Prospective application of special-resolution requirement under the Insolvency and Bankruptcy Code protected an already filed insolvency petition.

An amendment introducing a special-resolution requirement for a corporate applicant under the Insolvency and Bankruptcy Code was treated as prospective, so it did not apply to a section 10 petition filed before the amendment came into force. The filing date was taken as the relevant date, and the new condition could not be used to impose a fresh burden on an already filed application. The pendency of SARFAESI proceedings, and allegations of mala fides, did not bar admission of a complete insolvency application where debt and default were established. The application was therefore admitted, moratorium followed, and an interim resolution professional was appointed.

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Issues: (i) Whether the requirement of a special resolution under section 10(3)(c) of the Insolvency and Bankruptcy Code, 2016 applied to a petition filed before the amendment came into force. (ii) Whether the pendency of SARFAESI proceedings or the creditor's allegation of mala fides barred admission of the petition.

Issue (i): Whether the requirement of a special resolution under section 10(3)(c) of the Insolvency and Bankruptcy Code, 2016 applied to a petition filed before the amendment came into force.

Analysis: The amended provision introduced a new condition for filing an application by a corporate applicant. The amendment was not expressed to be retrospective. The Court treated the filing date of the petition as the relevant date and held that the amendment could not be applied so as to impose a new burden on petitions already filed. It distinguished authorities dealing with procedural amendments where an existing right was affected, and applied the principle that a statute creating new duties or disabilities is ordinarily prospective. The Court also noted that prior to the amendment there was no requirement of shareholder special resolution for an application under section 10.

Conclusion: The special resolution requirement under section 10(3)(c) did not apply to the petition and the objection on that ground failed.

Issue (ii): Whether the pendency of SARFAESI proceedings or the creditor's allegation of mala fides barred admission of the petition.

Analysis: The Court held that parallel recovery proceedings do not bar initiation of corporate insolvency resolution process. It relied on the overriding effect of the Insolvency and Bankruptcy Code and held that the existence of SARFAESI action could not defeat an otherwise complete application. On the record, debt and default were established and the petition was complete apart from the rejected special-resolution objection.

Conclusion: The SARFAESI proceedings and allegations of mala fides did not prevent admission of the petition.

Final Conclusion: The application under section 10 was admitted, insolvency resolution was commenced, moratorium followed, and an interim resolution professional was appointed.

Ratio Decidendi: An amendment imposing a new pre-filing condition on a corporate applicant is prospective unless the legislature clearly indicates otherwise, and pending recovery proceedings under another statute do not bar admission of a complete insolvency application.

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