Dismissed

Madhu Steel Corporation v. Innvoative Studios Pvt. Ltd.

Karnataka HC26 Jun 2023WA/143/2021

Case brief

AI extract

What is this about?

A two-judge bench dismissed an intra-court appeal filed against an order dismissing a writ petition challenging a Tribunal's decision to convene a meeting of secured creditors. The court held that pending winding up proceedings do not bar insolvency proceedings under the Insolvency and Bankruptcy Code.

What did the court decide?

The Writ Appeal and pending interlocutory applications were dismissed.

Madhu Steel Corporation Vs Innvoative Studios… — Insolvency and Bankruptcy | Karnataka HC (2023)

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NC: 2023:KHC:21939-DB WA No.143 of 2021

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26^TH DAY OF JUNE, 2023

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PRESENT

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THE HON'BLE MR. JUSTICE ALOK ARADHE

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AND

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THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE WRIT APPEAL NO.143 OF 2021 (GM-RES)

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BETWEEN:

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Digitally signed by RUPA V Location: High Court of Karnataka

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MADHU STEEL CORPORATION A BUSINESS OF THE HUF REPRESENTED BY ITS FAMILY MEMBER MR. VIJAY PRAKASH GUPTA NO.5 AND 6 MILLIA BUILDING NR ROAD, 2ND CROSS BANGALORE-560002.

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…APPELLANT

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(BY SRI. RAVIKUMAR M.C. ADV.,)

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AND:

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INNOVATIVE STUDIOS PVT LTD REGD. OFF. NO.135 OUTER RING ROAD VARTHUR ROAD, VARTHUR HOBLI MARATHAHALLI JUNCTION BANGALORE-560037 REPRESENTED BY MR. BALADY SHEKAR SHETTY COMPANY SECRETARY AND LIQUIDATOR.

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KARNATAKA STATE FINACIAL CORPORATION KSFC BHAVAN, NO.1/1, THIMMAIAH ROAD VASANTH NAGAR, BANGALORE-560052 REPRESENTED BY ITS EXECUTIVE DIRECTOR.

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MR. BALADY SHEKAR SHETTY COMPANY SECRETARY AND LIQUIDATOR

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E-98, 7A CROSS, MANYATA RESIDENCY NAGAVARA, BANGALORE-560045.

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SURESH PRODUCTION ENTERTAINMENT LLP REGD.OFF.1-A BLOCK GROUND FLOOR, PRINCE VILLIA NEW NO.15, (OLD NO.7 AND 8) RAJAMANNAR STREET, T-NAGAR CHENNAI-560017 REPRESENTED BY D. SURESH BABU.

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ALSO AT INNOVATIVE MULTIPLEX NO.135, OUTER RING ROAD VARTHUR ROAD, VARTHUR HOBLI MARATHAHALLI JUNCION BANGALORE-560037.

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ALSO AT ADMIN OFF-D.NO.551, 9TH MAIN INDIRA NAGAR, BANGALORE-560038.

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MR. DUSHYANTH KUMAR NO.404/2, 7TH MAIN, 9TH CROSS JAYANAGAR, 2ND BLOCK BANGALORE-560011.

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MR. MADHUSUDHAN RAO GUNUGUNTA A-406, MANTRI GREENS NO.1 SAMPIGE ROAD MALLESHWARAM, BANGALORE-560003.

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…RESPONDENTS

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(BY SRI. ROHAN TIGADI, ADV., FOR R1 & R3)

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THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE JUDGEMENT AND ORDER DATED 22/12/2020 PASSED IN WP 10114/2020 BY THE LEARNED SINGLE JUDGE OF THIS HON BLE COURT, CONSEQUENTLY ALLOW THE WRIT PETITION BY DECLARING

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THAT THE PROCEEDINGS BEFORE NCLT IS NULL AND VOID, VITIATED AND AGAINST THE LAW AS PER GAZETTE NOTIFICATION. OR IN THE ALTERNATIVE REMAND BACK THE MATTER BEFORE THE LEARNED SINGLE JUDGE FOR FRESH ADJUDICATION OF THE MATTER. GRANT SUCH OTHER RELIEF/S BY ALLOWING THIS APPEAL.

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THIS APPEAL COMING ON FOR PRELIMINARY HEARING, THIS DAY ALOK ARADHE J., DELIVERED THE FOLLOWING:

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JUDGMENT

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This intra Court appeal under Section 4 of the Karnataka High Court Act, 1961, has been filed against an order dated 22.12.2020 passed by the learned Single Judge by which the writ petition filed by the petitioner seeking to set aside the order dated 17.08.2020 passed by the National Company Tribunal (hereinafter referred to as 'the Tribunal') has been dismissed.

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Facts giving rise to filing of this appeal briefly stated are that the Karnataka State Financial Corporation (hereinafter referred to as 'the Corporation') filed a petition under Section 7 of the Insolvency and

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Bankruptcy Code, 2016 before the Tribunal which was admitted by the Tribunal. The appellant approached the Tribunal with his claim. Respondent No.3 sent two communications dated 28.09.2020 and 21.10.2020.

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The Tribunal, by an order dated 17.08.2020, has directed to convene a meeting of secured creditors on 26.09.2020. The aforesaid order has been passed in a proceeding relating to a scheme consented to by the secured creditors of the Company. The learned Single Judge, by an order dated 22.12.2020 has dismissed the writ petition.

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Learned counsel for the appellant submitted

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that since the matter pertaining to winding up of the Company was pending before the High Court, therefore, the Corporation could not have initiated proceedings under Section 7 of the Act before the Tribunal and the Tribunal could not have passed the impugned order dated 17.08.2020. On the other hand, learned counsel

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for the respondent has supported the order passed by the learned Single Judge.

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The issue raised by the learned counsel for the appellant is squarely covered by the decision of the Hon'ble Supreme Court in A.NAVINCHANDRA STEELS PRIVATE LIMITED Vs. SREI EQUIPMENT FINANCE LIMITED AND OTHERS¹ , wherein the Hon'ble Supreme Court has held that the pendency of winding up proceedings is not a bar to a proceeding under Section 7 or 9 of the Insolvency and Bankruptcy Code as the proceeding under Sections 7 and 9 of the Insolvency and Bankruptcy Code are independent and are overriding proceeding.

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