M/S. Innoventive Industries Limited Versus ICICI Bank & Anr. (CIVIL APPEAL No. 8337-8338 OF 2017, Judgment on 31st August 2017)

Question of law: – Can Corporate Debtor (erstwhile director) maintain appeal?

  • In this case, SC delivered its first extensive ruling on the operation and functioning of the Insolvency Code.
  • The ruling has its genesis in an application filed by ICICI Bank Limited (ICICI) before the National Company Law Tribunal, Mumbai (NCLT) to initiate corporate insolvency resolution process (CIRP) of Innoventive Industries Limited (Innoventive). This was the first application filed under the IBC.

The application was filed by ICICI as a financial creditor of Innoventive, under Section 7 of the IBC, on account of default made by Innoventive in payment of amounts due under certain credit facilities availed from ICICI.

Against the NCLAT order, an appeal was filed before the Hon’ble Supreme Court by Innoventive. One of the preliminary issues addressed by the Supreme Court was whether the appeal is maintainable as it had been filed by the erstwhile directors (in the name of Innoventive). The Supreme Court held that once an IRP is appointed to manage the company, the erstwhile directors, who are no longer in the management, cannot maintain the appeal on company’s behalf – and since in the present case, Innoventive was the sole applicant – the appeal was not maintainable.

  • Interestingly, the Supreme Court refused to dismiss the appeal, noting that it is delivering a detailed judgment so that all courts and tribunals may take notice of the paradigm shift in the law. The Supreme Court undertook an in-depth examination of IBC provisions dealing with corporate insolvency resolution.
  • Supreme Court further held that the non-obstante clause of IBC will prevail over the non-obstante clause in the MRUA.

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