# In the matter of Sholingur Textiles Limited CP-66(CHE)-2021 in CA(CAA)-359-2020 in IA-686-2020 in MA-1192-2019 in CP-1037-IB-2018

> NCLT judgment dated 2023-03-07. Citation: TCN-2023-NCLT-04294. The case involves a Company Petition (CP/66(CHE)/2021) filed as a sequel to CA(CAA)/359/2020 by…

- **Court:** NCLT
- **Order date:** 7 Mar 2023
- **Citation:** TCN-2023-NCLT-04294
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sholingur-textiles-limited-cp-66che-2021-in-cacaa-359-2020-in-ia-686-2020-in-ma-524e423a

## Summary

### Background

The case involves a Company Petition (CP/66(CHE)/2021) filed as a sequel to CA(CAA)/359/2020 by the Liquidator of Sholingur Textiles Limited, which is under liquidation. The petition was filed under Sections 230 to 232 of the Companies Act, 2013, read with the Insolvency and Bankruptcy Code, 2016, seeking sanction of a Scheme of Compromise/Arrangement with creditors and for the takeover of assets and properties by the scheme proponents, M. Poobalan and P. Poongodi. The Corporate Insolvency Resolution Process (CIRP) was initiated on 2019-02-04, but no viable resolution plan emerged, leading to the company being ordered for liquidation on 2020-02-13. The liquidator issued an Expression of Interest (EoI) inviting schemes and prepared an Information Memorandum. The

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## Facts

Sholingur Textiles Limited underwent Corporate Insolvency Resolution Process (CIRP) initiated on 2019-02-04, but failed to produce a viable resolution plan, leading to a liquidation order on 2020-02-13. T.V. Balasubramanian was appointed as the liquidator. The liquidator then invited schemes of compromise and arrangement under Sections 230-232 of the Companies Act, 2013. M. Poobalan and P. Poongodi proposed a scheme to take over the assets and properties of Sholingur Textiles Limited. The scheme involved an infusion of Rs. 16 crore, with Rs. 5 crore released 30 days after approval and Rs. 11 crore released 75 days after approval. Rs. 80 lakhs would be used for purchasing equity shares, and Rs. 15.2 crore would be treated as an unsecured loan. The existing equity shares

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## Issues and analysis

### Issue 1: Whether the Scheme of Compromise or Arrangement proposed by the Scheme proponents for the …

**Ratio:** A Scheme proposed under Section 230 of the Companies Act, 2013 may also include

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**Reasoning:** The court considered the submissions of the liquidator that the scheme is the most fair

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**Interpretation:** This legal issue concerns the fairness and reasonableness of the proposed

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**Application:** The court applied this ratio to the facts of the case by considering the

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## Parties

- **Judges:** (RETD.) RAMALINGAM…; SAMEER…
- **Appellants:** T.V. Balasubramani…
- **Respondents:** Sholingur…; The Regional…

## Timeline

- **2019-02-04 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP)…
- **2020-02-13 — Liquidation…**: Sholingur Textiles Limited ordered…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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