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REVIVAL AND REHABILITATION OF SICK COMPANIES(AS PER COMPANIES ACT 2013)

Determinti!n !" #i$%ne##&

As per section 253 of the Companies Act, 2013 , sickness of a company will bedetermined as follows:-

(1!here on a demand by the sec"red creditors of a company representin# fifty percent or more of its o"tstandin# amo"nt of debt, the company has failed to pay the

debt within a period of thirty days of the ser$ice of the notice of demand or tosec"re or compo"nd it to the reasonable satisfaction of the creditors, any sec"red

creditor may file an ''i$ti!nto the %ational Company &aw 'rib"nal (%C&' inthe prescribed manner alon# with the rele$ant e$idence for s"ch defa"lt, non-repayment or fail"re to offer sec"rity or compo"nd it, for a determination that thecompany be declared as a sick company

(2'he applicant "nder s"b-section (1 may, alon# with an application "nder that

s"bsection or at any sta#e of the proceedin#s thereafter, make an application forthe stay of any proceedin# for the windin# "p of the company or for e)ec"tion,

distress or the like a#ainst any property and assets of the company or for theappointment of a recei$er in respect thereof and that no s"it for the reco$ery of

any money or for the enforcement of any sec"rity a#ainst the company shall lie orbe proceeded with

(3'he %C&' may pass an order in respect of an application "nder s"b-section (2

which shall be operati$e for a period of one h"ndred and twenty days

(*'he company referred to in s"b-section (1 may also file an application to the %C&'on one or more of the #ro"nds specified in s"b-sections (1 and (2 abo$e

(5!itho"t pre+"dice to the pro$isions of s"b-sections (1 to (*, the Centralo$ernment or the eser$e .ank of /ndia or a tate o$ernment or a p"blicfinancial instit"tion or a tate le$el instit"tion or a sched"led bank may, if it has

s"fficient reasons to belie$e that any company has become, for the p"rposes ofthe Act, a sick company, make a reference in respect of s"ch company to the %C&'

for determination of the meas"res which may be adopted with respect to s"chcompany:

ro$ided that a reference shall not be made "nder this s"b-section in respect ofany company by:

(a the o$ernment of any tate "nless all or any of the "ndertakin#s belon#in# tos"ch company are sit"ated in s"ch tate(b a p"blic financial instit"tion or a tate le$el instit"tion or a sched"led bank

"nless it has, by reason of any financial assistance or obli#ation rendered by it, or"ndertaken by it, with respect to s"ch company, an interest in s"ch company

(!here an application "nder s"b-section (1 or s"b-section (* has been filed,-

(a the company shall not dispose of or otherwise enter into any obli#ation with

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re#ard to, its properties or assets e)cept as re4"ired in the normal co"rse ofb"siness

(b the .oard of irectors shall not take any steps likely to pre+"dice the interestsof the creditors

(6'he %C&' shall, within a period of si)ty days of the receipt of an application "nders"b-section (1 or s"b-section (*, determine whether the company is a sick

company or not:

ro$ided that no s"ch determination shall be made in respect of an application

"nder s"b-section (1 "nless the company has been #i$en notice of the applicationand a reasonable opport"nity to reply to the notice within thirty days of the receipt

thereof

(7/f the %C&' is satisfied that a company has become a sick company, the %C&'shall, after considerin# all the rele$ant facts and circ"mstances of the case, decide,

as soon as may be, by an order in writin#, whether it is practicable for thecompany to make the repayment of its debts referred to in s"b-section (1 within

a reasonable time

(8/f the %C&' deems fit "nder s"b-section (7 that it is practicable for a sickcompany to pay its debts referred to in that s"b-section within a reasonable time,

the %C&' shall, by order in writin# and s"b+ect to s"ch restrictions or conditions asmay be specified in the order, #i$e s"ch time to the company as it may deem fit tomake repayment of the debt

A''i$ti!n "!r rei n* re+,iitti!n ( Se$ti!n 2-.)

(19n the determination of a company as a sick company by the %C&' "nder section253, any sec"red creditor of that company or the company may make an

application to the %C&' for the determination of the meas"res that may beadopted with respect to the re$i$al and rehabilitation of s"ch company:

ro$ided that in case any reference had been made before the %C&' and a scheme

for re$i$al and rehabilitation s"bmitted, s"ch reference shall abate if the sec"redcreditors representin# three-fo"rths in $al"e of the amo"nt o"tstandin# a#ainst

financial assistance disb"rsed to the borrower ha$e taken meas"res to reco$ertheir sec"red debt "nder s"b-section (* of section 13 of the ec"ritisation and

econstr"ction of inancial Assets and ;nforcement of ec"rity /nterest Act, 2002:

ro$ided f"rther that no reference shall be made "nder this section if the sec"red

creditors representin# three-fo"rths in $al"e of the amo"nt o"tstandin# a#ainstfinancial assistance disb"rsed to the borrower ha$e taken meas"res to reco$ertheir sec"red debt "nder s"b-section (* of section 13 of the ec"ritisation and

econstr"ction of inancial Assets and ;nforcement of ec"rity /nterest Act, 2002:

ro$ided also that where the financial assets of the sick company had beenac4"ired by any sec"ritisation company or reconstr"ction company "nder s"b-section (1 of section 5 of the ec"ritisation and econstr"ction of inancial Assetsand ;nforcement of ec"rity /nterest Act, 2002, no s"ch application shall be made

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witho"t the consent of sec"ritisation company or reconstr"ction company whichhas ac4"ired s"ch assets

(2An application "nder s"b-section (1 shall be accompanied byinistry of Corporate Affairs ha$e f"rther clarified that "ntil a date is notified by the

Central o$ernment "nder s"b-section(1 of ection *3* of the Companies Act, 2013 fortransfer of all matters, proceedin# or cases to the 'rib"nal constit"ted "nder Chapter

==?// of the said Act, the .oard of the Company &aw Administration shall e)ercise thepower of the 'rib"nal "nder sections 2*,57 and ection 58 in p"rs"ance of the secondpro$iso to s"bsection (1 of section *5 of the said Act