 Good evening and one and all, and amongst us we have Mr. S. S. Naganan, senior advocate. The most interesting facet with Mr. Naganan is that he can take you to the wide spectrum of knowledge on different perspectives of law and in fact beyond that also. His knowledge also traverses to the fact that he's an author of books we did one on the webinar on his book. We will have that deep insight people into that. And the another fascinating fact with Mr. Naganan is that you just call him up late in the night also and say that sir, there's a lot of requests on a particular topic. It doesn't even, I would say that the blink of an eye maybe probably takes more time, but he readily agrees. And since we were receiving a lot of requests after this COVID being gone and we believe that it has gone for the good. And that moratorium period is also over. Litigation has started. Like everybody is feeling that the Securitization Act, the provisions under the NCLT provisions under the company's law, et cetera, et cetera are probably in a limbo or in a suspended state of affairs. But since we are banged back to business and for a professional to understand the nuances for this aspect has always been quite fascinating. And therefore, as we have seen that NCLT's role has grown with the flux of time. Consequently, the role of NCLT in corporate insolvencies and reconstruction is an important aspect, which we would like to understand from a person whose dedication towards paying back to the society can also be gathered. Today that he's not even in the office, but since he has dedicated to agree to share his knowledge, he's back and back with the bank. And we have enamored by the fact that he's agreed to our request. Thank you, sir. Thank you. I hope I'm audible now. Okay, in the course of this presentation, you might hear some temple sounds in the background. That's because I'm currently sitting in our ancestral family temple, which is about 45 minutes drive away from Bangalore. And you might hear some sounds of some pipes and ganda. So please keep that at the back of your mind. And then let's enjoy the session today. I think the topic that is selected today is role of national company law tribunal incorporate insolvency and restructuring. I think before I come to this topic, I need to tell you a little bit about the background of insolvency law, and then take you through the developments in the law. The earliest company law legislation in India was the 1916 Act of the Indian Companies Act, which dealt with a number of issues relating to corporate functioning, structuring, and also about jurisdiction of winding up. Then it was called not insolvency, not restructuring as it's now called, but it was called insolvency proceeding or the winding up proceeding. Now, later on in England, the 1948 English Companies Act was enacted. And modeled on that, the first company law legislation which came in India after independence was the 1956 Companies Act. The 1956 act stood the field for about 50, 60 years till it was replaced by the 2013 Companies Act. Now, the 2013 Companies Act is mainly modeled on the 1956 act, but it did bring about certain changes, certain modernizations, I would call it, and certain differential procedures. Now, sometime in the late 60s, there was a legislation called the Companies Tribunal. It was a tribunal that was set up under the Companies Act to adjudicate all disputes which arise under the Companies Act in regard to companies. It was in force for a very short period and then they realized that the tribunal was not a very happy state of affairs. So finally, the tribunal was abolished and the jurisdiction which was with the High Court came back to the High Court. In other words, cases which got transferred there came back to the respective High Courts. And as all of you might know, the High Court which has jurisdiction over the registered office of a registered company, that is the court which has the jurisdiction to deal with all matters arising under the Companies Act. And therefore, if the company has registered anywhere in the state of Karnataka, the Bangalore High Court, Karnataka High Court would be the jurisdiction. Similarly, in other places, if it's Mumbai, then it's the Bombay High Court and so on. So these High Courts exercise powers under different jurisdictions where what is connected to our topic today, corporate insolvency and restructuring, they were contained in two sets of provisions. One was section 433 of the 1956 Act. There is a similar parallel provision in the 1930 Act also, which is more or less similar to it, where it vested the power in the company court to wind up a company on the happening of certain events at the instance of certain persons. There was a large plethora of cases that came up. One of the important grounds on which a company could be ordered to be wound up and declared an insolvent was under section 433 E of the 1956 Companies Act, which said that if a company is unable to pay its debts, then it's liable to be wound up. That was a very simple phrase, which gave rise to a large volume of litigation as to what is a debt? Is a debt due? How much is the debt? Has there been a default? If so, what are the reasons for the default? And is it justifiable? And thereafter is a counterclaim valid. Supposing the respondent corporate data says, yes, I owe him money, but he also owes me money. Is that a claim? That would be tenable. And so on. And there was also the concept of a deemed insolvency because section 434 of the 1956 Act contained a provision which said that if a notice is issued to the registered office of a company and the company fails to pay it, pay the debt demanded within a period of three weeks, the company is deemed to be unable to pay its debts. Therefore, a winding up petition would lie. But courts took the view that it is not automatic and there's the element of discretion because section 433 starts with the word, the court may wind up a company. Now why I'm giving you this? The same similar pattern is there in the 2013 Act also with some minor changes. Section numbers are different. That's all the changes. Why I'm referring to this background is that the working of the company's Act after about 40 or 50, 40 years or so from 1956, there were rumblings that the cases of insolvency in the high court are getting enormously delayed. And the high