Landmark Judgements Under Insolvency & Bankruptcy
So, let’s talk about the 5 landmark judgements under the Insolvency and Bankruptcy Code, 2016. This code has been a game-changer in the Indian legal system, addressing financial distress and insolvency issues with more efficiency and transparency.
Mobilox Innovations Pvt Ltd vs Kirusa Software Pvt Ltd
The Hon’ble Supreme Court allowed the appeal by Mobilox Innovations Pt Ltd against the judgement of NCLAT while interpreting the expression “existence of a dispute” under the section 8(2)(a) of the Insolvency and Bankruptcy Code, as it was of the opinion that the breach of the non-disclosure agreement was sufficient to construe the existence of a dispute to invalidate the CIRP application filed by the operational creditor.
Pioneer Urban Land & Infra. Ltd & Anr. vs Uoi & Ors.
The SC in this landmark judgement upheld the constitutional validity of the IBC (Second Amendment) Act, 2018 which included ‘real estate allottees’ within the definition of “financial creditors’ under Section 5(8f) of the Insolvency and Bankruptcy Code. The ruling marks a breakthrough for allottees, who will not only be able to enforce the Code but will also be able to join the Committee of Creditors on the same terms as Banks and other Financial Organisations.
Swiss Ribbons Pvt. Tld. & Anr. vs Union Of India & Ors.
The Hon’ble Supreme Court upheld the constitutional validity of the IBC, in 2016 after ten writ petitions and a special leave petition was filed against it. The Court affirmed the stance of the legislation in bringing back the economy to its rightful position. It also directed the government to establish circuit benches of NCLAT.
State Tax Officer vs Rainbow Papers Ltd.
The Apex Court held that the State is a secured creditor under the GAT Act and any resolution plan which ignores the statutory demands payable to any State Government or legal authority, altogether, is liable to be rejected. The court further held that Section 48 of the Gujarat Value Added Tax Act is not contrary to or inconsistent with Section 53 or any provisions of the IBC.
Innoventive Industries Ltd. vs Icici Bank Ltd. & Arn.
The SC, in its first extensive ruling on the operation of the IBC, 2016 dismissed the appeal filed by Innoventive Industries Ltd. that challenged the ruling of both NCLAT and NCLT, Mumbai as it admitted the insolvency petition filed by ICICI Bank Ltd. against Innoventive Industries LTD.
The bench stated that once an insolvency professional is appointed to manage the company, the erstwhile directors, who are no longer in management, cannot maintain an appeal on behalf of the company.
Conclusion
So the above-mentioned 5 LANDMARK JUDGEMENTS UNDER INSOLVENCY & BANKRUPTCY CODE, 2016 show the significant impact and progressive nature of this code. These landmark judgements have set important precedents for future cases under the Insolvency & Bankruptcy Code, ensuring an efficient and fair resolution mechanism for distressed companies while protecting stakeholders’ interests. Contact C.A. Devendra Jain and Associates for the best guidance regarding Insolvency and Bankruptcy.