Supreme Court Half Yearly Digest 2025: IBC & Company Law

Insolvency and Bankruptcy Code, 2016 Sections 14, 238 - Moratorium under Section 14 of IBC does not bar property attachments under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act). The MPID Act, enacted under the State List, enables recovery for victims of financial fraud through asset attachment, and such vesting with the State Competent Authority is unaffected by the IBC moratorium. No inconsistency exists between the IBC and MPID Act, negating claims of repugnancy under Article 254 of the Constitution. Arising from the 2013 NSEL scam involving ₹5,600 crore in defaults, the case involved a challenge to property attachments under the MPID Act during an IBC moratorium. The Court, exercising its powers under Article 142, upheld the actions of a Supreme Court appointed Committee in executing decrees and distributing proceeds from attached properties to ensure equitable distribution to depositors, despite the IBC moratorium. Section 238 of the IBC was held inapplicable due to the absence of conflict between the two statutes. (Paras 48, 51, 52) National Spot Exchange Ltd. v. Union of India, 2025 LiveLaw (SC) 577 : 2025 INSC 694 Section 61(2) - The National Company Law Appellate Tribunal (NCLAT) lacks jurisdiction to condone delays in filing appeals beyond the 45-day limit (30 days + 15 days condonable) prescribed under Section 61(2) of the IBC. The limitation period commences from the date of order pronouncement, rejecting the respondent's contention that it began later due to disclosure to the stock exchange. The appeal, filed on 24.05.2022, was time-barred as it exceeded the 45-day limit ending on 22.05.2022, with no relief under Section 4 of the Limitation Act, 1963, as the initial 30-day period ended on a working day (07.05.2022). NCLAT cannot condone delays beyond 15 days, even on equitable grounds, to uphold the IBC's time-bound appellate framework. The appeal was allowed, reinforcing the strict limitation regime under the IBC. [Relied on: Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., (2021) 10 SCC 401 (Paras 10-13) Tata Steel Ltd. v. Raj Kumar Banerjee, 2025 LiveLaw (SC) 542 Sections 30(2) and 33(1) - the Supreme Court set aside the approval of JSW Steel Ltd.'s resolution plan for the corporate debtor, Bhushan Power & Steel Ltd. (BPSL), holding it illegal, non-compliant with Section 30(2) IBC, and vitiated by the Resolution Professional's (RP) dereliction of statutory duties and the Committee of Creditors' (CoC) failure to exercise commercial wisdom. The Court ordered immediate liquidation of BPSL under Section 33(1) IBC, invoking Article 142 of the Constitution to prevent further abuse of process. Kalyani Transco v. Bhushan Steel and Power Ltd, 2025 LiveLaw (SC) 524 : 2025 INSC 622 Corporate Insolvency Resolution Process (CIRP) initiated against BPSL in 2017 at the behest of Punjab National Bank. JSW's ₹19,700 crore plan—allocating ₹19,350 crore to financial creditors and ₹350 crore to operational creditors (against admitted claims of ₹733 crore)—was approved by CoC, National Company Law Tribunal (NCLT) on September 5, 2019, and National Company Law Appellate Tribunal (NCLAT) on February 17, 2022. However, JSW wilfully delayed implementation for two years post-approval, made misrepresentations to CoC, and contravened plan terms, frustrating IBC objectives. Appeals allowed from operational creditors. Kalyani Transco v. Bhushan Steel and Power Ltd, 2025 LiveLaw (SC) 524 : 2025 INSC 622 Issues - 1. Whether the RP discharged statutory duties under IBC and CIRP Regulations during BPSL's CIRP. 2. Whether CoC exercised commercial wisdom in approving JSW's non-compliant plan, and protected creditor interests. 3. Whether JSW's post-approval non-compliance and misrepresentations rendered the plan void. 4. Validity of NCLT/NCLAT approvals under Sections 30(2) and 31(2) IBC. Held: 1. RP's Failure: The RP utterly failed in statutory duties, warranting condemnation for enabling flawed CIRP. 2. CoC's Lapse: CoC abdicated commercial wisdom by approving a plan in "flagrant violation" of mandatory IBC provisions and CIRP Regulations; contradictory stances before Court and acceptance of JSW payments without demur undermined creditor protection. 3. JSW's Conduct: JSW's wilful non-compliance for two years, absent legal impediments, and misrepresentations to secure the bid constituted abuse of process; such delays frustrated IBC's revival objective, vitiating proceedings. 4. Plan's Invalidity: JSW's plan non-conformant with Section 30(2) IBC (e.g., inadequate creditor distributions); NCLT erred in not rejecting it under Section 31(2); NCLAT's judgment perverse and coram non judice. NCLT/NCLAT orders quashed; JSW's plan rejected; liquidation of BPSL directed forthwith. JSW's payments to creditors and equity infusions recoverable per CoC's undertaking (to refund within...

Supreme Court Half Yearly Digest 2025: IBC & Company Law

LIVELAW NEWS NETWORK

Tags