The Supreme Court in the case of M/s Innoventive Industries Ltd. versus ICICI Bank & Anr. delivered its first principal judgment on Insolvency and Bankruptcy Code (“IBC”), 2016 which is major legal step in preventing any sort of interaction between the insolvency proceedings and the test of repugnancy.
The appellant in this case has contended that as per the Maharashtra Relief Undertakings (Special Provision Act), 1958, no debt was legally due and all the liabilities were temporarily suspended to which an extension of one year has been further granted for any DEFAULTER under the IBC 2016. In addition, another contention by the appellant was with regard to the master restructuring agreement entered between the parties according to which the funds were not released as per the restructuring agreement preceding because the company in itself was going through a corporate debt restructuring.
NCLT has rejected the contentions on the basis that since IBC 2016 is a parliamentary statute and hence will prevail over Maharashtra Relief Undertakings (Special Provision Act), 1958. The appeal which had been carried on to NCLAT was also rejected on the basis that the defaulter company cannot derive any advantage from any act if it has failed to pay the debts.
The respondents has objected to the maintainability of the appeal as an Interim resolution professional (“IRP”) was appointed and suspension was already declared by the IRP and in addition the directors of the company were no longer in the management.
The court also discussed the repugnancy under the Article 254 of the India Constitution. And in the end, after taking into account the provisions of IBC and Maharashtra Relief Undertakings (Special Provision Act), 1958, the court declared that the former would any day prevail over the latter and hence, the appeal came to be rejected.
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