2026 INSC 189 Page 1 of 19

Civil Appeal No.11417 of 2025

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No.11417 of 2025

Omkara Assets Reconstruction Private Limited.

….Appellant

Versus

Amit Chaturvedi and Ors.

….Respondents

J U D G M E N T

K. VINOD CHANDRAN , J.

1. Judicial impropriety vis-a-vis financial rectitude is the moot

question arising in this appeal in the context of the proceedings

pending under the Companies Act, 1956 and that initiated under the

Insolvency and Bankruptcy Code, 2016 (for short, the IBC). The

Stressed Assets Stabilization Fund of the bank who financed

respondent No.2, approached the Adjudicating Authority under the

IBC, the Company Law Tribunal, for initiating Corporate Insolvency

Resolution Proceedings (CIRP) for recovery of an amount of

Rs.154,33,12,274/- with future interest; on the principal of

Rs.10,60,00,000/- disbursed by way of two term loans on 05.04.1999

and 12.12.2000; the default having commenced from 01.01.2003.

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Civil Appeal No.11417 of 2025

Respondent No.2 resisted the claim on the grounds of pending

proceedings with respect to a Scheme of Arrangement (SOA) under

Sections 391 to 394 of the Companies Act before the Punjab and

Haryana High Court and alleged suppression of such fact before the

Adjudicating Authority.

2. The Tribunal observed that respondent No.2 failed to establish

compliance with the provisions of Section 391 of the Companies Act

and noticing the contention of the appellant that the SOA had become

defunct, invoked the provisions of Section 7 of the IBC based on the

decisions of this Court, with reliance placed on Section 238 of the IBC.

The consequences, including that of moratorium under Section 14

and the prohibitions thereunder were listed out as directions and an

Interim Resolution Professional (IRP) was appointed. Respondent

No.1, the erstwhile director of the Corporate Debtor (CD),

approached the Company Law Appellate Tribunal which kept in

abeyance the application filed before the Adjudicating Authority

until disposal of the proceedings pending before the Punjab and

Haryana High Court. In the present appeal, this Court issued an

interim order reviving the moratorium and permitting the IRP to

resume charge of the CD.

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3. Mr. Neeraj Kishan Kaul, learned Senior Counsel appearing for

the appellant submitted that the proceeding before the High Court is

of no consequence, especially looking at the overriding effect of the

IBC as provided under Section 238. It is pointed out that under

Section 391 there are two motions required before the Company

Court, first an application to call for a meeting of the stake holders

and then to obtain sanction for the scheme, if it is passed with a

majority of three-fourths of the members, present and voting. There

is also prescribed a time for moving the second motion and the

submission of the order of approval before the Registrar of

Companies within the time prescribed, which are statutorily

mandated to bring into force the SOA. This was never complied with

by respondent No.2, thus making the scheme defunct and

unenforceable by reason only of the gross delay. Though consent

was initially granted by the creditors for the SOA, the same was not

acted upon and even before a second motion was moved, the consent

was expressly withdrawn by written communication addressed to

respondent No.2. The proceeding before the High Court is now

contested independently which would not disable the appellant,

whose debts have mounted astronomically from approaching the

adjudicating authority under the IBC for initiating a CIRP.

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Civil Appeal No.11417 of 2025

4. We were taken through the decisions of this Court which

categorically and unequivocally found the provisions of IBC to have

overriding effect as against the inconsistent provisions in any other

law for the time being in force. It is also submitted that IBC has been

interpreted as a measure, balancing the realization of debts; public

funds, to a reasonable extent while ensuring that the industry/

enterprise is not driven to sure death. The SOA under the Companies

Act having become defunct by the deliberate omissions of

respondent No.2 and the debt having risen astronomically; the

existence of which cannot be disputed, it was perfectly proper for the

Adjudicating Authority to have initiated the CIRP under the IBC. The

Appellate Authority erred in having kept the application under

Section 7 in abeyance, thus suspending the moratorium and putting

the tottering industry back in the hands of the management which

was responsible for its downfall.

