A. NAVINCHANDRA STEELS PRIVATE LIMITEDversusSREI EQUIPMENT FINANCE LIMITED & ORS.

                         [2021] 3 S.C.R. 597                           597


       A. NAVINCHANDRA STEELS PRIVATE LIMITED                          A
                                    v.
        SREI EQUIPMENT FINANCE LIMITED & ORS.
               (Civil Appeal Nos.4230-4234 of 2020)
                         MARCH 01, 2021                                B
   [ROHINTON FALI NARIMAN AND B. R. GAVAI, JJ.]
       Insolvency and Bankruptcy Code, 2016 – ss.7, 9 – Companies
Act, 1956 – ss.391-393, 446 – Companies Act, 2013 – ss.230(1),
279, fifth proviso to s.434(1)(c) – Winding up proceedings pending
                                                                       C
– Petition u/s.7 filed before NCLT – Maintainability of – Held: A
petition either u/s.7 or s.9, IBC is an independent proceeding
unaffected by winding up proceedings that may be filed qua the
same company – Any “suppression” of the winding up proceeding
would not be of any effect in deciding a s.7 petition which is to be
tried on its own merits – Discretionary jurisdiction under the fifth   D
proviso to s.434(1)(c), 2013 Act, cannot prevail over the undoubted
jurisdiction of the NCLT under the IBC once the parameters of s.7
and other provisions of the IBC have been met – Plea of appellant
that respondent no.1 suppressed the winding up proceeding in its
application u/s.7, IBC before the NCLT is of no avail – Winding up
                                                                       E
petition does not trump any subsequent attempt at revival of the
company through a petition u/s.7 or s.9, IBC – Further, on facts,
nothing can be said to have become irretrievable in the sense
mentioned in paragraph 31 of Action Ispat and Power Pvt. Ltd. v.
Shyam Metalics and Energy Ltd. reported as 2020 SCC OnLine SC
1025 – Interim order vacated.                                          F
    Insolvency and Bankruptcy Code, 2016 – Object of vis-à-vis
Companies Act – Discussed.
      Interpretation of Statutes:
     Special Law v. General Law – Discussed – Insolvency and           G
Bankruptcy Code, 2016 – Companies Act.
      Non-obstante clause – Insolvency and Bankruptcy Code, 2016
– s.238 – Held: Non-obstante clause in s.238 makes it even clearer
that in case of conflict, the provisions of the IBC will prevail –
Companies Act.                                                         H
                                597
598            SUPREME COURT REPORTS                      [2021] 3 S.C.R.


A           Dismissing the appeal, the Court
             HELD: 1.1 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. Vis-à-vis the Companies Act,
      which is a general statute dealing with companies, including
B     companies that are in the red, the IBC is not only a special statute
      which must prevail in the event of conflict, but has a non-obstante
      clause contained in Section 238, which makes it even clearer
      that in case of conflict, the provisions of the IBC will prevail.
      [Para 14][606-G-H]
C           Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC
            17 : [2019] 3 SCR 535; Allahabad Bank v. Canara
            Bank, (2000) 4 SCC 406 : [2000] 2 SCR 1102;
            Bakemans Industries (P) Ltd. v. New Cawnpore Flour
            Mills, (2008) 15 SCC 1 : [2008] 9 SCR 705; Madras
            Petrochem Ltd. v. BIFR, (2016) 4 SCC 1 : [2016] 11
D           SCR 419 – relied on.
             1.2 A petition either under Section 7 or Section 9 of the
      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
E     where a company in winding up is near corporate death that no
      transfer of the winding up proceeding would then take place to
      the 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
F     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 (an operational creditor of Respondent No.2, the
      company under winding up) that given Section 446 of the
G     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
H
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                       599
            EQUIPMENT FINANCE LIMITED

the company out of the red, Section 230(1) of the Companies             A
Act, 2013 is instructive. 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
                                                                        B
emphasis is on revival of the corporate debtor through infusion
of a new management. On facts also, in the present case,
nothing can be said to have become irretrievable in the sense
mentioned in paragraph 31 of Action Ispat. [Paras 23, 24]
[617-D-G; 618-D-F]
      Jaipur Metals & Electricals Employees Organization v.             C
      Jaipur Metals & Electricals Ltd., (2019) 4 SCC 227 :
      [2018] 14 SCR 926; Duncans Industries Ltd. v. AJ
      Agrochem, (2019) 9 SCC 725 : [2019] 12 SCR 830;
      Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC
      407 : [2017] 8 SCR 33; Kaledonia Jute and Fibres Pvt.             D
      Ltd. v. Axis Nirman and Industries Ltd., 2020 SCC
      OnLine SC 943; Forech (India) Ltd. v. Edelweiss Assets
      Reconstruction Co. Ltd. (2019) 18 SCC 549 – relied
      on.
      Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and
      Energy Ltd., 2020 SCC OnLine SC 1025 – referred                   E
      to.
      1.3 A secured creditor stands outside the winding up and
can realise its security dehors winding up proceedings. Indiabulls,
a secured creditor of the corporate debtor, viz. Respondent No.2
has in enforcement of its debt by a mortgage, sold the mortgaged        F
property outside the winding up. The aforesaid sale is the subject
matter of proceedings in the Bombay High Court filed by the
provisional liquidator. If the aforesaid sale is set aside, the asset
of respondent No.2 that has been sold will come back to the
provisional liquidator for the purposes of winding up. If the sale
                                                                        G
is upheld, equally, there are other assets of respondent No.2
which continue to be in the hands of the provisional liquidator for
the purposes of winding up. On the facts of this case, though no
application for transfer of the winding up proceeding pending in
the High Court has been filed, the High Court has itself, by the
orders dated 28.11.2019 and 23.01.2020, directed the provisional        H
600           SUPREME COURT REPORTS                      [2021] 3 S.C.R.


