NCLAT puts curbs on Gujarat NRE Coke former promoter

Allowing the appeal of Jindal Steel and Power, the National Company Law Appellate Tribunal (NCLAT) has held Arun Kumar Jagatramka, the former promoter of Gujarat NRE Coke, not eligible to negotiate with the creditors of the debt-ridden company.

A two-member Bench of NCLAT headed by Chairperson Justice S J Mukhopadjaya said that Jagatramka, who was ineligible to be a Resolution Applicant of the company under the Insolvency & Bankruptcy Code (IBC), cannot be allowed at this stage to negotiate with the creditors of Gujarat NRE Coke.

Jindal Steel and Power, which is an unsecured creditor of Gujarat NRE Coke, had challenged an NCLT order that allowed the promoters to settle debts with its creditors.

NCLT had given a go ahead to Jagatramka for “Financial Scheme of Compromise and Arrangement” with him and the company through its Liquidator, after holding the

debts of shareholders, creditors etc.

The appellate tribunal set aside the order passed on May 15, 2018, by the Kolkata Bench of the National Company Law Tribunal (NCLT).

“... it is clear that the Promoter, if ineligible under Section 29A, cannot make an application for Compromise and Arrangement for taking back the i mmovable and movable property or actionable claims of the Corporate Debtor,” said NCLAT.

Section 29A of the IBC

defines persons who are not eligible to submit bids for a company going through corporate insolvency resolution process.

“The NCLT, by impugned order dated May 15, 2018, though ordered to proceed under Section 230 to 232 of the Companies Act, failed to notice that such application was not maintainable at the instance of 1st respondentArun Kumar Jagatramka (Promoter), who was ineligible under Section 29A to be a ‘Resolution Applicant’,” said NCLAT.