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TMI Blog2017 (12) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... ck Industrial Companies (Special Provisions) Act, 1985; the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993; the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; Companies Act, 2003; Insolvency and Bankruptcy law and other laws. As per Section 238 of the Insolvency and Bankruptcy Code, 2016, provisions of the Code shall have the effect, notwithstanding anything inconsistent therewith, contained in any other law, for the time being in force or any instrument, has effect, by virtue of such power. As per Sub-Section (4) of Section 60 of the Code, the National Company Law Tribunal is vested with all the powers of the Debts Recovery Tribunal, as contemplated under Part II of the Code, for the purpose of sub-Section (2) of Section 60 of the Code and therefore, it is for the NCLT to consider, all the materials, and pass appropriate orders. Code enables a financial creditor to make an application, under Section 7 of the Code, if the adjudicating authority is satisfied that default has not occurred or the application is complete and there is no disciplinary proceedings pending against the proposed resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef stated supra. The company is in the business constructing commercial Mall projects including shopping complex, food court and multiplex theatres. The first petitioner Company has borrowed a Term Loan to an extent of ₹ 30 crores each from M/s.Indian Overseas Bank (IOB)and M/s.Oriental Bank of Commerce (OBC) for the purpose of developing a Multiplex Mall at Nos.45 47, Arcot Road, Saligramam, Chennai in the year 2005. The cost of the said project was approximately ₹ 515 crores. In addition to the Term Loan sanctioned by M/s.Indian Overseas Bank (IOB)and M/s.Oriental Bank of Commerce (OBC), the Promoters of the petitioner Company have also contributed a sum of ₹ 260 crores from their resources. The first petitioner Company has approached M/s.Indian Overseas Bank (IOB) for a further fund of ₹ 100 crores for completion of the said project. Though M/s.Indian Overseas Bank (IOB) initially assured them that the further fund would be sanctioned, the said bank did not extend payment to the petitioner for more than a year and finally the bank dropped the proceedings of sanctioning the said loan, without assigning any reasons. Due to the inordinate delay, on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.No.7953/2014, dated 21.03.2014. 7. The first petitioner company has filed S.I.A.No.72/2016 in S.A.No.113/2012, seeking for a relief to set aside the assignment of the petitioner's debt by the M/s.Indian Overseas Bank (IOB) to the 2nd respondent, by assignment deed dated 10-02-2015 and consequently, to direct M/s.Indian Overseas Bank (IOB), ARCIL to accept the offer of the petitioner for payment of ₹ 19,35,40,503/- together with interest @ 9% per annum from 10.02.2015. The Tribunal passed an order, dated 28-07-2016 in S.A.No.113/2012 observing that it was open to the petitioner company to approach the 2nd respondent with appropriate representation of settlement of outstanding dues under OTS and consider the representation for OTS given by the petitioner. 8. When the petitioners sent a proposal to the 2nd respondent for consideration, without following the procedure laid down by RBI, the 2nd respondent simply replied, stating that it is not acceptable to them. In the meanwhile, the DRT-II, has passed an order in O.A.No.430/2014 (filed by M/s.Indian Overseas Bank (IOB), directing the petitioner to pay the a sum of ₹ 22 Crores with simple interest @ 12% per annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for default. When proceedings with respect to computation of debt is pending adjudication before the DRT, approaching NCLT would amount to forum shopping. Though NCLT is not technically prevented under law from proceeding by virtue of Section 238 of the Insolvency and Bankruptcy Code, 2016, as the issue involves, questions of fundamental rights to business and property, proceedings initiated are violative of Articles 14, 19 and 300-A of the Constitution of India. 13. According to the petitioners, the scheme of the 2016 code is such that, it divests the Directors and shareholders of any authority over the Company which they run, and vests it with the Creditors. The business of the company and its assets are indirectly held by and belong to the shareholders and they have a right to property and do business. When there is a dispute on the quantification of the amount to be repaid and when the petitioner is willing to repay the debt to the 2nd respondent, approaching NCLT, is to strip him off the right to do business, which is violative of fundamental rights. 14. The 2nd respondent is promoted by various Public and Private Sector Banks and therefore has substantial shareholdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing efforts to pay, he is entitled to a fair opportunity and cannot be striped of his rights of management of his property . (vi) The appointment of Insolvency Professional and Moratorium, will effectively take all the Directors and shareholders out of the picture and they would not be able to participate in negotiation and take steps to repay. The willingness of the party and bonafide efforts are valid consideration in putting off the proceedings under the Insolvency and Bankruptcy Code. 15. Heard Mr.Niranjan Rajagopalan, learned counsel for the petitioner and perused the materials available on record. 