A     liquidator to hand over the records and assets of respondent no.2
      to the interim resolution professional (IRP) in the Section 7
      proceeding that is pending before the NCLT. This has not yet
      been done as the IRP has not yet been able to pay the requisite
      amount to the provisional liquidator for his expenses.
      [Paras 25, 26][618-F; 620-C-F]
B
            M.K. Ranganathan v. Govt. of Madras, [1955] 2 SCR
            374 – relied on.
            Central Bank of India v. Elmot Engineering Co., (1994)
            4 SCC 159 : [1994] 3 SCR 766; Industrial Credit and
C           Investment Corpn. of India Ltd. v. Srinivas Agencies,
            (1996) 4 SCC 165 : [1996] 2 SCR 960; Board of
            Trustees, Port of Mumbai v. Indian Oil Corpn., (1998)
            4 SCC 302 : [1998] 2 SCR 774 – referred to.
            1.4 Section 7 is an independent proceeding which has to be
D     tried on its own merits. Any “suppression” of the winding up
      proceeding would, therefore, not be of any effect in deciding a
      petition on the basis of the provisions contained in the IBC.
      Equally, it cannot be said that any subterfuge has been availed of
      for the same reason that Section 7 is an independent proceeding
      that stands by itself. A discretionary jurisdiction under the fifth
E     proviso to Section 434(1)(c) of the Companies Act, 2013 cannot
      prevail over the undoubted jurisdiction of the NCLT under the
      IBC once the parameters of Section 7 and other provisions of
      the IBC have been met. The interim order passed by this Court
      on 18.12.2020 stands vacated. [Para 27][621-A-B]
F                           Case Law Reference
      (2019) 18 SCC 549             relied on               para 8
      [2019] 3 SCR 535              relied on               para 14
      [2000] 2 SCR 1102             relied on               para 15
G     [2008] 9 SCR 705              relied on               para 16
      [2016] 11 SCR 419             relied on               para 17
      [2018] 14 SCR 926             relied on               para 18
      [2019] 12 SCR 830             relied on               para 20
H
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                        601
            EQUIPMENT FINANCE LIMITED

[2017] 8 SCR 33                relied on                para 20          A
[1955] 2 SCR 374               relied on                para 25
[1994] 3 SCR 766               referred to              para 25
[1996] 2 SCR 960               referred to              para 25
[1998] 2 SCR 774               referred to              para 25          B
      CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4230-
4234 of 2020.
      From the Judgment and Order dated 07.02.2020 and 21.09.2020
of the National Company Law Appellant Tribunal, New Delhi in
                                                                         C
Company Appeal (AT) (Insolvency) No. 1434 of 2019 and I.A Nos.
811/2020, 917/2020, 962/2020 and 1587 of 2020.
     Dr. Abhishek Manu Singhvi, Mr. Ranjit Kumar, Sr. Advs., Arvind
Kumar Gupta, Amit Bhandari, Ms. Henna George, Ms. Shivani Sharma,
Ravindra Sadanand Chingale, Advs.for the Appellant.
                                                                         D
      Gopal Jain, Shyam Divan, Sr. Advs., Abhijeet Sinha, Arijit
Mazumdar, Shambo Nandy, Ms. Akanksha Kaushik, Manan Shishodia,
Snehasish Mukherjee, Anirudh Sanganeria, Santosh Kumar Ray, Ms.
Rituparna Sanyal, Saswata Ganguly, Gaurav Kejriwal, Aditya Kanoria,
Ankit Kohli, Pankaj Singal, Dhaval Vussonji, Rubin Vakil, Ms. Sonam
Mhatre, Ms. Saloni Sulakhe, Ms. Kritya Sinha, Saurabh Chaudhary, Ms.     E
Anne Mathew, Advs. for the Respondents.
      The Judgment of the Court was delivered by
      R. F. NARIMAN, J.
       1. This appeal arises out of the judgment dated 07.02.2020, as    F
corrected by order dated 21.09.2020, by the National Company Law
Appellate Tribunal [“NCLAT”]. The Appellant is an operational creditor
of Respondent No.2 herein – M/s. Shree Ram Urban Infrastructure
Limited[“SRUIL”], the company under winding up – and has a decree
dated 07.10.2015 in its favour passed by the Bombay High Court in        G
Summary Suit No.626 of 2014. Vide order dated 06.10.2016, the Division
Bench stayed the order dated 07.10.2015 and directed SRUIL to deposit
INR14 crore with the Prothonotary and Senior Master of the High Court
or furnish a bank guarantee for the same, failing which the stay order
would get vacated. The said appeal is pending as on date. We are also
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602            SUPREME COURT REPORTS                           [2021] 3 S.C.R.


A     informed that an execution application, being Execution Application (L)
      No.934 of 2016 was filed by the Appellant before the Bombay High
      Court and the same is also pending as on date.
            2. Sometime in 2015, the Appellant had filed a winding up petition,
      being Company Petition No.1039 of 2015 against SRUIL before the
B     Bombay High Court, the same being pending as on date.
             3. A winding up petition, being Company Petition No.1066/2015
      filed by Respondent No.3 herein, M/s Action Barter Pvt. Ltd. [“Action
      Barter”] against SRUIL, by a conditional order dated 05.10.2016, stood
      admitted on the failure of SRUIL to deposit INR 5.90 crore. The appeal
C     instituted by SRUIL against this order was dismissed by the Division
      Bench of the High Court on 17.01.2017, whereas the appeal instituted
      by Action Barter was allowed vide the same order and the amount to be
      deposited by SRUIL was enhanced from INR 5.90 crore to INR 18
      crore. Vide order dated 27.02.2017, this Court disposed of SLP(C)
      No.5849/2017 filed by SRUIL, after recording a statement by the counsel
D     for SRUIL that SRUIL would deposit INR three crore the same day,
      and the balance of INR 15 crore within six months from the date of the
      order. The parties then filed consent terms before the Single Judge of
      the Bombay High Court on 22.03.2017, wherein Action Barter agreed
      to accept a sum of INR 15 crore, payable in instalments. Apart from the
E     payment of the first instalment of INR 25 lakh, no further instalment
      was paid, as a result of which the winding up petition stood revived on
      24.08.2017.On 17.04.2018, the provisional liquidator took over the
      physical possession of the assets of SRUIL.
            4. While this winding up petition was pending, Indiabulls Housing
F     Finance Ltd. [“Indiabulls”], a secured creditor of SRUIL, filed a petition
      under Section 7 of the Insolvency and Bankruptcy Code, 2016 [“IBC”]
      before the National Company Law Tribunal [“NCLT”], which was
      dismissed by the NCLT vide order dated 18.05.2018 as being not
      maintainable as a winding up petition had already been admitted by the
      Bombay High Court. An appeal to the NCLAT suffered a similar fate as
G     the appeal was dismissed on 30.05.2018. However, on 06.08.2018, the
      Supreme Court admitted a Civil Appeal from the NCLAT order, which
      is pending as on date.
            5. An application filed by Indiabulls for the following relief:

H
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                            603
    EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

