Apex Court has stated that,”IBC as an effective legal framework aimed to improve ‘Ease of Doing Business’.
Supreme Court has expounded that,”Provisions of the State enactments which hinder country’s new bankruptcy law Insolvency and Bankruptcy Code (IBC) meant to protect interests of the shareholders, creditors and the workmen against entrenched managements unable to dig their way out of their debts, will be declared void”.
SC Bench of Justice Rohinton Nariman and Justice Sanjay Kishan Kaul enunciated that erstwhile management of the company cannot represent it in the Court once the insolvency resolution process has been admitted in National Company Law Tribunal (NCLT) and management transferred to an Insolvency Professional.
Court has further added in its judgment that,“Entrenched managements are no longer allowed to be continued in the management if they cannot pay their debts”.
Supreme Court has dismissed the appeal by the Innoventive Industries, who was represented by the Senior Advocate, A.M. Singhvi and Advocate Shikhil Suri, against Insolvency Proceedings under IBC by the ICICI Bank.
Company had invoked the Maharashtra Relief Undertakings (Special Provisions Act),1958 against insolvency resolution process under Section 7, IBC.
In January,2017 the NCLT had already dismissed plea, stating that Code, Parliamentary Statute, would prevail against Maharashtra Act.
Appellate Tribunal of the NCLT, had stated that the Innoventive Industries’ Management cannot derive any advantage from Maharashtra Act to stall proceedings under Code.
Writing judgment for Bench, Justice Nariman expounded that Maharshtra Act repugnant to the IBC, which brings insolvency law under single unified umbrella with object of the speeding up of insolvency process.
Source - PTI