CIRP proceedings under Section 7 of the Insolvency and Bankruptcy Code are independent and can proceed concurrently with winding-up proceedings, with overriding effect and rights of secured creditors.

JUDGMENT

T. Raja, J.

1. M/s.Sharon Solutions Limited, Alandur, Chennai, has filed this appeal challenging the impugned fair and decreetal order passed by the learned Single Judge in C.A.No.575 of 2018 in C.P.No.14 of 2014, dated 15.02.2019, in and by which, the application filed by the Edelweiss Asset Reconstruction Company Limited/third party/first respondent herein seeking to permit them to initiate a Corporate Insolvency Resolution Process (CIRP) before the National Company Law Tribunal (NCLT), Chennai, under Section 7 of the Insolvency and Bankruptcy Code against M/s.Sharon Solutions Limited was allowed holding that there is no need for the applicant to seek leave of the Court to approach the NCLT which is automatic and therefore, the High Court cannot usurp the power of the NCLT from proceeding with the matter.

2. Mr.Sathish Parasaran, learned Senior counsel appearing for the appellant Company would submit that when the order of admittance of winding up under the provisions of the Companies Act, 1956, is in existence, the appellant Company cannot now be subjected to fresh proceeding under a separate statute. The finding given by the learned Single Judge that simultaneous proceedings can go on, that is, one before the NCLT and another before the Company Court, would create inconsistency and multiplicity of proceedings. Moreover, that is not the intention of statute and therefore, such an order ought not to have been passed by the learned Single Judge.

3. It is further argued that the present application filed by the first respondent in C.A.No.575 of 2018 in C.P.No.14 of 2014 seeking to permit them to initiate Corporate Insolvency Resolution Process before the NCLT is in the nature of an application filed under Section 446 of the Companies Act and this apart, when the Official Liquidator has been appointed as Provisional Liquidator, no other proceeding can be commenced except by leave of the Court. Therefore, having subjected to themselves to the provisions of the Companies Act, 1956, the first respondent cannot seek for initiation of fresh proceedings under the provisions of Insolvency and Bankruptcy Code before the NCLT, which is nothing but two parallel adjudications, that is, one before the Company Court and another before the NCLT, thus, such an approach of the first respondent is erroneous and does not convey the intention of the legislature. Hence, the impugned fair and decreetal order passed by the learned Single Judge permitting the first respondent to initiate fresh proceeding before the NCLT, Chennai, pending the similar proceeding before the Company Court, is not sustainable in law and therefore, the same is liable to be set aside.

4. Mr.S.Ravi, learned counsel for the first respondent would submit that the appellant Company had availed several loan facilities to the tune of Rs.12,75,00,000/- in the year 2006 from the Federal Bank and subsequently, they have approached UCO Bank Consortium comprising of the Assignor Bank, UCO Bank and Canara Bank for loan facilities which sanctioned credit facilities to the tune of Rs.85,01,00,000/- under the Consortium, and this apart, several loan documents were executed by way of deposit of title deeds of the properties of the appellant in favour of the Assignor Bank. Since the credit facilities were not regularized and the appellant failed to repay the loan amount, the amount was declared as Non Performing Asset in June, 2014, therefore, the said debt was assigned to the first respondent herein on 30.06.2014 by the said Assignor Bank by virtue of the Assignment Agreement registered as Document No.110/2015. Therefore, the first respondent is entitled to recover a huge public money to the tune of Rs.74,55,13,493/- from the appellant as on 31.03.2018.

5. It is further argued that while going through the records, the first respondent came to know the case filed by M/s.IFCI Venture Capital Funds Limited, New Delhi, in C.P.No.14 of 2014 and subsequent order passed by this Court on 12.11.