courts are not able to dispose of the matters within a time-bound frame because there is no exclusive jurisdiction of any company judge who sits every day in the week. The volume of work is too large. And in cases where winding up is already ordered, the administration of the insolvent company's affairs was in the hands of the official liquidator. The official liquidator can ought to have taken steps to realize the monies and distributed to rateably to persons who are entitled to the money, secured creditors, unsecured creditors and the body of shareholders if any is left. This was the broad scheme excluding the preferential creditors, but which I know not to elaborate now. So that was the role of the official liquidator and it was found that companies after insolvency, distribution, winding up order, it would take 5 years, 10 years, 15 years for the official liquidator to resolve it and do something about the assets of the company. Therefore, it was felt that a separate tribunal should be constituted. Therefore, the company law board was set up. The company law board was an independent tribunal which was set up under a separate statute and that all cases which are bending in the high court were transferred to the company law board for disposal under this jurisdiction of corporate insolvency. The company law board also functioned for some time. It had to take quarters as usual of all these tribunals in Delhi that initially they didn't have a bench anywhere. Later on they substituted and had a bench in southern India and Chennai and of course in other parts of the country also they had benches. The company law board also got boiled down into this procedural problems. Then the functioning of the company law board was found to be not satisfactory and was not completely independent because they exercised not only corporate insolvency jurisdiction but they exercised many other jurisdictions which the high court was dealing with. One of the main things being operation and mismanagement under section 397, in the 56 act, section 241 in the new act. These are the provisions which the CLB was also dealing with. It was found that the manner in which it was going on was not satisfactory. Therefore, the next avatar of the company law board was the national company law tribunal. So this is something which came much later and so the 1956 act was amended by using the word tribunal and they defined the tribunal as company law board. Whereas the 2013 act also uses the word tribunal and refers to the national company law tribunal. So this is the historical genesis of the jurisdiction being vested here. Now we see a complete change in the methodology of corporate insolvency under the new Companies Act of 1956. Along with that, we must bear in mind that they introduced a separate legislation called the Insolvency and Bankruptcy Code of 2016. Now the provisions relating to corporate insolvency and personal insolvency are governed by this act, the new act of 2016. So I'm going to be dealing with some provisions of this new act and explain to you in brief what is the role of the NCLB. Now the IBC refers to this authority as the adjudicating authority. So if they don't call it a court or a tribunal, it is the adjudicating authority which will adjudge whether the corporate data is insolvent or it's not insolvent. And for that we need to notice a few of the definitions. Now section 2A of the IBC says that it applies to all companies registered in India under any company law act. It might be 56 act, it might be the 1916 act or any other enactment if it's a corporate body, the act governs it. Two important definitions so far as this topic is concerned is of insolvency. We find very interestingly two sections devoted in this act for definitions. Normally we have section 2 in most of the statutes which contains definitions. But here we have two sections, section 3 and section 5. Now one of the definitions which we have is definition of a financial debt. Now what is a financial debt is defined in subsection 8 of 5 and it says that it includes A, B, C, D, E, F. You know we all know as lawyers that an inclusive definition means that it is very expansive. It could be very wide and to make it clear they're including something. But the other definition is particular they say so and so means that means it is confined only to what is stated in the section. But when includes is used it includes wider things than this. Now includes is also used to put into the framework of the law something which one would not normally think is included in the term. That is the meaning and object of such an inclusive definition. So there is a definition I'm not going to deal with the details of that definition because the section is very elaborate and it defines who is what is the commercial financial debt. The second definition is under subsection 21 which refers to an operational debt. Now an operational debt as distinguished I'll just give you broadly what are the distinctions. In the case of a financial debt it is lending via bank financial institution mutual fund any of these type of institutions which are mainly meant for financing corporate bodies. These are financial debts operational debt is in the course of a company's business. It is carrying on any activities. It has many trade creditors. It has bought goods it has yet to pay them. There could be other liabilities. These are all liabilities which arise in the course of operations of the company. These are all not by a financial creditor. So they are all called operational debts. There is a distinction as to what is the procedure in the case of financial debt and operational debt. The distinction between this act and the old companies act is the old companies act did not make a distinction between a financial debt and an operational debt. It was just a debt anybody could be could be a bank it could be a financial operational debt or also whereas here they make a distinction and subsequent provisions make a special provision as to how this should be conducted. For example, Section 7 talks of a petition for insolvency resolution by a financial creditor. So if a financial debt is due, the person to whom the debt is due is a financial creditor and the financial creditor can move the court by a procedure which is indicated in the section itself. Now the minute such a petition is