Appointment of Provisional Liquidator does not oust NCLT jurisdiction under IBC The Supreme Court held that the mere appointment of a Provisional Liquidator does not divest the NCLT of its jurisdiction under the Insolvency & ...
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Appointment of Provisional Liquidator does not oust NCLT jurisdiction under IBC
The Supreme Court held that the mere appointment of a Provisional Liquidator does not divest the NCLT of its jurisdiction under the Insolvency & Bankruptcy Code. The Court recalled the order disposing of CP. No. (IB)-104(PB)/2018 and reinstated the petition, directing the Resolution Professional to continue proceedings. The decision reaffirmed the application and independence of the IBC in such cases, ensuring that its provisions are upheld despite concurrent winding up proceedings under the Companies Act, 1956.
Issues: - Application for recalling order dated 30.01.2019 disposing of CP. No. (IB)-104(PB)/2018. - Jurisdiction of NCLT under Insolvency & Bankruptcy Code despite appointment of Provisional Liquidator. - Legal position regarding applicability of IBC to winding up proceedings post notice.
Analysis: The judgment pertains to an application seeking the recall of an order dated 30.01.2019 which disposed of CP. No. (IB)-104(PB)/2018 due to the appointment of a Provisional Liquidator by the Hon'ble Delhi High Court in a separate case. The applicant argued that the principles established by the Supreme Court in the case of Forech India Ltd. v. Edelweiss Assets Reconstruction Company Ltd. were not considered during the disposal of the petition. The Supreme Court's approval of the Bombay High Court's view in PSL Ltd. v. Jotun India Pvt. Ltd. is crucial, emphasizing that the appointment of a Provisional Liquidator does not strip the NCLT of its jurisdiction under the Insolvency & Bankruptcy Code (IBC) as it constitutes an independent proceeding.
The judgment highlights that the mere appointment of a Provisional Liquidator does not preclude the NCLT from exercising its authority under the IBC. The legal position established through the referenced cases clarifies that the provisions of the IBC remain applicable to proceedings validly initiated under it, even in cases where a winding up petition has been admitted or a Provisional Liquidator appointed. This ensures that the benefits and remedies provided by the IBC are not circumvented or nullified by the existence of winding up proceedings under the Companies Act, 1956.
Consequently, the Tribunal, after a thorough analysis of the legal precedents and the provisions of the IBC, concluded that the order disposing of CP. No. (IB)-104(PB)/2018 based on the appointment of a Provisional Liquidator was erroneous. The order dated 30.01.2019 was recalled, and CP. No. (IB)-104(PB)/2018 was reinstated. The Resolution Professional previously appointed was directed to continue the proceedings from the stage they were left, affirming the applicability and independence of the IBC in such matters. The application for recalling the order was thus disposed of in light of the Tribunal's decision to restore the petition and uphold the jurisdiction of the NCLT under the IBC.
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