MR. ANAND RAO KORADA RESOLUTION PROFESSIONAL versus M/S. VARSHA FABRICS (P) LTD. & ORS.

MR. ANAND RAO KORADA RESOLUTION PROFESSIONAL versus M/S. VARSHA FABRICS (P) LTD. & ORS.

The High Court was not justified in passing orders for auctioning assets of the Corporate Debtor after commencement of insolvency resolution and declaration of moratorium by NCLT; sale or liquidation of assets must be governed exclusively by IBC provisions.

Parties
Appellant Resolution Professional: Mr. Anand Rao Korada; Respondent No.1: M/s. Varsha Fabrics (P) Ltd.; Respondent No.2: India Finance Ltd.; Respondent No.3: Mudrika Commercial Pvt. Ltd.; Respondent No.4 Corporate Debtor: Hirakud Industrial Works Ltd.; Respondent No.5: Industrial Development Corporation of Orissa Ltd.; Respondent No.13 Workers’ Union: Hirakud Workers’ Union; Respondent No.8: HINDALCO
Jurisdiction
India
Judgment Date
18 November 2019
Procedural Posture
Civil Appeal / Final Disposition by Supreme Court
Outcome
Appeals allowed; orders of High Court set aside.
Legal Topics
Corporate Insolvency Resolution Process (cirp), Moratorium Under IBC, Jurisdiction of High Court During Insolvency Proceedings, Payment of Workmen’s Dues, Auction of Corporate Debtor’s Assets
Insolvency Law Labour Law Civil Procedure Corporate Insolvency Resolution Process (cirp) Moratorium Under IBC Jurisdiction of High Court During Insolvency Proceedings Payment of Workmen’s Dues Auction of Corporate Debtor’s Assets

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Parties

Mr. Anand Rao Korada

Appellant Resolution Professional

M/s. Varsha Fabrics (P) Ltd.

Respondent No.1

India Finance Ltd.

Respondent No.2

Mudrika Commercial Pvt. Ltd.

Respondent No.3

Hirakud Industrial Works Ltd.

Respondent No.4 Corporate Debtor

Industrial Development Corporation of Orissa Ltd.

Respondent No.5

Hirakud Workers’ Union

Respondent No.13 Workers’ Union

HINDALCO

Respondent No.8

Procedural Posture

Civil Appeal / Final Disposition by Supreme Court

Legal Issues

  1. 1 Whether High Court can proceed with auction of assets of Corporate Debtor during pendency of moratorium under IBC
  2. 2 Whether sale or liquidation of Corporate Debtor's assets is governed by IBC upon commencement of CIRP
  3. 3 Remedy available to workmen for arrears during CIRP

Ratio Decidendi

The High Court was not justified in passing orders for auctioning assets of the Corporate Debtor after commencement of insolvency resolution and declaration of moratorium by NCLT; sale or liquidation of assets must be governed exclusively by IBC provisions.

Court Disposition

Appeals allowed; orders of High Court set aside.

Orders

  • Interim Orders dated 14.08.2019 and 05.09.2019 passed by Odisha High Court set aside.
  • Sale or liquidation of assets of Respondent No.4 shall be governed by IBC.