5. Ms.Purti Gupta, learned Counsel appearing for the respondent,

on the other hand, urged that the order impugned is not liable to be

interfered with, especially since it promotes judicial discipline and

has not rejected the application under the IBC. The Adjudicating

Authority having been informed of the approval of the SOA under the

Companies Act ought not to have initiated the CIRP. It is pointed out

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Civil Appeal No.11417 of 2025

that the decisions wherein the proceedings under the IBC were

allowed to be continued can be distinguished insofar as there was no

approved scheme in one of them and in the other, there was a

liquidation proceeding under the Companies Act. When, by consent

of the creditors, a SOA has been arrived at under the Companies Act,

there is no reason to unseat the management by initiation of CIRP and

appointment of an IRP. There is no appeal taken from the stay order

of the Division Bench of the High Court is the further compelling

contention.

6. Mr.Ritin Rai, learned Senior Counsel appearing for the

applicant in I.A. No.54690 of 2026, does not join issue in the appeal

and restricts the applicant’s claim to that filed before the Resolution

Professional to admit the applicant’s entire claim, in the event of the

proceedings under the IBC being continued with.

7. At the outset we have to notice that though we are not in appeal

from the order of the High Court but all the same it has a bearing

especially when the impugned order brings to a complete halt, the

CIRP. We have to look at the consequences of the proceedings before

the High Court being taken to a logical end, to adjudicate upon the

initiation of CIRP under the IBC. Section 391 of the Companies Act

speaks of a compromise or arrangement between a company and

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Civil Appeal No.11417 of 2025

inter alia its creditors if a majority of the creditors representing 3/4

th

value of the debt, agree to such compromise or arrangement in a

meeting of such creditors present and voting, either in person or

through proxies; which meeting has to be directed by the Court on

an application under sub-section (1) by the Company or any creditor.

On such meeting being called, held and concluded with the required

majority, under sub-section (2) there is a further requirement of

sanction by the Court. The proviso also requires that the order of

sanction made by the Court under sub-section (2) shall have no effect

until a certified copy of the order has been filed with the Registrar.

8. Reference is apposite to The Companies (Court) Rules, 1959

which mandates by Rule 78 that after the meeting of the creditors, the

result shall be reported to the Court by the Chairman within 7 days

or within such time as directed by the Court. This was done as

evidenced from Annexure-1 dated 25.07.2008, the order of the

Company Judge, which also permitted the filing of the second

motion, which had to be done as per Rule 79 within 7 days therefrom.

The sanction obtained from the Judge has to be filed with the

Registrar within 14 days from the date of such order under Rule 81

which alone brings into effect the SOA as provided under the Act. The

respondent Company’s inaction to move the second motion was

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Civil Appeal No.11417 of 2025

brought to its notice by Annexure A-2 dated 12.03.2009, requiring the

second motion to be filed immediately, failing which withdrawal of

consent to the SOA was also threatened. On the continued inaction

by Annexure A-3 dated 03.07.2009, after almost a year, the creditors

withdrew their consent to the SOA.

9. It was much later, on 23.07.2019 that Annexure A-5 order was

passed by the High Court in the second motion said to have been

filed by the respondent in the year 2009. The filing of the second

motion was also not within the time provided under the Rules. In any

event the SOA based on the dues as on 2008, as has been argued by

the appellant herein, would have become completely unenforceable

in the year 2019. This is especially so when the creditors had initiated

proceedings under the Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002 (for short,

SARFAESI Act) and also approached the DRT which had issued a

recovery certificate in the original application filed, quantifying the

dues and mulcting the liability of pendente lite and future interest.

10. The predecessor in interest of the appellant herein, the

Stressed Assets Stabilisation Fund of the Industrial Development

Bank of India (for short, the IDBI Bank) moved an application for recall

of the order of sanction, passed by the Company Judge, which was

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Civil Appeal No.11417 of 2025

allowed by Annexure A-6 dated 02.08.2022. The recall order, as we

see from a bare reading, specifically found the inoperability of the

SOA which enabled settlement of the total dues of Rs.63.19 crores as

on 31.12.2006, while on the sanction being approved in 2019, the total

dues were close to Rs.150 crores. It was also noticed that the

Company Court had no jurisdiction in the matter by virtue of the

coming into force of The Companies (Transfer of Pending

Proceedings) Rules, 2016 and Section 434 (1) (c) of the Companies

Act, 2013. The recall order further observed that the order

sanctioning the scheme failed to notice the reply of one of the

creditors opposing the sanction of the scheme and asserting

withdrawal of the consent earlier granted. The order of recall passed

with sufficient reasoning was stayed by a Division Bench as per

Annexure 7 dated 10.10.2022, observing; albeit incorrectly, that the

creditors with 75% value of the debt had agreed to the scheme.