16. Before adverting to the submissions, let us have a cursory look, at the statement of objects and reasons, for enacting the Insolvency and Bankruptcy Code, 2016, as follows: There is no single law in India that deals with insolvency and bankruptcy. Provisions relating to insolvency and bankruptcy for companies can be found in the Sick Industrial Companies (Special Provisions) Act, 1985, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collate, authenticate and disseminate financial information to facilitate such proceedings. The Code also proposes to establish a fund to be called the Insolvency and Bankruptcy Fund of India for the purposes specified in the Code. 4. The Code seeks to provide for amendments in the Indian Partnership Act, 1932, the Central Excise Act, 1944, Customs Act, 1962, Income-Tax Act, 1961, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Finance Act, 1994, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, the Payment and Settlement Systems Act, 2007, the Limited Liability Partnership Act, 2008, and the Companies Act, 2013. 17. Insolvency and Bankruptcy Code, 2016 (31 of 2016), is an Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3). (5) Where the Adjudicating Authority is satisfied that (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal. 20 Management of operations of corporate debtor as going concern. 21 Committee of creditors. 22 Appointment of resolution professional. 23 Resolution professional to conduct corporate insolvency resolution process. 24 Meeting of committee of creditors. 25 Duties of resolution professional. 26 Application for avoidance of transactions not to affect proceedings. 27 Replacement of resolution professional by committee of creditors 28 Approval of committee of creditors for certain actions. 29 Preparation of information memorandum. 30 Submission of resolution plan. 31 Approval of resolution plan. 32 Appeal. 23. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application. 25. Though Mr.Niranjan Rajagopalan, learned counsel for the petitioner submitted that applications filed under Section 7 of the Code, are admitted mechanically by the National Company Law Tribunal and the moment, such application is admitted, the corporate insolvency resolution process comes into operation and in such circumstances, the Company, sought to be declared as insolvent or the directors, as the case may be, has no say, except to go by the procedure set out and therefore, intervention of the said process is required, we are not inclined to accept the said contention, for the reason that if the adjudicating authority is satisfied that default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2). (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. (6) Notwithstanding anything contained in the Limitation Act, 1963 or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded. 28. As per sub-Section (4) of Section 60 of the Code, the National Company Law Tribunal shall be vested with all the powers of the Debt Recovery Tribunal as conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the applications and the same is extracted hereunder: 64. (1) Where an application is not disposed of or an order is not passed within the period specified in this Code, the National Company Law Tribunal or the National Company Law Appellate Tribunal, as the case may be, shall record the reasons for not doing so within the period so specified; and the President of the National Company Law Tribunal or the Chairperson of the National Company Law Appellate Tribunal, as the case may be, may, after taking into account the reasons so recorded, extend the period specified in the Act but not exceeding ten days. (2) No injunction shall be granted by any court, tribunal or authority in respect of any action taken, or to be taken, in pursuance of any power conferred on the National Company Law Tribunal or the National Company Law Appellate Tribunal under this Code. 32. Part IV of the Code deals with regulation of insolvency professional, agencies and information utilities. Chapter II of the said Part deals with the powers and functions of the Board. Section 196 of the Code is extracted hereunder: 196. (1) The Board shall, subject to the general direction of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olvency professionals and information utilities; (q) specify mechanism for redressal of grievances against insolvency professionals, insolvency professional agencies and information utilities and pass orders relating to complaints filed against the aforesaid for compliance of the provisions of this Code and the regulations issued hereunder; (r) conduct periodic study, research and audit the functioning and performance of to the insolvency professional agencies, insolvency professionals and information utilities at such intervals as may be specified by the Board; (s) specify mechanisms for issuing regulations, including the conduct of public consultation processes before notification of any regulations; (t) make regulations and guidelines on matters relating to insolvency and bankruptcy as may be required under this Code, including mechanism for time bound disposal of the assets of the corporate debtor or debtor; and (u) perform such other functions as may be prescribed. (2) The Board may make model bye-laws to be to adopted by insolvency professional agencies which may provide for (a) the minimum standards of professional competence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of books of account and other documents, at such place and such time as may be specified by the Board; (ii) summoning and enforcing the attendance of persons and examining them on oath; (iii) inspection of any books, registers and other documents of any person at any place; (iv) issuing of commissions for the examination of witnesses or documents. 