The Supreme Court of India has set aside an order of the National Company Law Appellate Tribunal (NCLAT) that had stayed insolvency proceedings against a Corporate Debtor due to a pending Scheme of Arrangement (SOA) under the Companies Act, 1956.
A Bench comprising Justice Sanjay Kumar and Justice K. Vinod Chandran held that “judicial discipline” cannot be used as a shield by “tardy litigators” to jeopardize public funds. The Court ruled that the overriding effect of the Insolvency and Bankruptcy Code (IBC), 2016, ensures that insolvency resolution takes precedence over redundant schemes under the older Companies Act.
Legal Issue and Outcome
The primary legal question was whether proceedings for a Scheme of…