Tuesday, 29 January 2019

Can financial creditor file petition under Insolvency and Banking code when winding up petition is pending in HC

Yes , as per recent judgment of Supreme court in case of

Forech India Ltd. Vs Edelweiss Assets Reconstruction Co. Ltd. (SC)  

para 22 read as :

22. This Section is of limited application and only bars a corporate debtor from initiating a petition under Section 10 of the Code in respect of whom a liquidation order has been made. From a reading of this Section, it does not follow that until a liquidation order has been made against the corporate debtor, an Insolvency Petition may be filed under Section 7 or Section 9 as the case may be, as has been held by the Appellate Tribunal. Hence, any reference to Section 11 in the context of the problem before us is wholly irrelevant. However, we decline to interfere with the ultimate order passed by the Appellate Tribunal because it is clear that the financial creditor's application which has been admitted by the Tribunal is clearly an independent proceeding which must be decided in accordance with the provisions of the Code."

Therefore it is now concluded that even proceedings related to winding up petition is pending before HC , Financial creditor  can file petition before NCLT under IBC and both proceedings will be  treated as independent proceedings. Considering present mood of NCLT and speed at which disposals are happening at NCLT , there will be hardly any time for  corporate debtor to cheat further and drag the proceeding for unlimited time by using various tactics.  

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