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

Citation: [2021] 3 S.C.R. 597 · Decided: 01-03-2021 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Dismissed
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Judgment (excerpt)

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   [2021] 3 S.C.R. 597
A. NAVINCHANDRA STEELS PRIVATE LIMITED
v.
SREI EQUIPMENT FINANCE LIMITED & ORS.
(Civil Appeal Nos.4230-4234 of 2020)
MARCH 01, 2021
[ROHINTON FALI NARIMAN AND B. R. GAVAI, JJ.]
Insolvency and Bankruptcy Code, 2016 – ss.7, 9 – Companies
Act, 1956 – ss.391-393, 446 – Companies Act, 2013 – ss.230(1),
279, fifth proviso to s.434(1)(c) – Winding up proceedings pending
– Petition u/s.7 filed before NCLT – Maintainability of – Held: A
petition either u/s.7 or s.9, IBC is an independent proceeding
unaffected by winding up proceedings that may be filed qua the
same company – Any “suppression” of the winding up proceeding
would not be of any effect in deciding a s.7 petition which is to be
tried on its own merits – Discretionary jurisdiction under the fifth
proviso to s.434(1)(c), 2013 Act, cannot prevail over the undoubted
jurisdiction of the NCLT under the IBC once the parameters of s.7
and other provisions of the IBC have been met – Plea of appellant
that respondent no.1 suppressed the winding up proceeding in its
application u/s.7, IBC before the NCLT is of no avail – Winding up
petition does not trump any subsequent attempt at revival of the
company through a petition u/s.7 or s.9, IBC – Further, on facts,
nothing can be said to have become irretrievable in the sense
mentioned in paragraph 31 of Action Ispat and Power Pvt. Ltd. v.
Shyam Metalics and Energy Ltd. reported as 2020 SCC OnLine SC
1025 – Interim order vacated.
Insolvency and Bankruptcy Code, 2016 – Object of vis-à-vis
Companies Act – Discussed.
Interpretation of Statutes:
Special Law v. General Law – Discussed – Insolvency and
Bankruptcy Code, 2016 – Companies Act.
Non-obstante clause – Insolvency and Bankruptcy Code, 2016
– s.238 – Held: Non-obstante clause in s.238 makes it even clearer
that in case of conflict, the provisions of the IBC will prevail –
Companies Act.
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SUPREME COURT REPORTS
[2021] 3 S.C.R.
Dismissing the appeal, the Court
HELD: 1.1 The IBC is a special statute dealing with revival
of companies that are in the red, winding up only being resorted
to in case all attempts of revival fail. Vis-à-vis the Companies Act,
which is a general statute dealing with companies, including
companies that are in the red, the IBC is not only a special statute
which must prevail in the event of conflict, but has a non-obstante
clause contained in Section 238, which makes it even clearer
that in case of conflict, the provisions of the IBC will prevail.
[Para 14][606-G-H]
Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC
17 : [2019] 3 SCR 535; Allahabad Bank v. Canara
Bank, (2000) 4 SCC 406 : [2000] 2 SCR 1102;
Bakemans Industries (P) Ltd. v. New Cawnpore Flour
Mills, (2008) 15 SCC 1 : [2008] 9 SCR 705; Madras
Petrochem Ltd. v. BIFR, (2016) 4 SCC 1 : [2016] 11
SCR 419 – relied on.
1.2 A petition either under Section 7 or Section 9 of the
IBC is an independent proceeding which is unaffected by winding
up proceedings that may be filed qua the same company. Given
the object sought to be achieved by the IBC, it is clear that only
where a company in winding up is near corporate death that no
transfer of the winding up proceeding would then take place to
the NCLT to be tried as a proceeding under the IBC. Short of an
irresistible conclusion that corporate death is inevitable, every
effort should be made to resuscitate the corporate debtor in the
larger public interest, which includes not only the workmen of
the corporate debtor, but also its creditors and the goods it
produces in the larger interest of the economy of the country. It
is, thus, not possible to accede to the argument on behalf of the
Appellant (an operational creditor of Respondent No.2, the
company under winding up) that given Section 446 of the
Companies Act, 1956 / Section 279 of the Companies Act, 2013,
once a winding up petition is admitted, the winding up petition
should trump any subsequent attempt at revival of the company
through a Section 7 or Section 9 petition filed under the IBC.
While it is true that Sections 391 to 393 of the Companies Act,
1956 may, in a given factual circumstance, be availed of to pull
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the company out of the red, Section 230(1) of the Companies
Act, 2013 is instructive. What is clear by this Section is that a
compromise or arrangement can also be entered into in an IBC
proceeding if liquidation is ordered. However, what is of
importance is that under the Companies Act, it is only wind
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