      “The Hon’ble Court be pleased to direct the Provisional Liquidator     A
      to handover physical possession of the said Mortgaged Property
      i.e. all the pieces and parcels of land bearing C.S. Nos. 288, 289
      (part), 1/1540 (part), 2/1540(part) and 3/1540 (part), collectively
      forming Plot Nos.5B and 6 admeasuring approximately 28,409.57
      square meters situated at Worli Estate, Lower ParelDivision,
                                                                             B
      Mumbai to the Secured Creditor herein, in accordance with
      andpursuant to the provisions of the Companies Act, 1956 and the
      Securitisation and Reconstruction of Financial Assets and
      Enforcement of Security InterestAct, 2002 …”
       resulted in an order dated 07.02.2019 by which the learned
Company Judge allowed the aforesaid application in favour of Indiabulls.     C
Indiabulls isa secured creditor who stood outside the winding up, and
who sought to realise its security outside such winding up proceeding,
notices having already been issued under Sections 13(2) and 13(4) of
the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 [“SARFAESI Act”]. The             D
Court referred to an order of 12.04.2018, by which the provisional
liquidator was to take physical possession of the assets of SRUIL within
one week of the date of that order. Importantly, paragraph 2 of the said
order stated:
      “2. Ms. Maitra states that the secured creditors have already          E
      commenced proceedings under SARFAESI against the company.
      As and when the banks may take out an application for banks
      submissions to hand over that part of the assets secured to the
      bank, appropriate orders will be passed.”
      6. This being the case, the learned Company Judge allowed the          F
application in the following terms:
      “13. For the reasons aforesaid, the present Application is allowed.
      The Provisional Liquidator is directed to forthwith handover
      possession of the Mortgaged Property to the Applicant. However,
      the Applicant shall conduct the sale of the property in consultation   G
      with the Official Liquidator. The Applicant shall also deposit the
      sale proceeds or part thereof with this Court as and when the
      Court directs the Applicant to do so, for the purpose of making
      payments to workers as prescribed in section 529A of the
      Companies Act, 1956.”
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604            SUPREME COURT REPORTS                         [2021] 3 S.C.R.


A            7. As per the aforesaid order dated 07.02.2019, the provisional
      liquidator handed over possession of the property mortgaged with
      Indiabulls to Indiabulls, who then conducted a sale of the said property
      to M/s. Honest Shelters Pvt. Ltd. [“HonestShelters”], Respondent
      No.4 herein, for a sum of INR 705 crore, in which not only was the
      mortgaged property sold, but also the superstructure standing thereon,
B
      together with two other flats. We have since been informed that three
      sale certificates were issued to Honest Shelters on 26.06.2019 by
      Indiabulls on receiving the said payment of INR 705 crore. We have
      also been informed that the ex-Directors of SRUIL had challenged the
      aforesaid sale in the Debt Recovery Tribunal and the Debt Recovery
C     Appellate Tribunal unsuccessfully. The provisional liquidator has also
      challenged the said sale in the Bombay High Court, alleging that the
      conditions of the order dated 07.02.2019 were flouted, and that what
      was sold was much more than what was mortgaged to the secured
      creditor, and that too at a gross undervalue. We are informed that the
      next date in these pending proceedings is 23.03.2021.
D
             8. Meanwhile, Respondent No.1 before us, i.e., SREI Equipment
      Finance Limited [“SREI”] filed a petition under Section 7 of the IBC
      before the NCLT, which petition was admitted by the NCLT on
      06.11.2019. An appeal was then filed by Action Barter against the
      aforesaid NCLT order in which, after setting out this Court’s judgment
E     in Forech (India) Ltd. v. Edelweiss Assets Reconstruction Co.
      Ltd., (2019) 18 SCC 549 [“Forech”], the NCLAT dismissed the appeal
      with the following observations:
            “5. The case of the Appellant is covered by the decision of the
            Hon’ble Supreme Court in Forech India Ltd (supra), therefore,
F           we hold that the Application under Section 7 of the I&B Code
            filed by the Respondent – SREI Equipment Finance Limited is
            not maintainable. In so far as pending winding up petition before
            the Hon’ble Bombay High Court is concerned, the Appellant in
            terms of the decision of the Hon’ble Supreme Court in Forech
G           India Ltd (supra) may move before the Hon’ble High Court of
            Bombay.
            The Appeal is dismissed with the aforesaid observations. No costs.”
            9. By an order dated 21.09.2020, the NCLAT corrected the order
      by deleting the word “not” that occurred in paragraph 5 of the order
H     dated 07.02.2020.
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                                 605
    EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

       10. An appeal was then filed to this Court by Action Barter on             A
08.10.2020, in which this Court, by order dated 27.10.2020, issued notice
and directed the parties to maintain status quo qua the mortgaged property
and also stayed further proceedings before the NCLAT. An appeal was
also filed by the Appellanton 09.12.2020, in which this Court, by order
dated 18.12.2020, issued notice and stayed further proceedings before
                                                                                  B
the NCLTand tagged the appeal with the appeal filed by Action Barter.
       11. We have been informed that pursuant to a settlement between
Action Barter and the purchaser of the mortgaged property, i.e., Honest
Shelters, Action Barter has now withdrawn its appeal that was filed
before this Court. Thus, the only surviving appeal before us is Civil Appeal
Nos.4230-4234 of 2020, filed by A. Navinchandra Steels Pvt. Ltd.                  C

