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2018 (3) TMI 1829 - AT - Insolvency and BankruptcyCIRP Proceedings - pendency of Winding up proceedings - Appellant submitted that I B Code is a complete Code by itself and Section 238 of the I B Code will override the other provisions, including the winding up proceedings initiated under Section 433 of the Companies Act, 1956 - whether even after initiation of winding up proceedings, it is open to the Adjudicating Authority to restore the Company to its first stage of Resolution Process and on failure to order final stage of liquidation? HELD THAT - Similar issue decided in the case of INNOVENTIVE INDUSTRIES LIMITED VERSUS KUMAR MOTORS PRIVATE LIMITED 2018 (2) TMI 1736 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL where it was held that as admittedly the High Court has already admitted the winding up proceedings and ordered for winding-up of the Respondent- Corporate Debtor , we hold that the question of initiation of Corporate Insolvency Resolution Process against same Corporate Debtor does not arise. There are no merit in this appeal - appeal dismissed.
Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the State Bank of India for Corporate Insolvency Resolution Process against M/s. Shakti Bhog Foods Limited dismissed due to pending winding up proceedings. 2. Interpretation of Section 238 of the I&B Code overriding other provisions, including winding up proceedings. 3. Consideration of whether the Adjudicating Authority can restore a company to the first stage of Resolution Process after winding up proceedings are initiated. Analysis: 1. The Appellant, State Bank of India, filed an application under Section 7 of the I&B Code against M/s. Shakti Bhog Foods Limited for Corporate Insolvency Resolution Process. The National Company Law Tribunal dismissed the petition citing pending winding up proceedings against the Corporate Debtor. The Appellant argued that Section 238 of the I&B Code should override other provisions, including winding up proceedings initiated under the Companies Act, 1956. 2. The Appellate Tribunal referred to previous judgments to analyze the issue. It was noted that if a winding up proceeding has been initiated or a liquidation order passed against a Corporate Debtor, an application under Section 10 is not maintainable. However, if only a winding up petition is pending without an order of winding up or liquidation, it cannot be a ground to reject an application under Section 10. The Tribunal clarified that the term "winding up" is synonymous with "liquidation" as per the I&B Code. 3. In another case, the Tribunal reiterated that if a Corporate Debtor is already undergoing Corporate Insolvency Resolution or facing liquidation proceedings, a fresh application under Section 7 or 9 against the same Corporate Debtor is not maintainable. The Tribunal emphasized that once winding up proceedings have been initiated and ordered by the High Court, the question of initiating Corporate Insolvency Resolution Process does not arise. The Tribunal upheld the decision based on previous judgments and dismissed the appeal without costs. In conclusion, the judgment highlights the interplay between the I&B Code and winding up proceedings under the Companies Act, emphasizing that the initiation of winding up proceedings or a liquidation order against a Corporate Debtor can impact the maintainability of applications under the I&B Code. The Tribunal's analysis provides clarity on the hierarchy of insolvency processes and the implications of parallel proceedings on Corporate Debtors.
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