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2019 (10) TMI 1365 - Tri - Companies LawPendency of the winding up application and the appointment of OL - dilemma whether to proceed with CIRP or not - HELD THAT - Section 238 of IB Code will prevail over other Act. Hence there is no embargo on the part of the RP to proceed with the CIRP. Since the position has been clarified and settled by the Hon ble Apex Court in Jaipur Metals Electricals Employees Organization Vs. Jaipur Metals Electricals Ltd. 2018 (12) TMI 674 - SUPREME COURT and looking to the object of the IB Code as the time is essence. The RP is directed to complete the CIRP within a stipulated time. However the period which is consumed during the disposal of IA 331/2019 is exempted from the CIRP i.e. from 24.05.2019 to 16.10.2019 - Meanwhile the Suspended management is also directed to take an appropriate step before the Hon ble High Court wherein winding up application is pending and inform this Bench. Application disposed off.
Issues:
- Interpretation of Section 238 of the Insolvency and Bankruptcy Code, 2016 (IB Code) in relation to proceedings before the National Company Law Tribunal (NCLT). - Clarification on the jurisdiction of the NCLT in independent proceedings by a secured Financial Creditor. - Impact of a Supreme Court judgment on the proceedings before the NCLT and High Court. - Direction to the Resolution Professional (RP) regarding the Corporate Insolvency Resolution Process (CIRP) timeline. - Obligations of the Suspended management in a winding up application pending before the High Court. Interpretation of Section 238 of the IB Code: The judgment analyzed the applicability of Section 238 of the IB Code in the context of NCLT proceedings. It emphasized that the section prevails over other Acts, allowing the RP to proceed with the CIRP without any hindrance. The ruling clarified that the RP is not restricted by any other law, ensuring the continuity of the insolvency resolution process. Jurisdiction of NCLT in Independent Proceedings: The judgment referenced a Supreme Court decision regarding the jurisdiction of the NCLT in independent proceedings initiated by a secured Financial Creditor. It highlighted the correctness of applying Section 238 of the IB Code in such cases, emphasizing the NCLT's authority in insolvency matters. The ruling set aside a High Court judgment, affirming the NCLT's jurisdiction and continuity of proceedings. Impact of Supreme Court Judgment: A significant portion of the judgment discussed the impact of a Supreme Court ruling on the ongoing proceedings before the NCLT and High Court. The Supreme Court decision clarified the application of Section 434 of the Companies Act, 2013, within the framework of the IB Code. It overturned the High Court's decision, allowing the NCLT proceedings to resume from the point they were halted, emphasizing the necessity for insolvency proceedings to run their course. Direction to RP and Suspended Management: The judgment provided directives to the RP regarding the completion of the CIRP within a specified timeframe, exempting the period consumed during a specific application. Additionally, the Suspended management was instructed to take appropriate steps before the High Court where a winding up application is pending. These directions aimed to ensure the timely resolution of insolvency proceedings and the adherence to legal obligations by all involved parties. In conclusion, the judgment addressed various legal aspects, including the interpretation of Section 238 of the IB Code, the jurisdiction of the NCLT in independent proceedings, the impact of a Supreme Court ruling on insolvency proceedings, and specific directives to the RP and Suspended management. By providing detailed analysis and clarifications, the judgment aimed to facilitate the effective resolution of the insolvency case in accordance with the applicable legal framework.
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