        12. Dr. Abhishek Manu Singhvi and Shri Ranjit Kumar, learned
Senior Advocates appearing on behalf of the Appellant, argued that in
view of the judgment in Action Ispat and Power Pvt. Ltd. v. Shyam
Metalics and Energy Ltd., 2020 SCC OnLine SC 1025 [“Action
Ispat”], this matter is concluded in their favour in asmuch as irreversible       D
steps have been taken in a winding up petition that has already been
admitted by the Bombay High Court in that the plot on which a 72-
storey building stands, has now been sold, as a result of which it is now
clear that the Section 7 petition that was filed by SREI on 30.05.2019
under the IBC, would have to be held to be non-maintainable. They also            E
argued that the effect of Section 446 of the Companies Act, 1956 (which
is equivalent to Section 279 of the Companies Act, 2013) is that no suit
or other legal proceeding can be initiated once there is admission of a
winding up petition. This being the case, post admission of a winding up
petition, no petition under Section 7 of the IBC can be filed. They also
argued that it is a misnomer to think that winding up proceedings must            F
result in corporate death. On the contrary, according to them, Sections
391 to 393 of the Companies Act, 1956 would apply if the company
were to be restructured, as a result of which the winding up court could
then stay the winding up and order restructuring. The learned counsel
have also argued that there are gross malafides in the present case as            G
SREI was not only aware of the winding up petition before the Bombay
High Court, but has also participated in the winding up proceeding and
filed its claim before the provisional liquidator. All this has been suppressed
in the petition filed under Section 7 of the IBC. Further, the only route
available to SREI was really to ask for transfer of the company petition
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606             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A     in winding up from the Bombay High Court to the NCLT, which route
      has been circumvented by filing a Section 7 petition and suppressing the
      winding up proceeding.
              13. Shri Abhijeet Sinha, learned counsel appearing on behalf of
      SREI, took us through various judgments of this Court, including the
B     latest judgment in Action Ispat (supra). According to him, a Section 7
      proceeding under the IBC is an independent proceeding, which can be
      initiated at any time, even after a winding up order is made. He argued
      that this was a result of our decisions and that Section 238 of the IBC,
      which contains a non-obstante clause, clearly comes to his rescue as, if
      there is any conflict between Section 446 of the Companies Act, 1956 /
C     Section 279 of the Companies Act, 2013 and the IBC, the IBC will
      prevail. According to him, this point is no longer resintegra. He also
      argued, in the alternative, that there are no irretrievable steps that have
      been taken in the winding up proceeding in the present case, as the
      provisional liquidator continues to be seized of other assets of SRUIL.
D     He further argued that a private sale by a secured creditor outside the
      windingup is not the irretrievable step that is spoken of in Action Ispat
      (supra), such step having to be taken by the provisional liquidator himself
      in selling the assets of the company in the process of winding up the
      company. He also added that, on facts, two orders dated 28.11.2019 and
      20.01.2020 of the Bombay High Court would indicate that the Company
E     Court itself had directed the provisional liquidator to hand over the records
      and assets of SRUIL to the interim resolution professional [“IRP”] that
      had been appointed in the Section 7 proceeding. Doubtless, such assets
      had not been handed over because they were only to the handed over
      two weeks after certain payments had been made by the IRP to the
F     provisional liquidator, which payments have not yet been made.
             14. Having heard learned counsel for all the parties, it is important
      to restate a few fundamentals. Given the object of the IBC as delineated
      in paragraphs 25 to 28 of Swiss Ribbons (P) Ltd. v. Union of India,
      (2019) 4 SCC 17 [“Swiss Ribbons”], it is clear that the IBC is a special
G     statute dealing with revival of companies that are in the red, winding up
      only being resorted to in case all attempts of revival fail. Vis-à-vis the
      Companies Act, which is a general statute dealing with companies,
      including companies that are in the red, the IBC is not only a special
      statute which must prevail in the event of conflict, but has a non-obstante
      clause contained in Section 238, which makes it even clearer that in
H     case of conflict, the provisions of the IBC will prevail.
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                             607
    EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

       15. In Allahabad Bank v. Canara Bank, (2000) 4 SCC 406, this           A
Court had to deal with whether the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993 [“RDB Act”] was a special statute
qua the Companies Act, 1956. This Court held that the Companies Act
is a general Act and does not prevail against the RDB Act, which was a
later Act and which has a non-obstante clause that clearly excludes the
                                                                              B
provisions of the Companies Act in case of conflict. This was stated by
the Court as follows:
      “Special law v. general law
      38. At the same time, some High Courts have rightly held that
      the Companies Act is a general Act and does not prevail under           C
      the RDB Act. They have relied upon Union of India v. India
      Fisheries (P) Ltd. [AIR 1966 SC 35 : (1965) 3 SCR 679 : (1965)
      57 ITR 331].
      39. There can be a situation in law where the same statute is
      treated as a special statute vis-à-vis one legislation and again as a   D
      general statute vis-à-vis yet another legislation. Such situations
      do arise as held in LIC of India v. D.J. Bahadur[(1981) 1 SCC
      315 : 1981 SCC (L&S) 111 : AIR 1980 SC 2181]. It was there
      observed:
         “… for certain cases, an Act may be general and for certain          E
         other purposes, it may be special and the court cannot blur a
         distinction when dealing with the finer points of law”.
      For example, a Rent Control Act may be a special statute as
      compared to the Code of Civil Procedure. But vis-à-vis an Act
      permitting eviction from public premises or some special class of       F
      buildings, the Rent Control Act may be a general statute. In fact
      in Damji Valji Shahv.LIC of India[AIR 1966 SC 135 : (1965) 3
      SCR 665] (already referred to), this Court has observed that vis-
      à-vis the LIC Act, 1956, the Companies Act, 1956 can be treated
      as a general statute. This is clear from para 19 of that judgment.
      It was observed:                                                        G
      “Further, the provisions of the special Act, i.e., the LIC Act, will
      override the provisions of the general Act, viz., the Companies
      Act which is an Act relating to companies in general.”
                                                    (emphasis in original)
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608            SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A           Thus, some High Courts rightly treated the Companies Act as a
            general statute, and the RDB Act as a special statute overriding
            the general statute.
            Special law v. special law
            40. Alternatively, the Companies Act, 1956 and the RDB Act can
B           both be treated as special laws, and the principle that when there
            are two special laws, the latter will normally prevail over the former
            if there is a provision in the latter special Act giving it overriding
            effect, can also be applied. Such a provision is there in the RDB
            Act, namely, Section 34. A similar situation arose in Maharashtra
C           Tubes Ltd. v. State Industrial and Investment Corpn. of
            Maharashtra Ltd. [(1993) 2 SCC 144] where there was
            inconsistency between two special laws, the Finance Corporation
            Act, 1951 and the Sick Industries Companies (Special Provisions)
            Act, 1985. The latter contained Section 32 which gave overriding
            effect to its provisions and was held to prevail over the former. It
D           was pointed out by Ahmadi, J. that both special statutes contained
            non obstante clauses but that the
               “1985 Act being a subsequent enactment, the non obstante
               clause therein would ordinarily prevail over the non obstante
               clause in Section 46-B of the 1951 Act unless it is found that
E              the 1985 Act is a general statute and the 1951 Act is a special
               one”. (SCC p. 157, para 9)
            Therefore, in view of Section 34 of the RDB Act, the said Act
            overrides the Companies Act, to the extent there is anything
            inconsistent between the Acts.”
F
            16. Likewise, in Bakemans Industries (P) Ltd. v. New
      Cawnpore Flour Mills, (2008) 15 SCC 1, this Court, in the context of
      the State Financial Corporations Act, 1951 [“SFC Act”] and the
      Companies Act, 1956, held that though the SFC Act was an earlier Act
      of 1951, yet, it would prevail over the winding up proceedings before a
G     Company Judge, given that the SFC Act is a special statute qua the
      general powers of the Company Judge under the Companies Act. This
      was stated as follows:
            “37. The 1951 Act indisputably is a special statute. If a financial
            corporation intends to exercise a statutory power under Section
H
A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                          609
 EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