33. As per Section 231 of the Code, 2016, no civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority is empowered by, or under, this Code to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such Adjudicating Authority under this Code. 34. As per Section 238, the provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 35. In exercise of the powers conferred by clauses (c), (d), (e) and (f) of sub-section (1) of section 239 read with sections 7, 8, 9 and 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act, 2013 (18 of 2013), where the corporate debtor is a company; (b) is not a related party of the corporate debtor; or (c) has not been an employee or proprietor or a partner: 1) of a firm of auditors or company secretaries in practice or cost auditors of the corporate debtor; or 2) of a legal or a consulting firm, which has or had any transaction with the corporate debtor amounting to ten per cent or more of the gross turnover of such firm, at any time in the preceding three years. (2) An insolvency professional shall not be eligible to be appointed as a resolution professional if he, or the insolvency professional entity of which he is a partner or director, is under a restraint order of the Board. (3) An insolvency professional shall make disclosures at the time of his appointment and thereafter in accordance with the Code of Conduct. (4) An insolvency professional shall not continue as a resolution professional if the insolvency professional entity of which he is a director or a partner, or any other partner or director of such insolvency professional entity represents any other stakeholders in the same fast track proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als with proof of claims. Relevant Regulations in the said Chapter read as follows: 8. Claims by financial creditors:- (1) A financial creditor shall submit proof of claim to the interim resolution professional in electronic form in Form C: Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the committee. (2) The existence of debt due to the financial creditor may be proved on the basis of - (a) the records available with an information utility, if any; or (b) other relevant documents, including - (i) a financial contract supported by financial statements as evidence of the debt; (ii) a record evidencing that the amounts committed by the financial creditor to the corporate debtor under a facility has been drawn by the corporate debtor; (iii) financial statements showing that the debt has not been repaid; or (iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any. 10. Substantiation of claims:- The interim resolution professional or the resolution professional, as the case may be, may call for such other ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warranting such revision. 40. Regulation 16 of Chapter V, deals with Committee with only operational creditors and the same is extracted hereunder: (1) Where the corporate debtor has no financial debt or where all financial creditors are related parties of the corporate debtor, the committee shall be set up in accordance with this Regulation. (2) The committee formed under this Regulation shall consist of following members: - (a) eighteen largest operational creditors by value: Provided that if the number of operational creditors is less than eighteen, the committee shall include all such operational creditors; (b) one representative elected by all workmen other than those workmen included under sub-clause (a); and (c) one representative elected by all employees other than those employees included under sub-clause (a). (3) Every member of the committee formed under this Regulation shall have voting rights in proportion of the debt due to such creditor or debt represented by such representative, as the case may be, to the total debt. Explanation For the purposes of this sub-regulation, total debt means the sum of- (a) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5 (21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. 31. The rest of the insolvency resolution process is also very important. The entire process is to be completed within a period of 180 days from the date of admission of the application under Section 12 and can only be extended beyond 180 days for a further period of not exceeding 90 days if the committee of creditors by a voting of 75% of voting shares so decides. It can be seen that time is of essence in seeing whether the corporate body can be put back on its feet, so as to stave off liquidation. 32. As soon as the application is admitted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the corporate body as a going concern until a resolution plan is drawn up, in which event the management is handed over under the plan so that the corporate body is able to pay back its debts and get back on its feet. All this is to be done within a period of 6 months with a maximum extension of another 90 days or else the chopper comes down and the liquidation process begins. 