Innoventive Industries Limited Vs ICICI Bank Limited (Civil Appeal Nos. 8337-8338 of 2017) - Synopsis
Team SoOLEGAL 14 Oct 2020

Supreme Court of India in this particular case that is Innoventive Industries Limited Vs ICICI Bank Limited (Civil Appeal Nos. 8337-8338 of 2017) has given a broad ruling regarding the rules and regulations of Insolvency Bankruptcy Code, 2016. The Court was of the view that a detail judgement is being pronounced in this case on the first application of Insolvency and Bankruptcy Code, and it will also help all other Courts and Tribunals to understand the standard change in the law.
The appeal filed on behalf of Innovative Industries Limited by its ex-director after the insolvency resolution specialist assigned to handle the company cannot be sustained in the first part of the judgement itself, the Supreme Court proceeded to review in depth the statutory background and the scheme of the Insolvency Code and held that conformity with the deadlines had been defined.
Supreme Court also compared the law of U.K. and U.S.A. and was of the view that the law U.K. in relation to Insolvency Act, 1986 is a representation of  Insolvency Code. According to the Court there is a difference between U.S.A and U.K. law and that is when the debtor remained in possession of the former under the latter, the debtor made way for the administrator after the insolvency had started.
The Court was of the view that there is a gap in the scheme for the commencement of insolvency proceedings between the financial creditor (under Section 7) and the operating creditor (under Section 8) of the Insolvency Law. The Court was of the view that, in the case of a corporate debtor who defaults on a financial debt, the contracting authority had only to see the records of the information utility or other proof provided by the financial creditor in order to convince itself that a default had occurred. The purpose of the enquiry before the adjudicating authority is limited to evaluating the documents presented by the financial creditor in order to convince itself that the default has occurred.
Insolvency Code also brings a change in law which states that there is need for removing of the management of a corporate debtor which makes default in debts. In this particular case Supreme Court had dismissed the petition which had been filed by Innovative Industries Limited and upheld the order of NCLAT by allowing ICICI bank to initiate insolvency proceedings.

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