A. NAVINCHANDRA STEELS PRIVATE LIMITED versus SREI EQUIPMENT FINANCE LIMITED & ORS.

A. NAVINCHANDRA STEELS PRIVATE LIMITED versus SREI EQUIPMENT FINANCE LIMITED & ORS.

Section 7 proceedings under the IBC are independent and maintainable notwithstanding a pending admitted winding up petition; the IBC, being a special statute with a non-obstante clause (s.238), prevails over inconsistent provisions of the Companies Act; only where winding up has proceeded to an irreversible stage amounting to corporate death should the Company Court refuse transfer/decline IBC jurisdiction; discretionary power under the fifth proviso to s.434(1)(c) cannot override NCLT jurisdiction once s.7 parameters are met.

Parties
Appellant: A. Navinchandra Steels Private Limited; Respondent No.1: SREI Equipment Finance Limited; Respondent No.2 (company Under Winding Up): M/s Shree Ram Urban Infrastructure Limited; Respondent No.3: Action Barter Pvt. Ltd.; Respondent No.4 (purchaser): Honest Shelters Pvt. Ltd.
Jurisdiction
India
Judgment Date
01 March 2021
Procedural Posture
Civil Appeal / Appeal to the Supreme Court Disposing Challenge to Nclat/nclt Orders (judgment)
Outcome
Appeal dismissed
Legal Topics
Section 7 IBC, Section 9 IBC, Section 238 IBC (non Obstante), Winding Up (companies Act), Transfer of Winding Up Proceedings (s.434(1)(c) Fifth Proviso), Role of Secured Creditors Outside Winding Up, Irretrievable Steps / Corporate Death
Insolvency and Bankruptcy Companies Law Civil Procedure Secured Transactions Section 7 IBC Section 9 IBC Section 238 IBC (non Obstante) Winding Up (companies Act) +3 more

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Parties

A. Navinchandra Steels Private Limited

Appellant

SREI Equipment Finance Limited

Respondent No.1

M/s Shree Ram Urban Infrastructure Limited

Respondent No.2 (company Under Winding Up)

Action Barter Pvt. Ltd.

Respondent No.3

Honest Shelters Pvt. Ltd.

Respondent No.4 (purchaser)

Procedural Posture

Civil Appeal / Appeal to the Supreme Court Disposing Challenge to Nclat/nclt Orders (judgment)

Legal Issues

  1. 1 Whether a petition under Section 7 or Section 9 of the IBC is maintainable where a winding up petition has been admitted in a Company Court
  2. 2 Whether the provisions of the IBC prevail over inconsistent provisions of the Companies Act by virtue of Section 238 (non-obstante)
  3. 3 Whether sale by a secured creditor outside winding up constitutes an irretrievable step preventing transfer to/continuance under IBC

Ratio Decidendi

Section 7 proceedings under the IBC are independent and maintainable notwithstanding a pending admitted winding up petition; the IBC, being a special statute with a non-obstante clause (s.238), prevails over inconsistent provisions of the Companies Act; only where winding up has proceeded to an irreversible stage amounting to corporate death should the Company Court refuse transfer/decline IBC jurisdiction; discretionary power under the fifth proviso to s.434(1)(c) cannot override NCLT jurisdiction once s.7 parameters are met.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed
  • Interim order dated 18.12.2020 passed by this Court vacated immediately