2018 (9) TMI 2137 - HC - Insolvency and Bankruptcy

Jurisdiction - power of NCLT to strike down the provisions of Section 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - expression of interest already issued. HELD THAT - At this stage, this Court is not inclined to interfere with the impugned order. However, it is pointed out that in some cases, the Expression of Interest has already been issued by the Resolution Professionals. This Court is of the view that the process in those cases, need not be interdicted. Therefore, it is directed that the impugned order dated 05.09.2018 passed by NCLT in the matter of State Bank of India vs. Su Kam Power Systems Ltd. 2018 (9) TMI 2103 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI PRINCIPAL BENCH shall not come in the way of the matters where Expression of Interest has already been issued. List on 27.11.2018.

Summary

Issues:
1. Validity of NCLT striking down provisions of Section 36A of Insolvency and Bankruptcy Board of India Regulations.
2. Interpretation of time-bound completion of the "Expression of Interest" process by NCLT.
3. Direction regarding cases where "Expression of Interest" has already been issued.

Analysis:
1. The main issue in this case is whether the National Company Law Tribunal (NCLT) has the authority to invalidate the provisions of Section 36A of the Insolvency and Bankruptcy Board of India Regulations. The NCLT ruled that the process for calling "Expression of Interest" is beyond the scope of the Insolvency and Bankruptcy Code, 2016 due to the strict time constraints imposed on the completion of the process.

2. The Court, at this stage, declined to interfere with the NCLT's decision. However, it noted that in some instances, the "Expression of Interest" had already been issued by the Resolution Professionals. The Court opined that in such cases, the ongoing process should not be disrupted. Consequently, the Court directed that the NCLT's order dated 05.09.2018 in the State Bank of India vs. Su Kam Power Systems Ltd. case should not impede cases where the "Expression of Interest" has already been initiated.

3. The Court set a future date for the next hearing, indicating that the matter will be further examined on 27.11.2018. This direction provides clarity on the status of cases where the "Expression of Interest" process is already underway, ensuring continuity in those proceedings without being affected by the NCLT's ruling.