11. We cannot but observe that the procedural requirements under

the Companies Act and the rules were not complied with by the

respondent and despite the pendency of the proceedings before the

Company Court, we cannot presume that the SOA brought out in the

year 2008 is still feasible, operational and remains reasonable

considering the lapse of time and the deliberate omissions of the

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Civil Appeal No.11417 of 2025

Company, the respondent herein. The statutory timelines have not

been complied with and at the risk of repetition, we notice various

dates, on the basis of the submission of the learned Counsel

appearing for the respondent that as of now the SOA is in force for

reason of the filing having been done before the Registrar of

Companies in Form No.INC-28.

12. Pertinently the Adjudicating Authority specifically noticed that

the furnishing of the order in the second motion was merely pleaded

and not established by production of the document before the

Adjudicating Authority. Be that as it may, the Resolution at the

meeting of creditors which approved the SOA along with the report

of the Chairperson was taken on record by the High Court on

25.07.2008. Admittedly, no application by way of a second motion

was filed before the High Court within seven days therefrom, as is

required under Rule 78. The order sanctioning the SOA by the High

Court was on 23.07.2019 in an application filed in the year 2009 by

CP No. 89 of 2009, definitely way beyond the prescribed time. There

is no plausible explanation offered by the respondent for the delay

of almost ten years in moving the Court for sanction of the scheme,

the terms of which would have definitely become redundant by mere

passage of time. Yet again, it has to be noticed that even the order

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Civil Appeal No.11417 of 2025

dated 23.07.2019 prescribed a period of 30 days within which the

order had to be filed before the Registrar of Companies, which was

also not done. The recall of the order dated 23.07.2019 came about

on 11.07.2022, after three years in an application filed by the Stressed

Assets Stabilization Fund in the year 2019 numbered as CA 158 of

2019 in CP No. 89 of 2009. In the intervening three years there was no

filing done, of the order purportedly sanctioning the SOA, before the

Registrar. The recall order was stayed by the Division Bench of the

High Court on 10.10.2022 after which also there was no filing within

30 days, which even if filed would have been beyond the time

prescribed.

13. Form No. INC-28 now produced before us is seen to have been

filed on 06.07.2023. The Form also indicates the due date of filing

before the Registrar as 22.08.2019, 30 days from the date of order,

which stood recalled and later revived. We cannot find even a

pretense of the timelines statutorily prescribed having been

complied with. The SOA, the terms of which were as on the year 2008,

would have thus become redundant and inoperative as of now or

even in 2023 when the filing was done before the Registrar of

Companies which makes the SOA for all practical purposes defunct.

There would be no reason to stall the IBC proceedings on the ground

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Civil Appeal No.11417 of 2025

of judicial discipline, based on the pending proceedings before the

High Court. Relevant is also the fact that in the intervening period,

between 2008 and 2019, the creditors had approached the Debt

Recovery Tribunal under the Recovery of Debts and Bankruptcy Act,

1993 (the RDB Act) and also invoked the provisions of the SARFAESI

Act, both of which were specifically noticed by the Adjudicating

Authority. Despite our specific query as to the said proceedings, the

answer of the respondent was evasive, of the respondent having

contested the same without any specific details furnished to us.

14. In considering the order of sanction dated 23.07.2019 issued by

the High Court, we also have to look at the reliance placed by the

Company Judge on a Division Bench Decision of that Court in CAPP

No. 2 of 2017- Alpha Corp Development Private Limited and Euthoria

Developers Private Limited dated 31.03.2017. Therein a joint

application was filed by the two appellants to transfer a mall owned

by the 1

st

appellant to the 2

nd

appellant, both Companies. The

application under Sections 391 and 394 was a composite one seeking

dispensation of the requirement of convening a meeting as also

publication of notice of the meeting and also praying for treating the

very same petition as a second motion for sanction of the SOA. The

learned Company Judge who heard the matter reserved it on

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Civil Appeal No.11417 of 2025

25.10.2016 and on 07.12.2016, the Central Government brought out

the Companies (Transfer of Pending Proceedings) Rules, 2016 which

came into effect on 15.12.2016. Rule 3 required all pending

proceedings related to cases other than winding up to be transferred

to the Tribunal, but the proviso carved out an exception insofar as

those proceedings which are reserved for orders for allowing or

otherwise, which proceedings were not required to be transferred.

