On the date of hearing fixed by the Tribunal and on consideration of the report of the interim administrator filed under sub-section (1 ) of section 256, if the Tribunal is satisfied that the creditors representing three-fourths in value of the amount outstanding against the sick company present and voting have resolved that:—
a. it is not possible to revive and rehabilitate such company, the Tribunal shall record such opinion and order that the proceedings for the winding up of the company be initiated; or
b. by adopting certain measures the sick company may be revived and rehabilitated, the Tribunal shall appoint a company administrator for the company and cause such administrator to prepare a scheme of revival and rehabilitation of the sick company:
Provided that: the Tribunal may, if it thinks fit, appoint an interim administrator as the company administrator.
Legal Commentary & Landmark Judgments: Section 258
Section 258 historically empowered the Tribunal to adjudicate on corporate sickness and decide whether to order revival or winding up; omitted by the Insolvency and Bankruptcy Code, 2016, its bifurcated adjudication was replaced by the plan approval or liquidation mandate under Sections 31 and 33 of the IBC.
When litigating before the NCLT in insolvency, argue that the Tribunal lacks jurisdiction to grant indefinite extensions or sua sponte propose restructuring options; once the statutory CIRP period expires without an approved resolution plan, Section 33 IBC mandates an immediate order of liquidation.