Article
Overriding effect of Insolvency and Bankruptcy Code
The Apex Court has recently passed a judgment, for the first time, interpreting the scheme of IBC along with certain key provisions, that goes on to establish the efficacy of IBC while upholding the reasons for which the said law was introduced. The Court while dealing with the question of repugnancy between a central and state enactment, laid down certain tests and held that Maharashtra Relief Undertakings (Special Provisions Act), 1958, being State law, dealing with the same subject matter of ‘insolvency’ as the IBC, is repugnant to IBC. It was also held that timelines mentioned in IBC are of extreme importance, and that ‘default’ under IBC has a wide ambit, meaning non-payment of debt (whether in part or in full) once it is due and payable.
Bills, Notifications and Circulars
- Restriction on number of layers on companies – MCA notifies Section 2(87) of Companies Act, 2013 defining a ‘Subsidiary company’, and Companies (Restriction on number of layers) Rules, 2017
- No change in definition of ‘control’ as per SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - SEBI issued a Press Release
- SEBI Board Meeting – Amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014 notified
- IFSC - Companies (Acceptance of Deposits) Rules, 2014 amended
- SEBI (International Financial Services Centres) Guidelines, 2015 amended
- Arrests by SFIO - Commencement of sub-sections 212(8) to (10) of Companies Act, 2013 and Companies (Arrests in connection with investigation by Serious Fraud Investigation Office) Rules, 2017
- Issuance of Rupee Denominated Bonds Overseas - ‘Masala bonds’ excluded from overall limit for investments by Foreign Portfolio Investors in corporate bonds
Ratio decidendi
- Limitation Act not applicable for proceedings under Insolvency and Bankruptcy Code – NCLAT also holds that Debentures, irrespective of the amount of interest attached, are covered within meaning of ‘Financial Debt’
- Demerged resultant entity eligible to position itself as a ‘financial creditor’ – NCLT
- Admission of application of Insolvency Resolution Procedure is discretionary upon analysis of Adjudicating Authority – NCLT
- Parallel proceedings against guarantors cannot be admitted when moratorium under Insolvency and Bankruptcy Code, 2016 is in force – Allahabad High Court
