Citing legal precedents and rules under the Insolvency and Bankruptcy Code (IBC), Union Bank of India on Wednesday argued before the National Company Law Tribunal (NCLT) that insolvency proceedings can be triggered against Era Infra even if winding-up petitions were pending before the Delhi High Court. Union Bank had filed an insolvency petition against Era Infra, which owes the public sector lender R681 crore in term loans and $11 million in ECBs, under Section 7 of the IBC. The maintainability of the insolvency petition is the primary issue before the tribunal, since several winding-up petitions have already been filed against the company.
In his argument, Union Bank’s advocate said the IBC is a consolidating law relating to insolvency of corporate entities which provides for resolution of the corporate debtor before ordering liquidation. “On the contrary, remedy under Sec 433(e) of the Companies Act, 1956 and the remit of the Company Court is winding up the company, which is analogous to liquidation under the Code. Therefore, the jurisdiction of the Tribunal under Sec 7 of the Code is independent of the jurisdiction of the Company Court under 433(e) of the Companies Act,” he added.