Legal Provisions Involved: Sections 7, 14 and 238 of the Insolvency and Bankruptcy Code, 2016

Judgement by: Supreme Court of India 

Judge/Bench: Justice Sanjay Kumar and Justice K. Vinod Chandran

Facts

The Appellant filed an application under Section 7 of the IBC for initiating CIRP against the Corporate Debtor for recovery of Rs.154.33 crores. The Respondent resisted the claim citing pending proceedings for a Scheme of Arrangement (SOA) under the Companies Act before the Punjab and Haryana High Court.

Key Legal Provisions

Sections 7, 14 and 238 of the Insolvency and Bankruptcy Code, 2016

Issues raised

Whether pending proceedings related to Scheme of Arrangement under the Companies Act bar initiation of CIRP proceeding under the Insolvency and Bankruptcy Code ?

Arguments of the case

The Appellant argued that the SOA became defunct due to gross delay and non-compliance with statutory timelines while the Respondent argued that the approved SOA should preclude CIRP. 

Judgement

The Court held that the SOA was rendered defunct by the Corporate Debtor’s deliberate non-compliance with statutory timelines, and the IBC’s overriding effect under Section 238 prevails over inconsistent provisions in other laws. 

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