The Insolvency and Bankruptcy Code, 2016 prevails over the Companies Act, particularly in the context of stalling proceedings under section 7 of the Code. The court has the inherent power to recall/modify its orders if procedural errors have been committed.

Headnote:
Modification - Stay of Proceedings - The court modified the order to recall/modify the stay of the proceedings initiated by the Applicant under section 7 of the Insolvency and Bankruptcy Code, 2016.
Fact of the Case:

The Applicant sought modification/vacation of the order to enable pursuit of Company Petition (IB) no. 1312 of 2020 filed against the Respondent. The Respondent filed a Company Application proposing a Composite Scheme of Compromise and Arrangement under Section 230 of the Companies Act. The Applicant objected to the Scheme, citing gross injustice and prejudice to its rights.
Finding of the Court:

The court found that the order staying the proceedings under section 7 of the Code was passed without affording the Applicant an opportunity to be heard. It held that the proceedings under the Insolvency and Bankruptcy Code, 2016 cannot be stalled by proceedings under the Companies Act, particularly under section 230. The court allowed the Applicant's application to recall/modify the order to not stay the proceedings initiated under section 7 of the Insolvency and Bankruptcy Code, 2016.
Issues: The issues involved the modification/vacation of the order to enable the pursuit of the Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016, and the impact of the Composite Scheme of Compromise and Arrangement proposed under Section 230 of the Companies Act on the Applicant's rights.
Ratio Decidendi: The court held that the proceedings under the Insolvency and Bankruptcy Code, 2016 cannot be stalled by proceedings under the Companies Act, particularly under section 230. It further found that the order staying the proceedings under section 7 of the Code was passed without affording the Applicant an opportunity to be heard.
Final Decision: The court allowed the Applicant's application to recall/modify the order to not stay the proceedings initiated under section 7 of the Insolvency and Bankruptcy Code, 2016.

IN THE NATIONAL COMPANY LAW TRIBUNAL

MUMBAI BENCH, COURT-II

Application under Rule 11 of the NCLT

Rules, 2016

IN THE MATTER OF

ICICI Bank Limited

ICICI Bank Tower, Near Chakli Circle, Old

Padra Roiad, Vadodara, Gujarat – 390007.

Corporate Office at: ICICI Bank Tower, Bandra-Kurla Complex, Mumbai – 400051.

... Applicant

V/s.

Supreme Infrastructure India Limited

Supreme House, Pratap Gadh, Plot No. 94/C, Opp. IIT, Powai, Mumbai,

Maharashtra - 400076.

… Respondent

IN THE MATTER OF

Supreme Infrastructure India Limited

Supreme House, Pratap Gadh, Plot No. 94/C, Opp. IIT, Powai, Mumbai,

Maharashtra - 400076.

... Applicant Company

Order delivered on :- 05.03.2024

Coram:

Hon’ble Shri Kuldip Kumar Kareer, Member (Judicial)

Hon’ble Shri Anil Raj Chellan, Member (Technical)

Appearances:

For the Applicant : Sr. Adv. Gaurav Joshi a/w Anamica Singh and Nassir Shirkh For the Respondent : Sr. Adv. J P Sen a/w Ashish Pyasi ORDER Per: - Kuldip Kumar Kareer, Member (Judicial)

1. The present Application has been filed by the Applicant seeking modification/vacation of the order dated 23.12.2022, more particularly part (d) of the order passed by this Tribunal in the captioned matter to the extent to enable the Applicant to pursue Company Petition (IB) no. 1312 of 2020 filed against the Respondent. The relevant portion of the said Order dated 23.12.2022 is reproduced herein below:

“(d) The proceedings filed/initiated by any Financial Creditors of the Applicant Company before this Tribunal is pending is stayed till the time results of the meeting with Financial Creditors is placed before this Tribunal and the scheme is finally heard and disposed of.

Brief facts of the Application:

2. It is submitted by the Applicant that the Respondent has filed the captioned Company Application thereby proposing a Composite Scheme of Compromise and Arrangement ("Scheme") under Section 230 of the Companies Act. The Respondent had filed the Company Application No. 653 of 2022 ("said Application") for an extension to call a meeting of the financial creditors as directed by the Order dated 29 July 2022 passed by this Tribunal in the captioned matter amongst other reliefs. This e Tribunal while allowing the extension for holding the meeting in the said Application also stayed the hearing in the applications filed by the financial creditors, including the Applicant herein until the results of the voting on the Scheme are not produced before this Hon’ble Tribunal. It is submitted that the said direction was passed ex parte without providing any opportunity of hearing to the financial creditors including the Applicant herein as the said Application was never served upon the Applicant.

3. The Applicant is one of the financial creditors of the Respondent and has a valid and subsisting debt due and payable by the Respondent, which has been defaulted by the Respondent. In view of the default, the Applicant had filed the Company Petition under Section 7 of the Insolvency & Bankruptcy Code, 2016 ("Code") on 26 August 2022. The Respondent had approached the Applicant for grant of certain credit facilities to be utilized for the takeover of the existing term loans and investing in Project Special Purpose Vehicle ("SPV") for built operate transfer projects in the form of redeemable preference shares issued by the Project SPV. The said request was acceded to by the Applicant and the Applicant issued Credit Arrangement Letter (’CAL’) dated 29 June 2011 bearing reference no. CBG/2010- 2011/CMOG No. 12/W45MUM/34624. By the said CAL, the Applicant sanctioned a Rupee Term Loan ("RTL") of an amount of Rs. 200 crores in favour of the Respondent. Thereafter, the Applicant issued an amendatory CAL on 30 June 2011 bearing reference no. CMOG No. 12/W45MUM/34692 and revised the rates of interest of the RTL. The Applicant craves leave to refer and rely upon the CALs as mentioned above.

4. The Applicant and the Respondent executed Rupee Loan Agreement dated 1 July 2011 to define the terms and conditions of the RTL. The Appl

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