filed within 14 days the NCLT, the adjudicating authority has to decide whether to admit this petition or not. Whereas there was no such time limit under the old act. So there is now an element of expedition that has to be followed by this NCLT. Now what is a default is also defined in section 7 subsection 5 and it only says that if a notice is given and within the time prescribed of 14 days, if there is no dispute that is already existing, supposing 100 rupees is demanded and the creditor says no, no, not 100. I don't 100 rupees. I don't have any money. I filed a case as an arbitration proceeding relating to this claim. Then there is a sufficient defense for the financial debt creditor not to proceed under section 7. So the adjudicating authority can say this is a pre-existing dispute therefore I am not going to go forward and dismiss the petition. Now in the case of an operational creditor section 8 refers to it and there you must if a notice is issued by an operational creditor which is a must before you institute the case. The creditor has a 10 day window within which it must either raise a dispute or there must be a case pending before the issuance of the notice. So you can't cook up a defense and cook up a case. Now if there is a default in the 10 days period then section 9 says that the adjudicating authority which is NCLT can go forward and go to the next step. Now under the old companies act there was a long procedure under which a company would have to go through a procedure the court would hear both parties. Find out if a prima facie case is made out. The prima facie case meant is it prima facie established that the debt is due in which event the court would admit the petition and advertise it in the newspapers. After that the hearing will go on if necessary evidence will be taken that is the procedure. Now it is not like that the minute the adjudicating authority comes to the conclusion. But here is a case where insolvency resolution process has to go forward they admit it and they will appoint what is called as an interim resolution professional. There are elaborate rules for this in the petition itself the petitioner is supposed to give the name of the proposed insolvency resolution professional. And there is a regulation of the regulatory authority for this purpose insolvency regulation board, which provides for an examination and enlistment of areas professionals who can go through the process and get enlisted as insolvency resolution professional. Once you are enlisted then you are eligible to be appointed so the petitioner is required to explain and put in the name of one insolvency resolution professional who will automatically be appointed as the interim resolution professional. So the interim resolution professional there are strict rules for that within 14 days he has to advertise he has to correct all the information. And thereafter within 180 days from the date of admission that is the date insolvency resolution professional interim resolution professional is appointed within 180 days six months he the entire case has to be completed. There is a there is a provision for extension and there are some strict conditions for that the committee of creditors has to approve it in which event it can be extended by a maximum of 90 days. So that means you are looking at 270 days maximum period before it is decided whether the company can be restructed it can be corporate insolvency can be taken care of by various means that are there in that or it cannot be done. Now what is it that is supposed to happen in this 180 or 270 days is what is provided in the next provisions but before that you must notice section 13 and 14 which says that the minute an insolvency interim resolution professional is appointed the NCLT will order a moratorium on all actions against this corporate data. See because you one person is before the insolvency court if other people go to court get an order of attachment get an order of bank account attachment stoppage of activities then it becomes difficult to go forward with the resolution of the corporate insolvency. Therefore there is a moratorium there is a whole host of laws somewhat similar provision was there in the sick industrial companies special provisions act of 1985 where it provided that the minute you know this new IBC is a kind of a what should I say hybridization of a sick industrial act companies act IBC all of them put together so the scheme is different anyway there was a moratorium there here also there is a moratorium. Now what is it this interim resolution professional has to do is within 14 days he must give a report and his duties are all enumerated what he should do how we can do how we can take charge the companies affairs etc. But the most important role in the restructuring of any corporate body today in insolvency proceeding is that a committee of creditors is to be found. Now, ultimately this company in insolvency as we all know the whole objective is that when a body or a person is insolvent his estate will be vested and taken over by some independent receiver or independent administrator because it cannot be left to the insolvent company to do itself because it may prefer somebody it may do something wrong. Therefore, it goes into the hands in this case it will go into the hands of an interim resolution professional and later it goes into the hands of a resolution professional who is more or less permanent till the matter goes into liquidation. Now this resolution professional or the interim resolution professional will constitute a committee of creditors which is all the financial creditors of the company will be part of that committee. So if a company has let us say six financial institutions or other financial creditors who have advanced money to the company based on the information provided they will determine the IRP has to determine who are members of this credit supposing the total amount is 100 rupees the total library of this company this may be due to about 10% different sums are due. So the committee of creditors will comprise of everybody to whom this 100 rupees is due and in proportion to your respective debt you are voting right. So one important aspect on which again there has been quite a number of cases litigation before NCLT NC Appellate Authority and the Supreme Court is that there was an exclusion