The Hon’ble Delhi High Court vide its order dated May 13, 2022, in Millennium Education Foundation Vs Educomp Infrastructure And School Management Limited, has held that the mere pendency of an insolvency petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is not a bar for appointment of Arbitrator under the Arbitration and Conciliation Act, 1996.

The Insolvency and Bankruptcy Code 2016 has been evolving immensely since its inception. Through this Quarterly Journal the firm aims to share recent updates and landmark Judgements pertaining to the Code.

Recovery Certificate Holder Can Initiate CIRP As Financial Creditor Under IBC: Supreme Court

The Principal Bench of National Company Law Appellate Tribunal (“NCLAT”) in its recent order, Rakesh Kumar Jain v. Jagdish Singh Nain & Ors., has inter alia held that Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) does not bar passing of any orders under Section 66 of the IBC against the resolution professional during operation of the moratorium imposed under Section 14 of the IBC.

The Supreme Court of India (“Supreme Court”) in Sundaresh Bhatt, Liquidator of ABG Shipyard vs. Central Board of Indirect Taxes and Customs has held that the Customs Act, 1962 (“Customs Act”) and the Insolvency and Bankruptcy Code, 2016 (“IBC”) act in their own spheres. In case of any conflict, the IBC would override the Customs Act.

A 3-Judge Bench of the Supreme Court in its judgment dated 26 August 2022 has held that the provisions of the Insolvency and Bankruptcy Code, 2016 will prevail over the provisions of the Customs Act, 1962.

Background

The regime under the Insolvency and Bankruptcy Code, 2016 (“IBC”), is largely creditor centric. In fact, extraordinary as it may sound, corporate insolvency resolution process (“CIRP”) under IBC is nothing short of a puppet show, with the Committee of Creditors (“CoC”) as the puppet master. The CoC, comprising of financial creditors of the corporate debtor, is paramount in terms of making the most significant decisions of the process and plays a vital role in resolving the debt.

In a recent judgment in the case of ABG Shipyard, the Supreme Court has decided an extremely relevant question of law concerning the liquidation process under the Insolvency & Bankruptcy Code, 2016 (“IBC”).

Premise

Since the advent of the Insolvency & Bankruptcy Code, 2016 (“IBC”), the insolvency law regime in India has been consolidated and uniformized. Courts have repeatedly held that the IBC is a code in itself and that one need not look elsewhere in deciding matters under it.

Between the lines... For Private Circulation-Educational & Information purpose only Vaish Associates Advocates… Distinct. By Experience. I. Supreme Court: NCLT has discretion to not admit Financial Creditor’s CIRP Application even if Corporate Debtor is in default. The Hon’ble Supreme Court (“SC”) has in its judgment dated July 12, 2022 in the matter of Vidarbha Industries Power Limited v. Axis Bank Limited [Civil Appeal No.

I. INTRODUCTION

The Insolvency and Bankruptcy Code, 2016 (“Code”) was enacted at a time when there was no singular law which dealt with insolvency and bankruptcy in India. A perusal of the statement of objects and preamble of the Code reveal that it was enacted to consolidate the law of insolvency resolution of companies, partnerships etc in a time bound manner, for maximisation of assets and for balancing of interests of all stakeholders.