The Supreme Court of India, with respect to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (“SARFAESI Act”), has held that powers under the Companies Act cannot be wielded by the Company courts to interfere with proceedings by a secured creditor to realize its secured interests in terms of the provisions of the SARFAESI Act

What is this all about?

India is proposing a new insolvency and bankruptcy code. It’s all part of the “Make In India” campaign by Narendra Modi’s government who are trying to attract businesses to India.

Current law

It does not appear that there has been a single separate law for bankruptcy legislation in the country’s history. Currently / historically the following have been used for insolvency purposes:

Delhi High Court has rejected the plea that the Company Court must exercise its jurisdiction to supervise the Scheme of Arrangements, to evict tenants of premises which are not owned by the company. Winding up proceedings were initiated against the company and with a view to realize assets Scheme of Arrangements was accepted by the court. During the pendency of the winding up proceedings and before the sanctioning of the Scheme by the Court, dues of all creditors were settled.

Proposed Swiss International Insolvency Law Reforms

In October 2015, the Swiss Federal Department of Justice and Police (Eidgenössisches Justiz- und Polizeidepartement) published a preliminary draft of reforms to title 11 of the Swiss Private International Law Act (“SPILA”), which governs insolvency proceedings and compensation proceedings (Articles 166–175 rev-SPILA), together with an explanatory report. The consultation procedure for the proposed reforms culminated on February 5, 2016.

The court has to classify creditors or members if there are such classes and before sanctioning the scheme, to see that their respective interest are taken care of.¹

Last week we alerted clients to the need for a rapid assessment of their exposure to Satyam in the wake of the much-publicized acknowledgement of fraud and mis-reporting of financial results by the company’s founder and former Chairman.

Co-Author - Jehangir N. Mistry Mulla & Mulla & Craigie Blunt & Caroe

Co-Author - Shireen Pochkhanawalla Mulla & Mulla & Craigie Blunt & Caroe

This article was published in Bankruptcy Law360 and Corporate Finance Law360 on May 23, 2011. © Copyright 2011, Portfolio Media, Inc., publisher of Law360.  

In the case of BRS Ventures Investments Ltd. vs. SREI Infrastructure Finance Ltd. & Anr. the Hon’ble Supreme Court of India (“Supreme Court”) held that simultaneous insolvency proceedings against a borrower and a corporate guarantor can be initiated for the same debt and default; and that assets of a subsidiary do not form part of the corporate insolvency resolution process (“CIRP”) of its holding company.

Brief Facts

In the ever-evolving landscape of corporate governance and insolvency regulation, the Ministry of Corporate Affairs (MCA) stands at the forefront, orchestrating strategic reforms to fortify the framework governing businesses in India. The idea for seeking reforms in the Insolvency and Bankruptcy Code (IBC) are the dual imperatives of enhancing corporate governance standards and streamlining insolvency processes to foster economic resilience and growth.

UPDATED 3 AUGUST 2020

Updates marked with *

Updated: Ireland, Israel

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