of a related person. Now in this list of committee of creditors if a person comes within the definition of a related person has defined in the act because the act defines who is a related person. Those persons cannot form part of the committee of creditors the reason being that if they are related to the promoters of the company or the company in any manner the body of creditors decision will not be independent because the decision what should happen to this company if a scheme is propounded let us say the management comes and says that you know we would like to pay this in such and such a manner. We would like to stop this activity we'd like to sell some asset all these are parts of the resolution scheme that can be presented to the committee of creditors. When the committee of creditors examines it interest should persons cannot be there and voting on the scheme. Then there may be what shall I say backdoor fixation of the result of the committee of creditors so they are excluded that these related persons. Then there must be a majority voting section 21 says that the committee of creditors will adjudicate will vote on this as on the issue relating to the restructuring by a simple majority of votes and those votes are proportionate to the sum that is due to each of those creditors. Then the role of the resolution professional comes at that stage when he has to then place this matter the resolution plan as approved by the committee of creditors before the adjudicating authority which is the NCLT. Now the NCLT again there are cases on the point as to what NCLT can do what it cannot do. And then general view has been that the wisdom of the committee of creditors is something which the NCLT does not sit in appeal over unless there is some procedural irregularity or there is some other legal issue that is involved. Usually the decision the committee of creditors has to be accepted by the adjudicating authority and what is it that they can do. Now I'll give one example supposing a company that has got some large number of creditors it comes forward and as resolution plan says that all the creditors will be paid 50% of their debt. And this money will be raised by the sale of this entire undertaking to a person who comes and bids. I want to buy this company so I say okay I have assessed it I'm going to give 1000 rupees to buy this company. The company has liabilities of say 2000 rupees I'll say I'll give 50% every creditor. This is a proposal the resolution plan which will be placed before the committee of creditors and if the committee of creditors accepts this resolution plan and votes on it with a 51% majority. Then this is placed before the adjudicating authority which can in turn then say yes we accept this resolution plan. If for some reason the resolution plan is not accepted by the committee of creditors then a report goes to the adjudicating authority to say there was a scheme but it didn't pass muster with the requisite majority. Therefore nothing can be done to revive this company what should be done next is that it should go in for the NCLT will then have to make an order to say that there is no resolution plan that is possible. This company is insolvent it's not able to pay its debts therefore there is no option but to order the liquidation of this company and the resolution professional will become the liquidator of this company. And once he becomes a liquidator the rest of the provisions are more or less akin to what is there in the companies act itself as to the priority how this list of creditors should be drawn up and how assets should be realized and a host of other provisions. And finally at the end of all of that supposing they sell all the assets and the total liabilities are 1000 rupees he releases realizes only 500 rupees which is not sufficient to discharge all the creditors of the company. He pays them relatively and then says well nothing more can be done please dissolve the company and an order of dissolution can be passed. There are the usual powers of fraudulent preference and transfer of assets illegal activities prior to the resolution process all of that can be gone into. But finally if there's no solution at the end the company has to be dissolved and there's an order of dissolution that is made. One other new provision which we have in this NCLT the regulations is section 56 which talks of a fast track corporate insolvency resolution. You saw in the earlier it was 180 days if they opt for a fast track then it could be 90 days the time available is 90 days. Now one other important aspect which comes up in most resolution cases is what happens to the secured creditors. Now as we all know if a company has let's say a liability of 2000 rupees out of that 1000 rupees is due to a bank and the bank holds a mortgage over the property of a company. Let's say its factory is mortgaged to the bank. What are the rights of the secured creditor? Say the secured creditors use our 1000 rupees and if the value of that security is 500 rupees then the secured creditor has a right to say I'm not going to join the liquidation proceeding, winding up proceeding in insolvency resolution proceedings. I want to stand outside winding up. I want to take charge over this asset. Maybe I will take recourse to securitization act. Maybe I will take recourse to debt recovery provisions under the recovery of debts due to banks act. Whatever other remedies I have I would like to enforce them so that my security I would like to encash it in the manner known to law. And if I realize more than 500 rupees I'll pass on the rest to the body of creditors. If I realize less then I'm satisfied with that. For the balance if any I will stand along with the other unsecured creditors in the list proportionately pro rata I should get it. So such provisions are there in section 52 of the act. I must draw attention to one or two important cases that have come up in the interpretation because this is a new legislation it has gone to Supreme Court quite often. It's a 2016 enactment and one of the earliest cases which went to Supreme Court is the innovative case which is reported in 2018 one Supreme Court cases 407 and a later case called Swiss ribbons in 2019 for Supreme Court cases page 17. In both these cases, the question involved was what is the discretion available to the NCLT when it comes to dealing