The company being an independent legal entity is recognized for distinguished identity. The specialized corporate structure is monitored under the provisions of the Companies Act, 2013 (hereinafter referred to as the “Act”).
National Company Law Tribunal
With a view to regulate and administer the legal affairs with respect to a company, the Government has provided for the National Company Law Tribunal (hereinafter referred to as the “NCLT”) under the Act. This quasi-judicial body has been established in order to ensure meticulous and expeditious resolution of civil as well as criminal disputes concerning a company. The NCLT works according to the principles of natural justice not being bound by the rules of evidence and procedure laid under the judicial parameter.
The appeals from the decisions of NCLT may be contested to the appellate tribunal known as National Company Law Appellate Tribunal (hereinafter referred to as “NCLAT”) which may set-aside, modify or confirm the same.
The Government introduced the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”) with the aim at making availability of credit more transparent by maximizing the value of the assets in a time-bound manner. IBC restores the faith in the judicial mechanism and prevents the unscrupulous debtors from escaping the repayment of their debts by taking recourse to insolvency.
NCLT paves a new way
NCLT has ordered Enforcement Directorate of Delhi Zone to hand over to the liquidator, the possession of attached properties of the corporate debtor – REI Agro, one of the former renowned rice processing unit and now under liquidation.
Up till now, the proceedings under NCLT didn’t impact cases where criminal laws were involved. Agencies such as Debt Recovery Tribunal, Enforcement Directorate or Securities and Exchange Board of India were confiscating assets and selling them in furtherance of dealing with criminal charges.
In this first of its kind order, it has been settled that the control and disposal of the assets would be done by the liquidator appointed under the IBC, thus allowing it supremacy to the authorities handling criminal cases.
The aforesaid order of NCLT sets a precedent by authorizing the liquidator under IBC to take the charge of all the assets of the company which would have to be disposed of and the proceeds to be distributed, once it goes under liquidation. The said judgment brings a ray of hope of the creditors where the Government agencies have attached the assets of the debtor company on account of frauds committed by them.