Pendency Of Proceedings Before DRT, SARFAESI Or Others - Not A Bar For Initiating CIRP

Last updated: 18 May 2022

Save Share

Quick Summary

The National Company Law Appellate Tribunal (NCLAT) ruled that the pendency of proceedings under the SARFAESI Act or before the Debt Recovery Tribunal (DRT) does not prevent a financial creditor from initiating Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016. The tribunal emphasised that Section 238 of the IBC grants its provisions overriding effect over other laws, ensuring that the IBC's objective of corporate resolution takes precedence.

Court :
NCLAT Chennai Bench

Brief :
The Hon’ble NCLAT held that in view of the provisions of Section 238 of the IBC 2016 the financial Creditor/ Operational Creditor/Corporate Persons can file an application under Section 7 ,9 & 10 of the I & B Code, 2016 before the respective Adjudicating Authorities even though in respect of same any proceeding pending before other forums on the ground that the provisions of I & B Code, 2016 is overriding effect of other laws. It means that if proceedings before DRT is going on against an entity, then also CIRP Application under provisions of Sections 7, 9 & 10 will be maintainable.

Citation :
Company Appeal (AT) (CH) (Ins) No. 130 of 2022

Daily Limit Reached