Case Analysis: M/S Vistra ITCL (India) Ltd. Vs Dinkar Venkatasubramanian And Another (Civil Appeal No. 3606 Of 2020)
- IJLLR Journal
- Aug 8
- 2 min read
Amrutha Pushpan, LL.M. (Corporate Law), Vivekananda School of Law and Legal Studies
Background of Insolvency and Bankruptcy Code, 2016
The Insolvency and Bankruptcy Code was introduced in the year 2016 in order to administer and govern the insolvency and bankruptcy laws in India. This Code applies to companies, firms, limited liability entities and individuals and are not applied to financial service providers. The main purpose of bringing this Code in force was to consolidate all the existing framework in one single law. It has played a major role in protecting the rights of the secured creditors and providing them necessary relief in case of infringement of their legal rights. All the professionals, adjudicating authorities are required to comply with all the procedures laid down in the Code. The National Company Law Tribunal (NCLAT) is the appellate body who hears the appeal related to insolvency and bankruptcy cases. An Interim Resolution Professional is appointed by The National Company Law Tribunal (NCLAT) a person who is appointed to manage the affairs of the company and to keep an eye that all the individuals as well as the corporate entities are abiding the procedure of Resolution Process or not.
Sections of Insolvency and Bankruptcy Code, 2016 which is referred in the case law
Ø Section 7 – Initiation of Corporate Insolvency Resolution Process by the Financial Creditors
Under Section 7 of Insolvency and Bankruptcy Code, 2016, it explains the process of Corporate Insolvency Resolution Process (CIRP) when it is initiated by the financial creditor. As per this section, the financial creditor have to adhere to the requirements and procedures which are enumerated under this section. This section not only provides the resolution process but also states the eligibility of the financial creditor and also enlists the power of the adjudicating authority.
Ø Section 52- Secured Creditor in Liquidation Proceedings
Under Section 52 of The Insolvency and Bankruptcy Code, 2016, it states the rights of a secured creditor in liquidation process. It allows the secured creditor to relinquish the security interest or realize it independently by selling the secured assets in order to recover their debts. They are provided an option to either participate in the overall liquidation process or control their secured assets to recover their dues.
Ø Section 53 – Distribution Of Assets
Under Section 53 of The Insolvency and Bankruptcy Code, 2016, it states the distribution of proceeds from the sale of assets during the liquidation process. This section is regarded as the “waterfall mechanism”.