with petitions by financial creditors. The Supreme Court has noticed the language and the scheme of this new act is such that there's not much elbow room available to the corporate data to maneuver and delay things. The minute a financial creditor says that this much money is due and that is burnout because now you have a national credit registry and all that there's long procedure that has to be followed. If you follow all that procedure and come to court, there's very little defense that the corporate credit letter can actually have. There is a ultimately bank's dues are all borne out by records, they've got bank statement, there'll be demand, there'll be confirmation of balance, there'll be documentation, there'll be mortgage, there'll be registration of charge. It'll be in the register of charges, it'll be in the national registry of debts. All of this will show that the sum is due. So the scope for maneuvering is very, very limited. And that is what the innovative and the Swiss Rebels case, the Supreme Court had occasion to deal with it and settled it. So in some and substance, so far as insolvency is concerned in the resolution process. This is the broad scheme of the act. I would say that it is a change for the good. I must say with some disappointment that the manner in which the national company law tribunal has been formed and is functioning leaves much to be deserved. The tribunal is never filled up fully. There are not sufficient benches, there are not sufficient members of the tribunal. The registries are not properly manned and it is beset with innumerable delays and procedural problems. As a result, these time frames are never followed. Now the interesting thing about time frame is all these 180 days and other time frame that is indicated, it starts ticking from the date of admission of the petition. So if a petition is filed today, there's no time limit for the NCLT to decide whether to admit or not to admit. So we see huge enormous delays sometimes running to more than 2-3 years till the NCLT decides that this petition is to be admitted. The minute it is admitted, then this time starts ticking. And I find in many cases, this time frame is actually counterproductive because sometimes in one case, the RP knew that this committee of creditors were not properly constituted. But he was time bound. So he said, I can't do anything. Let's go ahead with the meeting. The meeting went ahead, resolution passed, accepting an offer made by somebody. Then it goes back to NCLT where he says he comes and tells the NCLT, see I went all this way forward because of the time frame. Now I find that the committee is not properly constituted. So please restart the whole process. This is the stage at which it is there. So I'm saying sometimes these time frames have a counterproductive effect. And that's what is happening in many cases. But most of the time this time frame, I must say with my experience, limited experience in NCLT, these time frames are never followed. And that is because of the huge amount of tendency of cases. One other important change that is brought about under the IBC. You know, in the past, as I was mentioning, the official liquidator is the one who has full jurisdiction over companies which were ordered to be wound up under the old act. And he was an officer of the court. He was a senior officer in the company law department and he had a separate office attached to the high court and he was under administrative control of the company judge. Now they have done away with that process. They have now vested it in independent professionals who have to follow a certain regimen to get registered. And once they do that, they become IRP or RP as the case may be. So they are also regulated in terms of professional ethics and other things. So these are independent persons to whom a remuneration is to be payable. There is a fixation of remuneration. Like they are private parties who are doing the public job of administrating insolvent companies because traditionally insolvency legislations provided. So once a person is insolvent, his estate will rest in the state, which is administered through a receiver or whatever as the case may be. Now it is resting in independent professional. There are some plus and minus points there. But I think there is something that can be said to support it, but there are many things that we said to not support it. But I'm not going to deal with that, but this is anyway one of the issues that is some sort of a bugbear. And it is somehow not being very efficiently done, very properly done is what I feel. The next aspect of the topic today is on restructuring. Now if you go back again to Companies Act of 1956, it had a provision in section 391 onwards, which said that a company can enter into an arrangement with its shareholders or creditors. And there was a procedure you would file an application and that application would be approved by the company judge. Meetings would be held. A scheme would be placed before the members. Same scheme would be placed if it is going to affect the secured creditors before them and then secured creditors. Voting would take place. You needed three fourths majority. And once you did that, the matter would go back to the company quote after public notice. And after notice to central government and official liquidator if it is necessary, the company is one of them is ordered to be wound up. Then income tax department and the matter would be company judge would decide the matter. Now the same set of provisions are contained in the new Companies Act because these provisions relating to restructuring is something which is not in the IBC because this is a case where a company is not insolvent. When a company is not insolvent and it wants to restructure itself, either to retire some debt, reduce some capital or enter into compromise with creditors, tell them look here. If you allow this company to its liquidation, you will get only 20 rupees in 100 rupees. So if you allow me to restructure, I am sure you will give you 50 rupees at least. So this type of structures are possible. So the new Companies Act more or less proceeds on the basis of the old section 391. The new sections are 230 to 236 of the Companies Act of 2013. The broad scheme is more or less the same. The procedure is more or less the same. Instead of going to the company