NCLAT restricts handing over of Bafna Pharma to its promoter

If the possession has already been handed over, promoter will not alienate, transfer or create third-party encumbrance of properties and must ensure firm remains a going concern

The National Company Law Appellate Tribunal (NCLAT) has called upon the monitoring committee for Chennai-based Bafna Pharmaceuticals Ltd not to hand over possession of the company to its promoter. The order comes in an appeal filed by Saravana Global Holdings Ltd and others against the company.

Earlier, the National Company Law Tribunal (NCLT) had issued an order approving the resolution plan by the promoter, Bafna Mahavir Chand, based on approval by the Committee of Creditors, as it falls within the meaning of Micro, Small and Medium Enterprises. 

Based on the appeal, Justice S J Mukhopadhaya, chairperson of NCLAT and Justice Bansi Lal Bhat, member (Judicial) issued an order restricting handing over the possession, but if the possession has already been handed over, the resolution applicant, which is the promoter of the company, will maintain status quo without alienating, transferring or creating third-party encumbrance of properties. He also has to ensure the company remains a going concern, the order said.

As per the resolution plan approved by the NCLT, the total claim for all financial creditors was Rs 49.23 crore, and the payment proposed was Rs 34.46 crore. The NCLT order said the plan provides for settling the claim of various stakeholders including workers and operational creditors. At the NCLT, the Committee of Creditors decided to defer the issuance of the expression of interest for the resolution plan on the ground that the company is an MSME and the promoter was allowed to submit the resolution plan.