Insolvency Proceedings cannot be affected by pendency of winding up proceedings

The Supreme Court held that a petition for Insolvency resolution by operational creditor under Insolvency and Bankruptcy Code is independent proceeding which is unaffected by winding up proceedings that may be filed against the same company. Secured creditor stands outside the winding up and can realise its security dehors winding up proceedings.

Only where a company in winding up is near corporate death, no transfer of the winding up proceeding would then take place to National Company Law Tribunal, to be tried as a proceeding under the Code. When corporate death is inevitable, every effort should be made to resuscitate the corporate debtor in the larger public interest, which includes not only the workmen of the corporate debtor, but also its creditors and the goods it produces in the larger interest of the economy of the country.

Discretionary jurisdiction under fifth proviso to S.434(1)(c) of Companies Act cannot prevail over undoubted jurisdiction of National Company Law Tribunal under Code once parameters necessary for initiating Insolvency resolution by operational creditor have been met.

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