code that is high code, you would now go to the NCLD. And there is a large procedural, it is largely procedural, but the important thing to be noted is that this restructuring, restructuring could be two things. You either retain the company as it is and restructure the debt and allow the company to continue, subsist and revive itself. Or you merge this company with somebody else, with some other company. So it is a scheme of amalgamation. So many times a merger takes place to take over a company which is ailing. A healthy company enters into a compromise and amalgamation proceeding with a not so healthy company. By which process is a win-win situation? The healthy company is getting a good asset company if it is so assessed like that. The unhealthy companies which is about to be closed because it has no means of sustenance. Their shareholders and creditors have a ray of hope because their obligations are taken over by the new company. Of course, there are provisions. The scheme of amalgamation will have to contain. What is it that the sacrifices to be made by which batch of creditors? Is it secured creditors? Is it unsecured creditors? How much are they each sacrificing? And what about the shareholders? If the shareholders holding 100 shares, maybe the scheme will provide that he will get only 50 shares in the new company. There is a share valuation that is done. In the valuation exercise, the net share value of each share of the transferor and the transferee companies are seen. There after a proportion is worked out, a charge accountants report is looked into. And this is placed before the members because members secured and unsecured creditors, three separate meetings have to be held. And they will then decide whether it is fit and suitable to accept this. Now the voting takes place. Again, in the case of shareholders, one vote per share. In the case of creditors, one vote per rupee. That's how the voting takes place. So 75% approval is needed. Once that is done, if there is a sectoral regulator, like for example, if you are a company which is in a stockbroking business, there is a sectoral regulator which is SEBI. If you are a real estate company, the sectoral regulator is RERA. Like this for each sector, if you are a banking company, the sectoral regulator is RBI. So there is a sectoral regulator for many of these things. If there is a sectoral regulator, that regulator will also be participating in this because their views will be considered after the members and the shareholders and the creditors approve it. And once that is done, the matter goes before the adjudicating authority, which is the NC&T, which plays a role of a supervisor. Now what is the role of this supervisor? There has been the subject matter of many decisions and one of them, the earlier decisions of Mahpat Lal, where the Supreme Court said that the role of this, then they were concerned with the court. Now it is the NC&T. He is not to act in as appellate authority. Ultimately, the persons who are stakeholders, they are the people who decide what is the fate of their company. So if all procedural regulations are followed, law is not violated, then the court or the regulator here, that is the NC&T has no right to say, no, no, I think the scheme is not fair, so I want to approve it. That is the role, but just to oversee and ensure that law is followed. That seems to be the object of the amalgamation proceedings and the old act, which is similarly applicable under the new act. One other important thing which is again parallely common is there may be a small dissenting number of shareholders. Supposing 90% of the shareholders approve it, 10% vote against it. In this case, the scheme can make a provision to say that this 10% who do not want to participate in this amalgamation of this restructuring, for them we make a separate provision. Those shareholders may be paid so much per share as a result of which the share will get extinguished. I am just saying this could be one such thing. Second is those 10% shareholders will be paid some X amount of rupees per share. Like these many things could be there. So the order of the NC&T can provide as to what should happen to this dissenting members if any dissent should be exercised. And also there is another separate provision in section 236 of the Companies Act of 2013 which provides for some order to be made to purchase the minority shareholders. Supposing there is a small group in the illustration is giving 10% are not agreeable. What should happen to those 10% there is a provision to provide that those shares of those 10% will be purchased by someone else. Or by the company itself by means of an order made under the section itself without the company having to go for reduction of capital which is a different procedure into the old section 100 is a parallel provision in the new act also is there. So these are the provisions relating to restructuring of a company. The restructuring can be as I said by means of reduction of the debt by means of reduction of the capital by means of repayment of some capital. By means of buying out minority shareholders all these are to be debated in terms of the procedure that is provided in the Companies Act under the nose and supervision of the NC&T. My experience is that because of the specialization of the members of the NC&T many times they come precisely to the question and if you satisfy them that the requirements have been fulfilled. It's a matter of procedural approval. It's more or less easily done provided you follow all the procedures and the same thing was happening in the Companies Act also. Many company judges before whom we have appeared for so many years they came to the point straight away and 1234 checklist ahead finished all these things all approvals granted. Okay if there's some dissenting member will hear you what is it that you want to say are you going to be better off or worse off and then take a decision as to what should happen to this company. So I think these are the provisions which we have in matter relating to corporate insolvency and restructuring. I think I've come to the end of my time which was 45 minutes. Thank you for a patient hearing. It's time for a few questions. Anybody wants to ask since you have taken us to the Swiss judgment etc. And there has been a lot of debate as to whether it results