By Saikat Das
The Insolvency and Bankruptcy Code (IBC) has seen a new twist as the Supreme Court has set aside the National Company Law Tribunal‘s order invoking a constitutional provision, creating an important legal precedent for recovery proceedings.
The National Company Law Tribunal (NCLT) admitted ABNM Restaurant, a little known Kolkata-based company, earlier in November for bankruptcy proceedings. But the company later settled the matter with its financial creditor, Ketan Mehta, out of court and moved a Special Leave Petition to the country’s apex court.
“The Supreme Court order setting aside the NCLT admission (for ABNM Restaurants) shows the way,” said Anil Agarwal, partner AAA Insolvency Professional. “If both parties can settle the matter amicably, it can result in a smooth solution for everyone.”
The committee of creditors had appointed Agarwal as the resolution professional, which was awaiting approval from NCLT.
The company could not be contacted immediately for comments.
Mehta, the financial creditor, had loaned the company about Rs 1.16 crore in his personal capacity. He filed an insolvency application at the dedicated bankruptcy court in Kolkata.
“In this particular case, the company may have found the burden of IBC a bit heavy. Hence, it settled it with the financial creditor directly outside the court,” said another person with knowledge of the matter.
Although outstanding claims are paltry, the SC order has expanded the legal remit in bankruptcy cases. Article 142 of the Constitution empowers the country’s apex court to take special steps.
The Supreme Court had pronounced the order during mid-December before its year-end vacation began. The order will be uploaded on the web after the court resumes. Khaitan & Co, the legal counsel in the case, will inform NCLT Kolkata about the order, seeking necessary directions.