The National Company Law (Appellate) Tribunal, has upheld an order of the Chennai Bench of NCLT admitting an insolvency case filed by the City Union Bank against one Mr Amar Vora, suspended director of Milan Textiles, Madurai, who had borrowed from the bank to develop a shopping mall, and defaulted. 

It was Vora’s case that the bank had earlier issued demand notice under the SARFAESI Act and had also initiated proceedings before the Debts Recovery Tribunal—so, it could not also proceed under the IBC. He said that he had also prayed to the NCLT to keep the matter in abeyance until another case under the Benami Property Transaction Act, 1998, is decided. 

The Appellate Tribunal would have none of it. It noted that the IBC was a special enactment and “an act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individual in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship.” 

It said: As held by the Hon’ble Supreme Court, the aim and object of the Code is not for recovery of debts but for Resolution of Corporate Persons. In this regard Section 238 of I & B Code, 2016 deal with provisions of the Code to override other laws and the said provision reads as under: “The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.”

The Appellant cannot take a stand that the proceedings are pending before DRT and PBPT and the application under Section 7 of the I & B Code, 2016 cannot be maintained does not merit. The application under Section 7 filed by the financial creditor before the adjudicating authority is very well maintained.