The Division Bench found that since the learned Company Judge had

reserved orders on 25.10.2016 in a composite petition, insofar as one

of the prayers made with respect to dispensation of meetings was

finally allowed; what remained for consideration was only the

sanction of the SOA on merits. The Division Bench found no reason to

transfer it to the Tribunal since the application filed fell clearly within

the exception carved out in the Rules of 2016 and the second proviso

to Section 434(1)(c) of the Companies Act, 2013. The Division Bench

also proceeded to consider the sanction by themselves rather than

sending it back to the Company Judge due to the delay occasioned

in the consideration of the SOA.

15. Applying the dictum of the said decision to the present case,

herein the meeting was convened, and the Chairperson had filed the

report before the High Court which was taken on record on

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25.07.2008. There was no second motion filed within the period

prescribed under the Companies Rules and a delayed motion was

made in the year 2009. Nothing was done thereafter and in 2016

specifically on 15.12.2016, the Rules of 2016 came into effect,

requiring the transfer of proceedings to the Tribunal as on that date.

The second motion filed belatedly was pending and ‘not reserved for

allowing or otherwise ordering’. Even if a second motion had been

filed within the time prescribed in the rules, that is within seven days

of 25.07.2008 and the matter was kept pending, after the constitution

of the Tribunal the matter would have to be transferred. In the present

case, admittedly, the application was filed in the year 2009 long after

the statutory time prescribed and since the same was not taken up

even when the rules of 2016 came into force, it should have been

transferred to the Tribunal.

16. We make it clear that the observations are merely prima facie,

but we find no reason to stall the proceedings for initiation of the CIRP

by resorting to the provisions of the IBC, as has been now attempted

by the appellant herein, which would ensure rehabilitation of the

Company. Judicial discipline, though a corner stone of justice, equity

and fairness; ensuring continued public trust in judicial institutions,

cannot be urged by tardy litigators engaged in fractious and opulent

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litigations aimed at jeopardizing public funds and putting the

economy in a hostage situation. In cases having economic

implications like the present one, at stake is not only public funds but

rehabilitation of an industry, in the larger national interest, wherein

financial probity is also of pre-eminence.

17. Learned Counsel for the respondent has sought to distinguish

the decision of the Appellate Tribunal, as approved by this Court, in

Sunil Kumar Sharma v. ICICI Bank Ltd.

1

(AT)(Ins.) No. 1158-1162 of

2024 on the ground that there the SOA was pending consideration,

while in the present case, the SOA is approved. It is relevant that in

the cited decision, the Appellate Tribunal held, in the facts of the

case, that the SOA was pending from 2018 to 2024, which scheme had

neither come into effect nor was the debt bifurcated, for transfer to

the Special Purpose Vehicle, taken over by the SPV. In the present

case also, we have already noticed that the SOA of 2008 never came

into operation and the sanction in the year 2019 was without

jurisdiction and after it had become redundant and inoperable for

sheer passage of time, the terms of which having not been complied

with by the respondent company.

1

2025 SCC OnLine SC 145

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18. A. Navinchandra Steels (P) Ltd. v. Srei Equipment Finance

Ltd.

2 was sought to be distinguished on the ground that therein a

liquidation proceeding was pending. The learned Judges in the cited

decision looked at the earlier decisions on the subject and reiterated

that the “IBC is a special statute dealing with revival of companies that

are in the red, winding up only being resorted to in case all attempts of

revival fail” (sic para 16). It was also held that the Companies Act is a

general statute with reference to the IBC, which has the status of a

special statute; prevailing, in the event of conflict especially by virtue

of Section 238 of the IBC. Therein, a secured creditor of the Corporate

Debtor had, in enforcement of its debt by mortgage, sold a property,

while standing outside the winding-up proceedings of the Company

Court. This sale was the subject matter of a proceeding in the High

Court, filed by the Provisional Liquidator. Noticing the pendency of

the proceedings before the High Court and the sale of the mortgaged

property, it was held that if the aforesaid sale is set aside, that

particular asset would be resumed to the possession of the

Provisional Liquidator and if upheld, there would be other assets of

the Corporate Debtor which would continue to be in the hands of the

2

(2021) 4 SCC 435

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Civil Appeal No.11417 of 2025