43. During the course of arguments, Mr.Niranjan Rajagopalan, learned counsel for the petitioners submitted that a writ petition has been filed, challenging the Insolvency and Bankruptcy Code, 2016 and that there is no stay. On the above submission, this Court deems it fit to consider few decisions of the Hon'ble Supreme Court, on the presumption of the constitutionality of an enactment, (i) A Full Bench of the Hon'ble Supreme Court in Shri Ram Krishna Dalmia v. Shri Justice S.R.Tendolkar reported in AIR 1958 SC 538 = 1959 SCR 279, has carved out the principles as follows: (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Moti Das v. S.P.Sahi, the Special Officer In Charge of Hindu Religious Trust Ors. reported in AIR 1959 SC 942, the Hon'ble Supreme Court, held as follows: The decisions of this Court further establish that there is a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional guarantee; that it must be presumed that the legislature understands and correctly appreciates the needs of its own people and that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; and further that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest...... (iv) In State of Uttar Pradesh v. Kartar Singh reported in AIR 1964 SC 1135, the Constitution Bench of the Hon'ble Supreme Court held that where a party seeks to impeach the validity of a rule on the ground of such rule offending Article 14, the burden is on him to plead and prove infirmity. This Court said : ........., if the rule has to be struck down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the statute is clearly violative of the right conferred on the citizen under Part III of the Constitution or when the Act is beyond the legislative competence of the legislature or such other grounds. It is for this reason that the Courts have recognised that there is always a presumption in favour of the constitutionality of a statute and the onus to prove its invalidity lies on the party which assails the same. (vii) In M.L.Kamra v. Chairman-Cum-Managing Director, New India Assurance Co. Ltd., reported in 1992 AIR 1072 : 1992 SCR (1) 220, the Hon'ble Supreme Court held as follows: It is settled law that there is a presumption of constitutionality of the rule. The court ought not to interpret the statutory provisions, unless compelled by their language, in such a manner as would involve its unconstitutionality, Since the legislature of the rule making authority is presumed to enact a law which does not contravene or violate the constitutional provisions. Therefore, there is a presumption in favour of constitutionality of a legislation or statutory rule unless ex facie it violates the fundamental rights guaranteed under Part III of the constitution. (viii) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be borne in mind : (1) that a law may be constitutional even through it relates to a single individual, in those cases where on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (2) that it is the accepted doctrine of the American Courts, which I consider to be well-founded on principle, that the presumption is always in favour of the constitutionality of an enactment, and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. A clear enunciation of this latter doctrine is to be found in Middleton vs. Texas Power and L. Company, (248 U.S. 152 and 157), in which the relevant passage runs as follows : It must be presumed that a legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by expression and that its discriminations are based upon adequate grounds. and this view has been consistently followed thereafter. 59. Thus in M/s. B.R. Enterprises vs. State of U.P. and others AIR 1999 SC 1867 this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l will Shell Company of Australia vs. Federal Commissioner of Taxation, 1931 AC 275 (Privy Council). The aforesaid principle, however, is subject to one exception that if a citizen is able to establish that the legislation has invaded his fundamental rights then the State must justify that the law is saved. It is also a cardinal rule of construction that if one construction being given the statute will become ultra vires the powers of the legislature whereas on another construction which may be open, the statute remains effective and operative, then the Court will prefer the latter, on the ground that the legislature is presumed not to have intended an excess of jurisdiction . (emphasis supplied) 61. In State of Bihar and others v. Bihar Distillery Ltd., AIR 1997 SC 1511 (vide para 18) a Constitution Bench of this Court observed : The approach of the Court, while examining the challenge to the constitutionality of an enactment, is to start with the presumption of constitutionality. The Court should try to sustain its validity to the extent possible. It should strike down the enactment only when it is not possible to sustain it. The Court should not approach the enactment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out the preposition of law, as hereunder: i) Repugnancy under Article 254 arises only if both the Parliamentary (or existing law) and the State law are referable to List III in the 7th Schedule to the Constitution of India. ii) In order to determine whether the Parliamentary (or existing law) is referable to the Concurrent List and whether the State law is also referable to the Concurrent List, the doctrine of pith and substance must be applied in order to find out as to where in pith and substance the competing statutes as a whole fall. It is only if both fall, as a whole, within the Concurrent List, that repugnancy can be