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SC delivered a Landmark Judgment in a case related to Insolvency proceedings [Read Judgment]

Team SoOLEGAL 1 Sep 2017 1:04pm

SC delivered a Landmark Judgment in a case related to Insolvency proceedings [Read Judgment]

The Supreme Court today delivered its first Judgment related to the section 7 of the newly established Insolvency and Bankruptcy Code, 2016. The Supreme Court bench comprising Justices R F Nariman and Sanjay Kishan Kaul was hearing a petition filed by M/s Innovative Industries (Multi-product company) challenging the insolvency process initiated by ICICI bank. The appellant as a “defaulter” under the code, contended to be free from debts legally due as the Special Provision Act of Maharashtra Relief Undertaking, 1958, all liabilities were suspended for short period of one year, which was later stretched to 2 years. It was, then argued that the M/s Innovative Industries was going through a corporate debt restructuring and though a master restructuring agreement was entered into, the funds were not released as per the restructuring agreement.    

The impugned order dated 17th January 2017, the adjudicating authorities rejected all the contentions of appellant and held the application filed by the respondent (ICICI Bank) is complete under sub-section 2 and section 7 of the Insolvency and Bankruptcy Code 2016. In other impugned order dated 23rd January, 2017 passed by the NCLT, rejected the clarification application filed by the appellant, observing that the appellant was unable to pay the debts, hence the appellant is not liable to get benefits of Maharashtra Act.

The maintainability of the appeal was challenged by the ICICI in the court on grounds of Interim Resolution Professional and the declaration of moratorium. The financial creditor argued that the appeal is not maintainable as the directors of the company are no longer in the management. Therefore, the Court supported the arguments delivered by ICICI bank and delivered a detailed judgment. The Court then directed all the lower courts to put into consideration the paradigm changes appeared into the laws related to Insolvency and Bankruptcy Code.     

Read the Judgment here:        

Supreme Court   Justices R F Nariman   Sanjay Kishan Kaul  

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