  29 of the 1951 Act, the same will prevail over the general powers     A
  of the Company Judge under the Companies Act.
  38. There cannot be any doubt whatsoever that the proceedings
  under Section 29 of the 1951 Act would prevail over a winding-up
  proceeding before a Company Judge in view of the decision of
  this Court in International Coach Builders Ltd. v. Karnataka          B
  State Financial Corpn. [(2003) 10 SCC 482] wherein it has been
  held: (SCC p. 496, para 26)
     “26. We do not really see a conflict between Section 29 of the
     SFC Act and the Companies Act at all, since the rights under
     Section 29 were not intended to operate in the situation of        C
     winding up of a company. Even assuming to the contrary, if a
     conflict arises, then we respectfully reiterate the view taken
     by the Division Bench of this Court in A.P. State Financial
     Corpn. Case[A.P. State Financial Corpn. v. Official
     Liquidator, (2000) 7 SCC 291]. This Court pointed out therein
     that Section 29 of the SFC Act cannot override the provisions      D
     of Sections 529(1) and 529-A of the Companies Act, 1956,
     inasmuch as SFCs cannot exercise the right under Section 29
     ignoring a pari passu charge of the workmen.”
  The view taken therein was reiterated by a three-Judge Bench of
  this Court in Rajasthan State Financial Corpn. v. Official            E
  Liquidator[(2005) 8 SCC 190] wherein it was stated: (SCC pp.
  201-02, para 18)
     “18. In the light of the discussion as above, we think it proper
     to sum up the legal position thus:
                                                                        F
     (i) A Debts Recovery Tribunal acting under the Recovery of
     Debts Due to Banks and Financial Institutions Act, 1993 would
     be entitled to order the sale and to sell the properties of the
     debtor, even if a company-in-liquidation, through its Recovery
     Officer but only after notice to the Official Liquidator or the
     Liquidator appointed by the Company Court and after hearing        G
     him.
     (ii) A District Court entertaining an application under Section
     31 of the SFC Act will have the power to order sale of the
     assets of a borrower company-in-liquidation, but only after
                                                                        H
610            SUPREME COURT REPORTS                              [2021] 3 S.C.R.


A               notice to the Official Liquidator or the Liquidator appointed by
                the Company Court and after hearing him.
                (iii) If a financial corporation acting under Section 29 of the
                SFC Act seeks to sell or otherwise transfer the assets of a
                debtor company-in-liquidation, the said power could be
B               exercised by it only after obtaining the appropriate permission
                from the Company Court and acting in terms of the directions
                issued by that court as regards associating the Official
                Liquidator with the sale, the fixing of the upset price or the
                reserve price, confirmation of the sale, holding of the sale
                proceeds and the distribution thereof among the creditors in
C               terms of Section 529-A and Section 529 of the Companies
                Act.
                (iv) In a case where proceedings under the Recovery of Debts
                Due to Banks and Financial Institutions Act, 1993 or the SFC
                Act are not set in motion, the creditor concerned is to approach
D               the Company Court for appropriate directions regarding the
                realisation of its securities consistent with the relevant provisions
                of the Companies Act regarding distribution of the assets of
                the company-in-liquidation.”
            (See also ICICI Bank Ltd. v. SIDCO Leathers Ltd. [(2006) 10
E           SCC 452 : (2006) 5 Scale 27])”
             17. In Madras Petrochem Ltd. v. BIFR, (2016) 4 SCC 1, this
      Court had to deal with whether a predecessor statute to the IBC, which
      has been repealed by the IBC, namely, the Sick Industrial Companies
      (Special Provisions) Act, 1985, prevails over the SARFAESI Act to the
F     extent of inconsistency therewith. This Court noted that in the case of
      two statutes which contain non-obstante clauses, the laterAct will normally
      prevail, holding:
            “36. A conspectus of the aforesaid decisions shows that the Sick
            Industrial Companies (Special Provisions) Act, 1985 prevails in
G           all situations where there are earlier enactments with non obstante
            clauses similar to the Sick Industrial Companies (Special
            Provisions) Act, 1985. Where there are later enactments with
            similar non obstante clauses, the Sick Industrial Companies (Special
            Provisions) Act, 1985 has been held to prevail only in a situation
            where the reach of the non obstante clause in the later Act is
H
A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                             611
 EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

  limited—such as in the case of the Arbitration and Conciliation          A
  Act, 1996—or in the case of the later Act expressly yielding to
  the Sick Industrial Companies (Special Provisions) Act, 1985, as
  in the case of the Recovery of Debts Due to Banks and Financial
  Institutions Act, 1993. Where such is not the case, as in the case
  of Special Courts Act, 1992, it is the Special Courts Act, 1992
                                                                           B
  which was held to prevail over the Sick Industrial Companies
  (Special Provisions) Act, 1985.
  37. We have now to undertake an analysis of the Acts in question.
  The first thing to be noticed is the difference between Section 37
  of the Securitisation and Reconstruction of Financial Assets and
  Enforcement of Security Interest Act, 2002 and Section 34 of the         C
  Recovery of Debts Due to Banks and Financial Institutions Act,
  1993. Section 37 of the Securitisation and Reconstruction of
  Financial Assets and Enforcement of Security Interest Act, 2002
  does not include the Sick Industrial Companies (Special Provisions)
  Act, 1985 unlike Section 34(2) of the Recovery of Debts Due to           D
  Banks and Financial Institutions Act, 1993. Section 37 of the
  Securities and Reconstruction of Financial Assets and
  Enforcement of Security Interest Act, 2002 states that the said
  Act shall be in addition to and not in derogation of four Acts,
  namely, the Companies Act, the Securities Contracts (Regulation)
  Act, 1956, the Securities and Exchange Board of India Act, 1992          E
  and the Recovery of Debts Due to Banks and Financial Institutions
  Act, 1993. It is clear that the first three Acts deal with securities
  generally and the Recovery of Debts Due to Banks and Financial
  Institutions Act, 1993 deals with recovery of debts due to banks
  and financial institutions. Interestingly, Section 41 of the             F
  Securitisation and Reconstruction of Financial Assets and
  Enforcement of Security Interest Act, 2002 makes amendments
  in three Acts—the Companies Act, the Securities Contracts
  (Regulation) Act, 1956, and the Sick Industrial Companies (Special
  Provisions) Act, 1985. It is of great significance that only the first
  two Acts are included in Section 37 and not the third i.e. the Sick      G
  Industrial Companies (Special Provisions) Act, 1985. This is for
  the obvious reason that the framers of the Securitisation and
  Reconstruction of Financial Assets and Enforcement of Security
  Interest Act, 2002 intended that the Sick Industrial Companies
  (Special Provisions) Act, 1985 be covered by the non obstante            H
612            SUPREME COURT REPORTS                          [2021] 3 S.C.R.


