974 and subsequently established his own business. During the course of his work, he became acquainted with Respondent No.2. After initially expressing interest in joining the Applicant’s business, Respondent No.2 deferred his decision and continued in his employment until 1978. Thereafter, he joined the Applicant’s business, and they formed a partnership firm, M/s. Furnace Fabrica, with equal stakes held by their respective families.
5. Further, M/s Furnace Fabrica Private Limited, was incorporated on 03.12.1985 to provide engineering, procurement, and construction services. It was later converted into a public company on 08.08.1996. The Applicant No.1 and Respondent No.2 expanded their business operations by incorporating three more companies: M/s Pacific Refractories Limited (1994), M/s Begg Cousland Private Limited (2010), and M/s FF International Limited (2014). The management of Respondent No.1 and its subsidiaries was shared between two groups: the Prasad Group (Applicant Nos. 1 to 3) and the Basheeruddin Group (Respondent Nos. 2 to 6), with the sons of both Applicant No.1 and Respondent No.2 serving as directors on the Board of Respondent No.1.
6. It is stated that the Prasad Group and Basheeruddin Group mutually agreed to restructure Respondent No.1’s ownership and management due to differences. A Memorandum of Understanding (MoU) was signed on 01.03.2014, outlining the reorganization plan. Following this, the Prasad Group withdrew from managing Respondent No.1, while the Basheeruddin Group took over. An addendum to the MoU was later executed on 09.09.2014. Despite the agreement, the Basheeruddin Group del
