In Brief
A financial creditor sought to initiate corporate insolvency proceedings against a corporate debtor under the Insolvency and Bankruptcy Code, 2016. The debtor resisted, claiming a scheme of arrangement under the Companies Act, 1956 was pending. The Supreme Court held that the Insolvency Code's overriding effect under Section 238 means pending scheme proceedings do not bar insolvency initiation. The Court found the scheme in question procedurally defective, with statutory timelines grossly violated and consent withdrawn by creditors. It reinforced that insolvency law prioritizes creditor-driven revival and cannot be frustrated by dilatory restructuring attempts lacking legal finality. The appeal was allowed.
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