a matter for all times to come. For a person who is to understand the backdrop of the NC&T etc. There are a lot of judgments specially by just Ronnington on these aspects and rightly said that the endeavor of the government is quite in a positive direction. But yes if the contribution towards the bar in the bench for its early disposal is also a prerequisite. And while if we take these webinars and seven hours to understand the things, if one understands the procedure, it becomes quite easy. One aspect according to the people would be what would be the aspect because a lot of people since they are youngsters also. How is the interest done in the case of a secured creditor and an unsecured creditor in the NC&T matters? Is it the same or is it the same like the companies matter? No, I think the role of the secured and unsecured creditor and their rights, they are not disturbed. The only distinction is this that in the earlier procedure before the IBC, at the stage of admission of the petition, the creditors had no role to play, the general body of creditors. Same thing here also, at the stage of admission of the petition, the petitioning creditor, whether he is secured or unsecured, depending on whether he is a financial creditor or an operational creditor, the court will look into it and if it finds there is a debt which is not paid, it will admit it. At that stage, the rest of the body of creditors won't come into the picture, same situation as it prevailed then. But once this admission happens, the procedure is completely different now under the new IBC. Under the old provisions, what would happen was the court would then issue a public notice and here anybody who comes, including the creditors. Now, if other creditors came and said, sir, don't wind up this company, the court would then ask them, well, you see, this debt is not paid. The company has no means of payment and therefore it is insolvent. If you don't wind it up, what will happen to the creditor who has come to court? Who will pay him? Are you going to pay him? Many times, the workers come and oppose. The court asks, well, I am a sympathy with you because in the PR Ramakrishnan versus NTC case in 1983 or so, Supreme Court said, workmen never write to be heard in winding up proceedings. Yes, they can be heard, but what will they say? So in the new procedure under the IBC, the role of the court or the NCLT is reduced. What happens now is the ball goes into the court of the committee of creditors. So when the committee of creditors is formed, the committee of creditors will decide whether there is any chance of revival of this company or there is no chance. If there is no chance, then the next step of liquidation proceeds automatically because if no resolution plan is approved, nothing can be done except to wind up the company, liquidate the company. So then the procedure will go on. The only small distinction is in this committee of financial, the committee of creditors, the financial creditors play the major role. The role played, there is no role for the operational creditors. Say in the example I was giving, supposing the company has a debt of 1000 rupees. In 1000 rupees, 800 rupees or 700 rupees is let us say due to financial creditors, banks, institutions, long term lenders, all of them. 300 rupees is due to operational creditors, people who supply you goods, people who give you services whom you have not paid, etc. Now in the new dispensation, the operational creditors of 300 rupees, they have no role in the decision making process of the committee of creditors. Similarly, any interested person who may be interested in the company as a director, former director, relative of a director, relative of majority shareholder, they also have no role. So it's an independent body of financial creditors who call the shots. If they accept a resolution plan, then the resolution professional will go forward and place it before the adjudicating authority. And those who are not in agreement with it certainly have a right of audience there, they can come and say, don't approve it for this reason, that reason. But the role of the adjudicating authority there is very limited, the discretion is not there. Same whereas in the old Companies Act, there's a famous passage in Palmer Company law, where the question was, the section says may wind up a company. What is the meaning of may? It means there's a discretion, company can still say I won't wind up, it doesn't say shall wind up. What is that element of discretion? The discussion of the leading textbook says may wind up means unless there are very good and compelling reasons as to why this company should not be warmed up, the company court is bound to wind it up. If no such good reasons are there, it is also bound to wind it up. So I think we are more or less on the same lines. But the distinction is that in the decision making process here, it is the financial creditors who call the shots. For a youngster, we would like also to understand what is the role of this RP? RP is a very important role. As I explained, initially at the time of admission, an interim resolution professional is appointed. What he does is he or she, they'll correct the data, they'll go to the company, correct all the information and they will look into the records and give a report to the adjudicating authority which is NCLT. In that report, he will specify who are the creditors, the committee of creditors and what are the state of affairs. The IRP also has a right to look into supposing this is a running company, salary has to be paid, bank account has to be operated, all those things the IRP can do. Once the committee of creditors is formed, then the committee of creditors, the shepherding of the committee of creditors is all done by the resolution professional. He is the next level. The resolution professional, it could be the same IRP who becomes the RP, but RP could be independently appointed also. So it's again another registered professional. The RP's role is to take it forward from the committee of creditors, then submit a report to the adjudicating authority that is NCLT and thereafter look after the affairs till a decision is made. If the resolution plan is sanctioned and the adjudicating authority approves it, then the RP's role is over, he gets his money and he goes home. But if it is not approved and