A           clause contained in Section 35, and not by the exception thereto
            carved out by Section 37. Further, whereas the Recovery of Debts
            Due to Banks and Financial Institutions Act, 1993 is expressly
            mentioned in Section 37, the Sick Industrial Companies (Special
            Provisions) Act, 1985 is not, making the above position further
            clear. And this is in stark contrast, as has been stated above, to
B
            Section 34(2) of the Recovery of Debts Due to Banks and
            Financial Institutions Act, 1993, which expressly included the Sick
            Industrial Companies (Special Provisions) Act, 1985. The new
            legislative scheme qua recovery of debts contained in the
            Securitisation and Reconstruction of Financial Assets and
C           Enforcement of Security Interest Act, 2002 has, therefore, to be
            given precedence over the Sick Industrial Companies (Special
            Provisions) Act, 1985, unlike the old scheme for recovery of debts
            contained in the Recovery of Debts Due to Banks and Financial
            Institutions Act, 1993.”
D            18. Indeed, this position has been echoed in several judgments of
      this Court. In Jaipur Metals & Electricals Employees Organization
      v. Jaipur Metals & Electricals Ltd., (2019) 4 SCC 227 [“Jaipur
      Metals”], this Court, in dealing with whether proceedings under the
      Sick Industrial Companies (Special Provisions) Act, 1985 were to be
      transferred to the NCLT under the IBC, held:
E
            “19. However, this does not end the matter. It is clear that
            Respondent 3 has filed a Section 7 application under the Code on
            11-1-2018, on which an order has been passed admitting such
            application by NCLT on 13-4-2018. This proceeding is an
            independent proceeding which has nothing to do with the transfer
F           of pending winding-up proceedings before the High Court. It was
            open for Respondent 3 at any time before a winding-up order is
            passed to apply under Section 7 of the Code. This is clear from a
            reading of Section 7 together with Section 238 of the Code which
            reads as follows:
G              “238. Provisions of this Code to override other laws.—The
               provisions of this Code shall have effect, notwithstanding
               anything inconsistent therewith contained in any other law for
               the time being in force or any instrument having effect by virtue
               of any such law.”
H
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                             613
    EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

      20. Shri Dave’s ingenious argument that since Section 434 of the        A
      Companies Act, 2013 is amended by the Eleventh Schedule to the
      Code, the amended Section 434 must be read as being part of the
      Code and not the Companies Act, 2013, must be rejected for the
      reason that though Section 434 of the Companies Act, 2013 is
      substituted by the Eleventh Schedule to the Code, yet Section
                                                                              B
      434, as substituted, appears only in the Companies Act, 2013 and
      is part and parcel of that Act. This being so, if there is any
      inconsistency between Section 434 as substituted and the provisions
      of the Code, the latter must prevail. We are of the view that NCLT
      was absolutely correct in applying Section 238 of the Code to an
      independent proceeding instituted by a secured financial creditor,      C
      namely, the Alchemist Asset Reconstruction Company Ltd. This
      being the case, it is difficult to comprehend how the High Court
      could have held that the proceedings before NCLT were without
      jurisdiction. On this score, therefore, the High Court judgment
      has to be set aside. NCLT proceedings will now continue from
                                                                              D
      the stage at which they have been left off. Obviously, the company
      petition pending before the High Court cannot be proceeded with
      further in view of Section 238 of the Code. The writ petitions that
      are pending before the High Court have also to be disposed of in
      light of the fact that proceedings under the Code must run their
      entire course. We, therefore, allow the appeal and set aside the        E
      High Court’s judgment [Jaipur Metals and Electricals Ltd., In
      re, 2018 SCC OnLine Raj 1472].”
       19. Likewise, in Forech (supra),in a situation in which notice had
been issued in a winding up petition and the said petition was ordered to
be transferred to the NCLT,to be treated as a proceeding under the            F
IBC, this Court clearly held:
      “22. This section is of limited application and only bars a corporate
      debtor from initiating a petition under Section 10 of the Code in
      respect of whom a liquidation order has been made. From a
      reading of this section, it does not follow that until a liquidation    G
      order has been made against the corporate debtor, an insolvency
      petition may be filed under Section 7 or Section 9 as the case may
      be, as has been held by the Appellate Tribunal. Hence, any
      reference to Section 11 in the context of the problem before us is
      wholly irrelevant. However, we decline to interfere with the
                                                                              H
614            SUPREME COURT REPORTS                          [2021] 3 S.C.R.


