RBI circulars cannot override IBC provisions; Upholds CIRP initiation NCLAT

Published in news-legal December 14 2018 0
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NCLAT dismisses appeal filed by Promoter and Director (‘Appellant’) of Impex Metal & Ferro Alloys Ltd. (‘Corporate Debtor’), challenging NCLT order wherein Corporate Insolvency Resolution Process (‘CIRP’) pursuant application u/s 7 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’) was initiated; Takes note of Appellant’s claim that State Bank of India (‘Respondent’/ ‘SBI’) was bound to follow the statutory mandate laid vide RBI Circulars and thus application u/s 7 of Code, as preferred by SBI defeats such guidelines; Peruses Sec. 35 AA and Sec. 35 AB of the Banking Regulation Act, 1949 which inter alia authorizes RBI to take actions for resolution of stressed assets, highlights that Circular June 13, 2017, relied on by the Appellant itself provides for initiating CIRP under the Code for certain ‘identified accounts’; Construes that RBI directions do not suggest interference with the statutory remedy of resolution process under the Code and aforesaid Circulars cannot override the provisions of the Code, which is a special enactment and a complete Code in itself; Upholds statutory right of the Creditors under the Code for initiation of CIRP and states that once the concerned Adjudicating Authority is satisfied w.r.t. (i) existence of debt and default, (ii) completeness of application, it is bound to admit the application:

Re:Impex Metal & Ferro Alloys Ltd
New Delhi NCLAT
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