Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 1060

NATIONAL COMPANY LAW TRIBUNAL
Sanjiv Jain, J, Venkataraman Subramaniam, Technical Member
ASHOK MAGNETICS LIMITED VS
CA(CAA)/102(CHE)/2025|CP(CAA)/10/CHE/2026|CP(IBC)/551(CHE)/2017

Advocates:
For the Petitioner liquidator: R.Subramanian
For the Scheme Proponent: Rajesh Bohra

The Tribunal sanctioned a compromise scheme under the Companies Act, emphasizing revival of the corporate debtor as opposed to mere recovery by creditors, highlighting the importance of creditor consent in liquidation proceedings.

Headnote:(A) Companies Act, 2013 - Sections 230-232 - Compromise scheme for creditors sanctioned by Tribunal - Petition filed by Liquidator for approval of compromise scheme, with reliefs binding on creditors - Scheme approved as it facilitates revival of company - 100% creditor approval met - Emphasis on revival over mere creditor recovery stated. (Paras 40-46)

(B) Liquidation Procedures - The sanction of a compromise scheme during liquidation is recognized under applicable regulations - Tribunal has the discretion to dispense with meetings of creditors when majority consent is achieved - Aim of IBC is to protect and revive the corporate debtor rather than mere liquidation. (Paras 43-45)

Table of Content
1. case background and procedural history. (Para 1 , 2 , 3 , 4 , 5 , 10)
2. judicial principles regarding schemes of compromise. (Para 40 , 43 , 44)
3. court approves compromise scheme. (Para 46)
4. conclude the approval process for the scheme. (Para 49 , 51 , 52)

O R D E R

(Heard through Hybrid Mode)

1. This Petition has been filed under Section 230 and other applicable provisions of the Companies Act, 2013 read with regulation 2B of the IBBI (Liquidation Process) Regulations, 2016, the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the NCLT Rules, 2016, by the Liquidator ofAshok Magnetics Limited being the Company Under Liquidation seeking the following reliefs:

a. That the scheme of compromise proposed by Anuj Kumar Behera may be sanctioned by the Tribunal as to be binding on all the creditors of the company and on the company as set out therein

b. For such other and further reliefs as the nature and circumstances of the case may require.

BRIEF FACTS:

2. The Corporate Debtor was incorporated on 16.04.1993. Main objects of the Company are, to carry on in India or elsewhere in any country or state or part of the world the business of manufacturing, producing, altering, converting, processing, treating, improving, manipulating, extruding, milling, slitting, cutting, casting, forging, rolling and re-rolling of all shapes, sized, varieties, specifications, dimensions, descriptions and strength of iron and steel products including sponge iron, pig iron, malleable iron, S.G.iron, iron ore, steel, etc. Detailed objects are delineated in the Memorandum of Association annexed with the application.

3. Corporate Debtor (herein after CD) was carrying on the business of manufacture of TMT steel bars used in the construction industry. Such manufacturing was conducted at the factory of the Company situated at Eripakkam Village, in the State of Pondicherry.

4. Corporate Debtor for the purpose of its business availed loans from 3 banks viz. Central Bank of India, State Bank of India and Federal Bank Limited (subsequently assigned to Prudent ARC Limited). Such loans were secured by movable assets and also the land building and machinery at Eripakkam Village, Pondicherry and industrial land at Gummidipoondi. CD also availed loan from Religare Finvest Limited against the mortgage of the office property at Gopalapuram, Chennai.

5. Central Bank of India, State Bank of India, and Federal Bank filed a Section 7 Petition CP/551/2017 before this Tribunal. This Tribunal vide order dated 04.09.2017 admitted Corporate Debtor into Corporate Insolvency Resolution Process (CIRP).

6. The Applicant was appointed as the Resolution Professional. The Applicant filed the application for liquidation as no viable Resolution Plan was approved in respect of the CD. This Tribunal vide Order dated 09.11.2018 ordered for the liquidation of CD and appointed the applicant as the liquidator.

7. In respect of claims invited at the stage of Liquidation, the liquidator received only 3 claims. The table capturing the details of the claims received in Liquidation is as under:

8. It is stated that though financial statements of the company reflected mortgage loan in respect of the office property at Gopalapuram, Chennai 600 086 as availed from Religare Finvest Limited, but, no claim was filed by the said lender either during CIRP or in Liquidation.

9. Three creditors namely BKL Steels Private Limited, Dnepro Advisory Private Limited and Toughened Alloys & Steels Private Limited and few others filed the claims at stage of CIRP. The same were rejected by the Applicant in the capacity as Resolution Professional. They have chosen not to file any claims at the stage of Liquidation.

10. The overview providing the status of financial creditors of the CD is extracted below:

11. During the pendency of Liquidation, 3 bank lenders opted to stay out of the liquidation and chose to enforce their securities outside the Liquidation. The liquidator sold the property bei