A           ultimate order passed by the Appellate Tribunal because it is clear
            that the financial creditor’s application which has been admitted
            by the Tribunal is clearly an independent proceeding which must
            be decided in accordance with the provisions of the Code.”
             20. In Duncans Industries Ltd. v. AJ Agrochem, (2019) 9
B     SCC 725, this Court was faced with a situation of conflict between
      Section 16-G(1)(c) of the Tea Act, 1953, under which winding up/
      liquidation proceedings were to take place (and which could not take
      place without prior consent of the Central Government), and aproceeding
      initiated under Section 9 of the IBC. After relying upon the judgment of
      this Court in Innoventive Industries Ltd. v. ICICI Bank, (2018) 1
C     SCC 407 and Swiss Ribbons (supra), this Court held:
            “7.4. Section 16-G(1)(c) refers to the proceeding for winding up
            of such company or for the appointment of receiver in respect
            thereof. Therefore, as such, the proceedings under Section 9 IBC
            shall not be limited and/or restricted to winding up and/or
D           appointment of receiver only. The winding up/liquidation of the
            company shall be the last resort and only on an eventuality when
            the corporate insolvency resolution process fails. As observed by
            this Court in Swiss Ribbons (P) Ltd.[Swiss Ribbons (P)
            Ltd. v. Union of India, (2019) 4 SCC 17 : AIR 2019 SC 739],
E           referred to hereinabove, the primary focus of the legislation while
            enacting IBC is to ensure revival and continuation of the corporate
            debtor by protecting the corporate debtor from its own
            management and from a corporate debt by liquidation and such
            corporate insolvency resolution process is to be completed in a
            time-bound manner. Therefore, the entire “corporate insolvency
F           resolution process” as such cannot be equated with “winding up
            proceedings”. Therefore, considering Section 238 IBC, which is
            a subsequent Act to the Tea Act, 1953, shall be applicable and the
            provisions of IBC shall have an overriding effect over the Tea
            Act, 1953. Any other view would frustrate the object and purpose
G           of IBC. If the submission on behalf of the appellant that before
            initiation of proceedings under Section 9 IBC, the consent of the
            Central Government as provided under Section 16-G(1)(c) of the
            Tea Act is to be obtained, in that case, the main object and purpose
            of IBC, namely, to complete the “corporate insolvency resolution
            process” in a time-bound manner, shall be frustrated. The sum
H
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                             615
    EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

      and substance of the above discussion would be that the provisions      A
      of IBC would have an overriding effect over the Tea Act, 1953
      and that no prior consent of the Central Government before initiation
      of the proceedings under Section 7 or Section 9 IBC would be
      required and even without such consent of the Central Government,
      the insolvency proceedings under Section 7 or Section 9 IBC
                                                                              B
      initiated by the operational creditor shall be maintainable.”
       21. In Kaledonia Jute and Fibres Pvt. Ltd. v. Axis Nirman
and Industries Ltd., 2020 SCC OnLine SC 943 [“Kaledonia”], this
Court decided as to whether a winding up proceeding in the Company
Court could be transferred despite the fact that the winding up order had
been passed and then been kept in abeyance. This Court, in paragraph          C
27, held:
      “27. Apart from providing for the transfer of certain types of
      winding up proceedings by operation of law, Section 434(1)(c)
      also gives a choice to the parties to those proceedings to seek a
      transfer of such proceedings to the NCLT. This is under the fifth       D
      proviso to Clause (c).”
      The Court then went on to hold that in a winding up proceeding
that has been admitted, since all creditors would be parties to such
proceeding in rem, a secured creditor being such a party could, therefore,
move the Company Court under the fifth proviso to Section 434(1)(c) of        E
the Companies Act, 2013 to transfer the aforesaid proceeding to the
NCLT to be tried as a proceeding under Section 7 or Section 9, as the
case may be.
       22. In Action Ispat (supra), this Court was faced with a
proceeding in which a winding up petition had been admitted by the High       F
Court and then transferred to the NCLT to be tried as a proceeding
under the IBC. After referring to the judgments in Jaipur Metals (supra),
Forech (supra), and Kaledonia (supra), and after setting out various
Sections dealing with winding up of companies under the Companies
Act, 2013, this Court then held:                                              G
      “20. What becomes clear upon a reading of the three judgments
      of this Court is the following:
      (i) So far as transfer of winding up proceedings is concerned, the
      Code began tentatively by leaving proceedings relating to winding
                                                                              H
616      SUPREME COURT REPORTS                           [2021] 3 S.C.R.


A     up of companies to be transferred to NCLT at a stage as may be
      prescribed by the Central Government.
      (ii) This was done by the Transfer Rules, 2016 [Companies
      (Transfer of Pending Proceedings) Rules, 2016] which came into
      force with effect from 15.12.2016. Rules 5 and 6 referred to three
B     types of proceedings. Only those proceedings which are at the
      stage of pre-service of notice of the winding up petition stand
      compulsorily transferred to the NCLT.
      (iii) The result therefore was that post notice and pre admission
      of winding up petitions, parallel proceedings would continue under
C     both statutes, leading to a most unsatisfactory state of affairs.
      This led to the introduction of the 5th proviso to section 434(1)(c)
      which, as has been correctly pointed out in Kaledonia[Kaledonia
      Jute & Fibres Pvt. Ltd. v. Axis Nirman & Industries Ltd., 2020
      SCC OnLine SC 943], is not restricted to any particular stage of
      a winding up proceeding.
D
      (iv) Therefore, what follows as a matter of law is that even post
      admission of a winding up petition, and after the appointment of a
      Company Liquidator to take over the assets of a company sought
      to be wound up, discretion is vested in the Company Court to
      transfer such petition to the NCLT. The question that arises before
E     us in this case is how is such discretion to be exercised?”
      xxx xxx xxx
      “31. Given the aforesaid scheme of winding up under Chapter
      XX of the Companies Act, 2013, it is clear that several stages are
F     contemplated, with the Tribunal retaining the power to control the
      proceedings in a winding up petition even after it is admitted. Thus,
      in a winding up proceeding where the petition has not been served
      in terms of Rule 26 of the Companies (Court) Rules, 1959 at a
      pre-admission stage, given the beneficial result of the application
      of the Code, such winding up proceeding is compulsorily
G     transferable to the NCLT to be resolved under the Code. Even
      post issue of notice and pre admission, the same result would
      ensue. However, post admission of a winding up petition and after
      the assets of the company sought to be wound up become
      in custodia legis and are taken over by the Company Liquidator,
      section 290 of the Companies Act, 2013 would indicate that the
H
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                                 617
    EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

       Company Liquidator may carry on the business of the company,               A
       so far as may be necessary, for the beneficial winding up of the
       company, and may even sell the company as a going concern. So
       long as no actual sales of the immovable or movable properties
       have taken place, nothing irreversible is done which would warrant
       a Company Court staying its hands on a transfer application made
                                                                                  B
       to it by a creditor or any party to the proceedings. It is only where
       the winding up proceedings have reached a stage where it would
       be irreversible, making it impossible to set the clock back that the
       Company Court must proceed with the winding up, instead of
       transferring the proceedings to the NCLT to now be decided in
       accordance with the provisions of the Code. Whether this stage             C
       is reached would depend upon the facts and circumstances of
       each case.”
       23. A conspectus of the aforesaid authorities would show that a
petition either under Section 7 or Section 9 of the IBC is an independent
proceeding which is unaffected by winding up proceedings that may be              D
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
corporate death that no transfer of the winding up proceeding would
then take place to the 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           E
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               F
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 petitionfiled 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:                       G

       “230. Power to compromise or make arrangements with
       creditors and members.—(1) Where a compromise or
       arrangement is proposed—

                                                                                  H
618            SUPREME COURT REPORTS                          [2021] 3 S.C.R.


