Supreme Court Emphasizes NCLT's Jurisdiction in IBC Insolvency Proceedings, Protects Workmen Rights

The Supreme Court set aside interim orders of Odisha High Court in insolvency proceedings under the IBC, emphasizing NCLT's exclusive jurisdiction and the overriding effect of IBC. It highlighted workmen and employees' rights to file claims under IBC regulations and allowed interested parties to participate in auction proceedings while upholding the Resolution Professional's rights to contest objections. The judgment clarified High Courts' jurisdictional boundaries, protected workmen and employees' rights, and permitted parties to seek remedies within the IBC framework.

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Issues Involved:
Challenge to interim orders passed by Odisha High Court during insolvency proceedings under IBC.

Analysis:

Issue 1: Jurisdiction of High Court during insolvency proceedings
The Supreme Court examined the jurisdiction of the High Court to proceed with auction proceedings of a corporate debtor's assets after the initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). It highlighted that once the NCLT declares a moratorium, the High Court should refrain from conducting parallel proceedings that may affect the interests of stakeholders. The Court emphasized the exclusive jurisdiction of NCLT and NCLAT in insolvency matters and the overriding effect of IBC over other laws, as per Sections 238 and 231 of the Code. The judgment set aside the interim orders of the High Court, directing that the sale or liquidation of assets must comply with the IBC provisions.

Issue 2: Rights of Workmen and Employees
Regarding the rights of workmen and employees of the corporate debtor, the Court mentioned Regulation 9 of the Insolvency and Bankruptcy Board of India Regulations. It allowed the Hirakud Workers' Union to file claims for arrears, salaries, and other dues before the competent authority under the IBC regulations. The judgment emphasized the procedural requirements for submitting claims by workmen and employees, ensuring their rights are protected during the insolvency resolution process.

Issue 3: Participation of Interested Parties
The judgment acknowledged the participation of interested parties, such as HINDALCO, in the auction proceedings before the High Court. It granted liberty to parties to pursue legal remedies in accordance with the law. The Court allowed Respondent No. 8 to file an application for addressing objections raised during the auction process, while reserving the right of the Resolution Professional to contest such applications.

In conclusion, the Supreme Court's judgment clarified the jurisdictional boundaries of High Courts during insolvency proceedings, safeguarded the rights of workmen and employees, and permitted interested parties to seek appropriate remedies within the framework of the IBC regulations.

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