Provisional Liquidator. Therein, the Bombay High Court reckoning

the proceedings under the IBC had suo motu directed the Provisional

Liquidator to handover the record of the assets to the IRP of the CD

subjected to the Section 7 proceedings. The plea that Section 7 was

merely a subterfuge to avoid moving a transfer application was

rejected. Section 7 was held to be an independent proceeding, which

stands by itself as reiterated in a catena of judgments of this Court,

which had to be tried on its own merits. There was held to be no

suppression employed and the discretionary jurisdiction under the

fifth proviso to Section 434(1)(c) permitting any party to a winding up

proceeding before the High Court, prior to the IBC, to seek for a

transfer to the Tribunal, would be inconsequential once the

parameters of Section 7 and other provisions of the IBC are met. Here,

the reliance is on the second proviso to Section 434(1)(c) which we

have already found to be inapplicable.

19. We in fact notice paragraph 25 of A. Navinchandra Steels (P)

Ltd.

2 which is extracted herein below (Para 25):

“25. A conspectus of the aforesaid authorities would show

that a petition either under Section 7 or Section 9 IBC is an

independent proceeding which is unaffected by winding-

up proceedings that may be filed qua the same company.

Given the object sought to be achieved by the IBC, it is

clear that only where a company in winding up is near

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Civil Appeal No.11417 of 2025

corporate death that no transfer of the winding-up

proceeding would then take place to NCLT to be tried as a

proceeding under the IBC. Short of an irresistible

conclusion that corporate death is inevitable, every effort

should be made to resuscitate the corporate debtor in the

larger public interest, which includes not only the

workmen of the corporate debtor, but also its creditors and

the goods it produces in the larger interest of the economy

of the country. It is, thus, not possible to accede to the

argument on behalf of the appellant that given Section 446

of the Companies Act, 1956/Section 279 of the Companies

Act, 2013, once a winding-up petition is admitted, the

winding-up petition should trump any subsequent attempt

at revival of the company through a Section 7 or Section 9

petition filed under the IBC. While it is true that Sections

391 to 393 of the Companies Act, 1956 may, in a given

factual circumstance, be availed of to pull the company out

of the red, Section 230(1) of the Companies Act, 2013 is

instructive and provides as follows:

“230. Power to compromise or make

arrangements with creditors and members.—(1)

Where a compromise or arrangement is proposed—

(a) between a company and its creditors or any class

of them; or

(b) between a company and its members or any class

of them,

the Tribunal may, on the application of the company

or of any creditor or member of the company, or in

the case of a company which is being wound up, of

the liquidator, appointed under this Act or under the

Insolvency and Bankruptcy Code, 2016, as the case

may be, order a meeting of the creditors or class of

creditors, or of the members or class of members, as

the case may be, to be called, held and conducted in

such manner as the Tribunal directs.

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Explanation.—For the purposes of this sub-section,

arrangement includes a reorganisation of the

company's share capital by the consolidation of

shares of different classes or by the division of shares

into shares of different classes, or by both of those

methods.”

What is clear by this Section is that a compromise or

arrangement can also be entered into in an IBC

proceeding if liquidation is ordered. However, what is of

importance is that under the Companies Act, it is only

winding up that can be ordered, whereas under the IBC,

the primary emphasis is on revival of the corporate

debtor through infusion of a new management.”

Hence, the consideration of an SOA is not alien to a proceeding under

the IBC, which as of now could only be on the debt due in praesenti.

20. As observed, when the Rules of 2016 came into force, the

second motion filed before the High Court under Sections 391 was

pending without any orders passed nor was it reserved for orders

which required the proceeding to be transferred to the Tribunal. We

say this without prejudice to our prima facie finding that the

application for second motion was grossly delayed, beyond the time

prescribed for filing such an application and hence incompetent.

Further as seen from the extract above a compromise or an

arrangement under Section 230 of the Companies Act, 2013 can also

be entered into in an IBC proceeding at the appropriate stage.

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21. We find absolutely no reason to sustain the order of the

Appellate Tribunal, and we set aside the same restoring the order of

the Company Law Tribunal, the Adjudicating Authority under the

IBC. The IRP hence would be entitled to proceed and our interim

direction to keep the management in the loop of the day-to-day

affairs, stands vacated.

22. The appeal stands allowed.

23. Pending applications, if any, shall also stand disposed of.

.………………………… …... J.

(SANJAY KUMAR)

..………… .…………………. J.

(K. VINOD CHANDRAN )

NEW DELHI;

FEBRUARY 24, 2026.