A              (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
B           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.
C                  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.
D           xxx xxx xxx”
             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
E     emphasis is on revival of the corporate debtor through infusion of a new
      management.
            24. On facts also, in the present case, nothing can be said to have
      become irretrievable in the sense mentioned in paragraph 31 of Action
      Ispat (supra).
F
            25. It is settled law that a secured creditor stands outside the
      windingup and can realise its security dehors winding up proceedings. In
      M.K. Ranganathan v. Govt. of Madras, (1955) 2 SCR 374, this Court
      held:
            “The position of a secured creditor in the winding up of a company
G           has been thus stated by Lord Wrenbury in Food
            Controller v. Cork [1923 Appeal Cases 647]:
               “The phrase ‘outside the winding up’ is an intelligible phrase if
               used, as it often is, with reference to a secured creditor, say a
               mortgagee. The mortgagee of a company in liquidation is in a
H
A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                           619
 EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

     position to say “the mortgaged property is to the extent of the     A
     mortgage my property. It is immaterial to me whether my
     mortgage is in winding up or not. I remain outside the winding
     up” and shall enforce my rights as mortgagee. This is to be
     contrasted with the case in which such a creditor prefers to
     assert his right, not as a mortgagee, but as a creditor. He may
                                                                         B
     say ‘I will prove in respect of my debt’. If so, he comes into
     the winding up”.
  It is also summarised in Palmer’s Company Precedents Vol. II,
  page 415:
     “Sometimes the mortgagee sells, with or without the                 C
     concurrence of the liquidator, in exercise of a power of sale
     vested in him by the mortgage. It is not necessary to obtain
     liberty to exercise the power of sale, although orders giving
     such liberty have sometimes been made”.
  The secured creditor is thus outside the winding up and can realise    D
  his security without the leave of the winding up Court, though if
  he files a suit or takes other legal proceedings for the realisation
  of his security he is bound under Section 231 (corresponding with
  Section 171 of the Indian Companies Act) to obtain the leave of,
  the winding up Court before he can do so although such leave
  would almost automatically be granted. Section 231 has been read       E
  together with Section 228(1) and the attachment, sequestration,
  distress or execution referred to in the latter have reference to
  proceedings taken through the Court and if the creditor has resort
  to those proceedings he cannot put them in force against the estate
  or effects of the Company after the commencement of the winding        F
  up without the leave of the winding up Court. The provisions in
  Section 317 are also supplementary to the provisions of Section
  231 and emphasise the position of the secured creditor as one
  outside the winding up, the secured creditor being, in regard to the
  exercise of those rights and privileges, in the same position as he
  would be under the Bankruptcy Act.                                     G
  The corresponding provisions of the Indian Companies Act have
  been almost bodily incorporated from those of the English
  Companies Act and if there was nothing more, the position of the
  secured creditor here also would be the same as that obtaining in
                                                                         H
620             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A            England and he would also be outside the winding up and a sale
             by him without the intervention of the Court would be valid and
             could not be challenged as void under Section 232(1), Indian
             Companies Act.”
                                                              (at pages 383, 384)
B           This principle has been followed in Central Bank of India v.
      Elmot Engineering Co., (1994) 4 SCC 159 (at paragraph 14),
      Industrial Credit and Investment Corpn. of India Ltd. v. Srinivas
      Agencies, (1996) 4 SCC 165 (at paragraph 2), and Board of Trustees,
      Port of Mumbai v. Indian Oil Corpn., (1998) 4 SCC 302 (at paragraph
C     12).
              26. Indiabulls, a secured creditor of the corporate debtor, viz.
      SRUIL, has, in enforcement of its debt by a mortgage, sold the mortgaged
      property outside the windingup. The aforesaid sale is the subject matter
      of proceedings in the Bombay High Court filed by the provisional
D     liquidator. If the aforesaid sale is set aside, the asset of SRUIL that has
      been sold will come back to the provisional liquidator for the purposes of
      winding up. If the sale is upheld, equally, there are other assets of SRUIL
      which continue to be in the hands of the provisional liquidator for the
      purposes of winding up. We may also add that on the facts of this case,
      though no application for transfer of the winding up proceeding pending
E     in the Bombay High Court has been filed, the Bombay High Court has
      itself, by the orders dated 28.11.2019 and 23.01.2020, directed the
      provisional liquidator to handover the records and assets of SRUIL to
      the IRPin the Section 7 proceeding that is pending before the NCLT. No
      doubt, this has not yet been done as the IRP has not yet been able to pay
F     the requisite amount to the provisional liquidator for his expenses.
             27. Dr. Singhvi and Shri Ranjit Kumar have vehemently argued
      that SREI has suppressed the winding up proceeding in its application
      under Section 7 of the IBC before the NCLT and has resorted to Section
      7 only as a subterfuge to avoid moving a transfer application before the
G     High Court in the pending winding up proceeding. These arguments do
      not avail the Appellant for the simple reason that Section 7 is an independent
      proceeding, as has been held in catena of judgments of this Court, which
      has to be tried on its own merits. Any “suppression” of the winding up
      proceeding would, therefore, not be of any effect in deciding a Section 7
      petition on the basis of the provisions contained in the IBC. Equally, it
H
   A. NAVINCHANDRA STEELS PRIVATE LIMITED v. SREI                                621
    EQUIPMENT FINANCE LIMITED [R. F. NARIMAN, J.]

cannot be said that any subterfuge has been availed of for the same              A
reason that Section 7 is an independent proceeding that stands by itself.
As has been correctly pointed out by Shri Sinha, a discretionary jurisdiction
under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013
cannot prevail overthe undoubted jurisdiction of the NCLT under the
IBC once the parameters of Section 7 and other provisions of the IBC
                                                                                 B
have been met. For all these reasons, therefore, the appeal is dismissed
and the interim order that has been passed by this Court on 18.12.2020
shall stand immediately vacated.

Divya Pandey                                                 Appeal dismissed.
                                                                                 C




                                                                                 D




                                                                                 E




                                                                                 F




                                                                                 G




                                                                                 H