applied to determine as to whether one particular statute or part thereof has to give way to the other. iii) The question is what is the subject matter of the statutes in question and not as to which entry in List III the competing statutes are traceable, as the entries in List III are only fields of legislation; also, the language of Article 254 speaks of repugnancy not merely of a statute as a whole but also any provision thereof. iv) Since there is a presumption in favour of the validity of statutes generally, the onus of showing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f implied repeal rests, namely, that if the subject matter of the State legislation or part thereof is identical with that of the Parliamentary legislation, so that they cannot both stand together, then the State legislation will be said to be repugnant to the Parliamentary legislation. However, if the State legislation or part thereof deals not with the matters which formed the subject matter of Parliamentary legislation but with other and distinct matters though of a cognate and allied nature, there is no repugnancy. ix) Repugnant legislation by the State is void only to the extent of the repugnancy. In other words, only that portion of the State s statute which is found to be repugnant is to be declared void. x) The only exception to the above is when it is found that a State legislation is repugnant to Parliamentary legislation or an existing law if the case falls within Article 254(2), and Presidential assent is received for State legislation, in which case State legislation prevails over Parliamentary legislation or an existing law within that State. Here again, the State law must give way to any subsequent Parliamentary law which adds to, amends, varies or repeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Indian Income-tax Act as forming a code complete in itself and exhaustive of the matters dealt with therein, and ascertain what their true scope is. (at page 585) Similarly in Union of India v. Mohindra Supply Company, [1962] 3 S.C.R. 497, this Court held: The Arbitration Act of 1940 is a consolidating and amending statute and is for all purposes a code relating to arbitration. In dealing with the interpretation of the Indian Succession Act, 1865, the Privy Council in Narendra Nath Sircar v. Kamlabasini Desai [(1896) LR 23, IA 18] observed that a code must be construed according to the natural meaning of the language used and not on the presumption that it was intended to leave the existing law unaltered. The Judicial Committee approved of the observations of Lord Herschell in Bank of England v. Vagliano Brothers [(1891) AC 107, 144-145] to the following effect: I think the proper course is in the first instance to examine the language of the statute and to ask what is its natural meaning uninfluenced by any considerations derived from the previous state of the law, and not to start with enquiring how the law previously stood, and then, assuming tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier State law is repugnant to the later Parliamentary enactment as under the said State law, the State Government may take over the management of the relief undertaking, after which a temporary moratorium in much the same manner as that contained in Sections 13 and 14 of the Code takes place under Section 4 of the Maharashtra Act. There is no doubt that by giving effect to the State law, the aforesaid plan or scheme which may be adopted under the Parliamentary statute will directly be hindered and/or obstructed to that extent in that the management of the relief undertaking, which, if taken over by the State Government, would directly impede or come in the way of the taking over of the management of the corporate body by the interim resolution professional. Also, the moratorium imposed under Section 4 of the Maharashtra Act would directly clash with the moratorium to be issued under Sections 13 and 14 of the Code. It will be noticed that whereas the moratorium imposed under the Maharashtra Act is discretionary and may relate to one or more of the matters contained in Section 4(1), the moratorium imposed under the Code relates to all matters listed in Section 14 and follows as a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which has thread analysed the code, the contention that the rights of the Company and its Directors, as well as the share holders, would be stripped of the moment, an application, under Section 7 of the Code, is admitted and that therefore, the whole proceedings by NCLT, require to be stalled, cannot be accepted. 48. Further contention of the petitioners that the action of the 2nd respondent in approaching the NCLT, would amount to forum shopping, also cannot be countenanced, for the reason, Insolvency and Bankruptcy Code, 2016, has been enacted, consolidating various enactments, such as, Sick Industrial Companies (Special Provisions) Act, 1985; the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993; the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; Companies Act, 2003; Insolvency and Bankruptcy law and other laws. 49. As per Section 238 of the Insolvency and Bankruptcy Code, 2016, provisions of the Code shall have the effect, notwithstanding anything inconsistent therewith, contained in any other law, for the time being in force or any instrument, has effect, by virtue of such power. As per Sub-S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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