the NCLT orders the liquidation of the company, then the RP will continue and the RP will continue to be the equidator of the company unless the adjudicating authority orders otherwise. That is the distinction in the role of these two. The number of powers of the RP and IRP are there, the sections provide exactly what they have to do, but in common parlance I can say they will substitute the board of directors. Whatever the board could do, the IRP and the RP can do, but subject to the overall supervision of the adjudicating authority and the provisions of law, the act itself contains. This is, the name is not coming, what is the discretionary power of the NCLT in relation of approving of an evaluation report in case of a merger? If there is a valuation report that is given in a merger proceeding, in a restructuring or amalgamation proceeding, that valuation report is to be placed before the three bodies of decision makers, the shareholders, the secured creditors and the unsecured creditors. Once that is placed before them, taking note of the valuation in that, if appropriate majority of three fourth is voting in favor of the scheme, then the role of the adjudicating authority or the NCLT is very minimal. They can't say that this report is not correct, incorrect, because that is not their role. The decision makers are the three affected persons and once they have made up their mind, it should be final. And if somebody is dissenting, there is a provision to make an order so far as dissenting persons are concerned. That is something which they can, you know, fashion it in that fashion in the order. This is Kesha, he says, what is the value of prior order by RERA authority ordering revocation of project registration and assignment of project completion to independent authority under the initiation of CIRP? See, the RERA orders are something to do with the running of the business. The fact that the company is facing RERA proceedings and there are some orders passed in RERA is a very important fact which has to be placed before the committee of creditors in the resolution plan. See, whoever, see, if there was a real estate company, it has got 10 projects. In two projects, RERA authority has developed the plan and given some directions. How to revive this company? These two projects must also be taken note of and to see how it can be done. Of course, there is a slight aberration in the law now as it stands. See, very, I would respectfully say a very incorrect order has been passed by the NCLAT in two matters which has been commented upon and, you know, disagreed by Bench of the Madras Tribunal. Where they said that in a real estate company, if the company has three projects, the CIRP can go on with that to one project and not involve the other projects. I don't know how that's possible. Because the CIRP is not project-wise. The CIRP is for the whole company. Now you cannot bifurcate it like that. So the answer to the question is that if some project has been commented upon or ordered by RERA, that is a very important facet which has to be included in the resolution plan. Noticed and included and a resolution of that also should be proposed. What are they proposing to do for that? Is there any distinction between RERP and IRP? IRP as I told you is initially appointed. In the petition itself, the petitioning creditor must give the name of a person to be appointed as IRP. They have to give a certificate saying he's not disqualified, he's agreeable on that. Once it is there, usually the NCLT will appoint that named person as the interim resolution professional. The interim resolution professional takes charge forthwith, steps into the shoes of the board, collects all the material and formulates the committee of creditors. Once that is done, the matter goes back to the adjudicating authority that's NCLT with a request to appoint now a resolution professional. So the interim can get converted to a resolution professional or a new person can be appointed. Because from that stage onwards, the resolution professional takes over. Like we have been talking about, I'm just taking few questions for a common person to understand. It says that, what is actually the role of a RP, resolution professional in a NCLT matters? See, the role of an RP is as I'm saying they step into the shoes of the board of directors of the company. The board of directors is superseded. So whatever is supposing let's say a company, it's got a factory, it's got say 200 employees, it's got a running business. Now the IRP is supposed to substitute the board and take all decisions relating to running. Tomorrow, whether they should produce A or B or C, whether they should collect money from XYZ, whether they should pay electricity bill, who should operate the bank account, all of this is like a receiver in a civil action. Everything is vested in him with powers and what his powers are clearly stipulated in the act itself, what he can do. Section 18 talks of the duties of the IRP. So he literally steps into the shoes of the board of directors. That's what I can say. This is what after the malformation is affected and moratorium is lifted. What will happen to the money recovery suits against the old entity? Can it continue against the new reformed entity? Normally in all amalgamation proceedings, they insist on a provision in the scheme itself, which normally it is included, to say that any proceeding by or against a company which is under amalgamation will be continued by or against the transferring company which takes over all this. Unless such a provision is there, the scheme will not be approved at all. So if there is a proceeding against a company which is amalgamating and the amalgamated company will step into the shoes of the amalgamating company and all obligations will be of them. Of the amalgamated company because most of the time the amalgamating company will be ordered to be dissolved without binding them because everything is taken over. There is no asset left, no obligation left. So we have discussed the entire topic along with the questions and we are thankful to you for sharing your knowledge and that too despite the fact that you've come to the temple because we all are in the temple of justice to understand that the right knowledge flows from the right fountain. Thank you everyone, stay safe, stay blessed. Thank you.