CHAPTER XIX
REVIVAL AND REHABILITATION OF SICK COMPANIES
Determination of Sickness
1 (1) Every application made to the Tribunal under sub-section (1) of section 253 by one or more secured creditors of a company, (hereinafter referred to as ‘debtor company’), for determination whether the debtor company is a sick company, shall be made in Form A. The application can be made by the secured creditors collectively, wherein they can be mentioned as ‘secured creditors’ or a single secured creditor on behalf of others on authorization.
(2) No such application shall be made unless accompanied by the following:
(i) prescribed fees as specified in Annexure B;
(ii) copy of the initial demand notice issued by the applicant upon the debtor company and such notice should be dated at least ninety days prior to the date of making the application in the event of non-payment of debt;
(iii) proof of service of the demand notice upon the debtor company;
(iv) any acknowledgement and reply, if any, or correspondence, if any, received from the debtor company in pursuance of the demand notice;
(v) an up to-date statement of the ledger account of the respective secured creditors showing the amount receivable and the amount shown in the demand Notice;
(vi) copies of the audited financial statements of last five financial years, if available, of the debtor company;.
(vii) the authorisation issued by the respective secured creditors in favour of the creditor acting on authorization for filing the application and the original authorization issued by the secured creditor in favour of the signatory of the application; and
(viii) any other document which the applicant or applicants may consider necessary for effective determination of sickness.
(3) For the purposes of sub-section (2) of section 253, subject to provisions of sub-section (1) of section 254, where the applicant, at the time of making such application in Form A, makes a prayer for the stay of any proceeding for the winding up of the company or for execution, distress or the like against any property and assets of the company or for the appointment of a receiver in respect thereof and that no suit for the recovery of any money or for the enforcement of any security against the company shall lie or be proceeded with, such interim relief shall be prayed for in the application in Form A:
Provided that where an application for the stay of any proceeding for the winding up of the company or for execution, distress or the like against any property and assets of the company or for the appointment of a receiver in respect thereof and that no suit for the recovery of any money or for the enforcement of any security against the company shall lie or be proceeded with, is to be made at any stage of proceedings after the filing of Form A, it shall be made in Form B and accompanied by a fee as specified in Annexure C.
(4) No application either under sub-section (1) or sub-section (2) of section 253 shall be made unless a notice thereof has been issued to the debtor company not less than fifteen days prior to the making of the application. Such notice shall be in Form C. The notice shall mention the date and place at which the applicant intends to move the application before the Tribunal.
(5) Before passing an order declaring the debtor company as a sick company, the Tribunal shall take into account reasons for default in payment of dues and position of debts owed by the debtor company to its creditors, both secured and unsecured and if satisfied that there exist sufficient reasons warranting the passing of such an order, the Tribunal may do so.
(6) No such order shall be passed without giving the debtor company an opportunity of being heard:
Provided that if the debtor company willfully abstains from participating in the proceedings before the Tribunal, summons requiring the presence of debtor company shall be directed to be published in writing on the notice board at or upon the door or gate at the entrance of the premises, where the registered office of the debtor company is situate and despite causing such notice, if the debtor company does not enter appearance, it shall be deemed that the debtor company was duly granted adequate opportunity for being heard and the Tribunal may proceed accordingly.
(7) The order of the Tribunal declaring the debtor company as a sick company shall be in Form D.
(8) If the Tribunal grants stay, in pursuance of sub-sections (2) and (3) of section 253, of any proceedings for the winding up of the company or for execution, distress or the like against any property and assets of the company or for the appointment of a receiver in respect thereof, such order shall also direct the applicant or the debtor company to file a certified copy of the said order with the respective court or any other judicial forum where such proceedings have been continuing.
(9) Upon determination of the debtor company as a sick company, the applicant at its own cost shall cause the publication of a notice in Form E at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and circulating in that district and at least once in English in an English newspaper circulating in that district within seven days from the date of the receipt of certified copy of order of the Tribunal determining the debtor company as a sick company.
(10) Every application made to the Tribunal under sub-section (4) of section 253 shall be made in Form A. Rules 19.1 (2) to (9) shall apply to such application mutatis mutandis. |