Supreme Court asks for amendment to Insolvency and Bankruptcy Rules

Supreme Court asks for amendment to Insolvency and Bankruptcy Rules

Varun Marwah

The Supreme Court has for the second time allowed settlement to be recorded after admission of case under the Insolvency and Bankruptcy Code, 2016 (IBC).

This power was invoked under Article 142 of the Constitution which allows the Supreme Court to “pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it.

A similar ruling, in July 2017, was passed by the same bench, comprising Justice Rohinton Nariman and Justice Sanjay Kishan Kaul. The reason why parties have to resort to this provision of the Constitution is that IBC as well the Rules made thereunder only permit withdrawal of case before its admission by the National Company Law Tribunal.

The appeal under Article 142 has been filed by corporate debtor, Uttara Foods and Feeds Private Limited following the settlement with its operational creditor Mona Pharmachem. The appeal comes after the National Company Law Appellate Tribunal refused to grant relief owing to lack of authority to do so.

This time, however, the Bench has expressed a view that the relevant portions of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 be amended to include inherent powers so as to obviate such unnecessary appeals before the Supreme Court.

Senior Advocate Shyam Divan appeared for Uttara Foods, the appellant.

(Read the judgment)

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