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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5120 OF 2019

Duncans Industries Ltd. .. Appellant

Versus

A. J. Agrochem .. Respondent

J U D G M E N T

M. R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned

judgment and order dated 20.06.2019 passed by the National

Company Law Appellate Tribunal (for short “NCLAT”) by which the

learned Appellate Tribunal has allowed the said appeal preferred by

the respondent herein and has quashed and set  aside the order

dated  05.10.2018  passed  by the National Company Law Tribunal,

Kolkata (for short “NCLT”), holding that the respondent’s

application under Section 9 of the  Insolvency and Bankruptcy

Code, 2016 (for short “IBC”) would be maintainable, the original

respondent has preferred the present appeal.

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2. The facts of the case in nutshell are as under:

2.1 That the appellant is a Corporate Debtor. It is a company

which owns and manages 14 tea gardens.  Out of 14 tea gardens,

the Central  Government  vide notification dated 28.01.2016, in

exercise of its power under Section 16E of the Tea Act, 1953 has

taken over the control of 7 tea gardens.    

2.2 That the respondent is an operational creditor of the

appellant.   It used to supply pesticides, insecticides, herbicides

etc. to the appellant.   According to the respondent­operational

creditor, a sum of Rs.41,55,500/­ was due and payable by the

appellant­corporate debtor to the respondent­operational

creditor.   That the respondent initiated the proceedings against

the appellant­corporate debtor before the NCLT under Section 9

of the IBC.   Initiation of the proceedings under the IBC by the

respondent­operation creditor was opposed by the appellant­

corporate debtor mainly and solely on the ground that, as

provided under Section 16G(1)(c) of the Tea Act, once the

management of tea  unit has been taken over by the  Central

Government, then the proceedings for winding up or appointment

of receiver cannot be initiated without the consent of the Central

Government.  It was the case on behalf of the appellant­corporate

debtor that, in the  present  case,  as the  prior  approval  of the

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Central Government has not been taken, as required under

Section  16G  of the Tea  Act, the insolvency  proceeding  under

Section 9 of the IBC would not be maintainable.   That, by an

order dated 05.10.2018, learned NCLT held that in view of the

statutory provisions under Section 16G of the Tea Act and as the

prior consent of the Central Government has not been obtained,

the proceedings under Section 9 of the IBC shall not be

maintainable.   In an appeal before the NCLAT by the

respondent­operational creditor, by the impugned judgment and

order, the NCLAT has reversed the order passed by the NCLT,

Kolkata and has held that the  respondent’s  application under

Section 9  of the IBC would be  maintainable  even without the

consent of the Central Government in terms of Section 16G of the

Tea Act.   Feeling aggrieved and dissatisfied with the impugned

judgment and  order dated  20.06.2019  passed  by the learned

NCLAT, allowing the respondent’s appeal thereby holding that the

insolvency  petition filed  under  Section 9  of the IBC would  be

maintainable, the original respondent­corporate debtor has

preferred the present statutory appeal.

3. Shri Shyam Divan, learned Senior Advocate has appeared

on behalf of the appellant­corporate debtor and Shri Amar Dave,

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learned Advocate has appeared on behalf of the respondent­

operational creditor.

4. Shri  Shyam Divan,  learned Senior Advocate appearing on

behalf  of the appellant­corporate debtor has taken us through

the relevant provisions of the Tea Act, 1953, more particularly

Section 16.   He has also taken us through the objects and the

purpose of the Tea Act.

4.1 It is submitted by Shri Shyam Divan, learned Senior

Advocate appearing on behalf of the appellant that the Tea Act is

a special Act for the purpose of providing control by the Union of

India of the Tea Industry.   It is submitted that Section 16D(1) of

the Tea Act, 1953 provides for taking over the tea unit and the

tea undertaking  inter  alia if the  Central  Government  is  of the

opinion that the tea unit is being managed in a manner highly

detrimental to the tea industry or to public interest.   It is

submitted that Section 16D(4) provides that the Central

Government shall take such steps as may be necessary for the

purpose of efficiently managing the business of the undertaking.

It is submitted that any notification under Section 16D is to have

effect for  a period not  exceeding  five  years which can only  be

extended if the Central Government is of the opinion that it  is

expedient to do so in public interest, for such period not

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exceeding one year at a time, and for total period not exceeding

six years.   It is submitted that Section 16E refers to the power of

the Central  Government to  restart the  tea  undertaking  if it is

found necessary in the interest of the general public.   It is

submitted that  Section 16G specifically  deals  with  a  situation

such as in the present application.   It is submitted that an

insolvency process is also meant to culminate in liquidation, if

there is no revival.   It is submitted that since the Tea Act permits

for the Central Government to take over the management of a tea

estate  which is  not run  properly, the  prior permission  under

Section 16G is applicable to such an estate, the management of

which has been taken over by the Government.   

4.2 It is further submitted by Shri Shyam Divan, learned Senior

Advocate appearing on behalf of the appellant that the “winding

up” process under the Companies Act, 1956 includes the

insolvency proceedings under the IBC.   It is submitted that,

therefore, initiation of any proceedings for winding up or

liquidation by way of insolvency proceedings under the IBC shall

be maintainable only after the consent of the Central Government

is obtained, as required under Section 16G of the Tea Act which,

in the present case, is lacking.  

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4.3 It is further submitted by Shri Shyam Divan, learned Senior

Advocate appearing on behalf of the appellant that, in the present

case, in the proceedings challenging the Central Government

notification dated 28.01.2016 authorising the Tea Board to take

over the management and to take control of the 7 tea estates of

the appellant­corporate debtor, the High Court of Calcutta

though has not stayed the notification, but only made an interim

arrangement for the management of 7 tea estates and the High

Court has directed/permitted the appellant to run the gardens in

a prudent business­like manner and to pay both the current and

arrear dues of the workers.   It is  submitted that  the  interim

order has been passed for improving the conditions of the

workers as also that of the tea estates.   

4.4 It is further submitted by Shri Shyam Divan, learned Senior

Advocate appearing on behalf of the appellant that the provisions

of the Tea Act, 1953 apply to tea units, the management of which

have been taken over for the purpose of stimulating the

production and manufacturing of tea.   It is submitted that the

control by the Tea Board of the manufacturing of tea from the tea

units is in public interest.   It is also a welfare legislation.   The

Tea Act is a Central Act and applies only to companies which are

having tea gardens or tea  units.   It is submitted that if the

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provisions of the Tea Act are applicable, then on a conjoint

reading of Section 16G, Section 16J and Section 16M of the Tea

Act, an application under Section 7 or Section 9 of the IBC would

not be maintainable and cannot be proceeded with without the

consent of the Central Government.   

4.5 It is further submitted by Shri Shyam Divan, learned Senior

Advocate appearing on behalf of the appellant that, in the present

case, by passing the impugned judgment and order, the learned

NCLAT has erroneously relied upon Section 238 of  the  IBC to

hold that the IBC will have an overriding effect over the Tea Act.

It is submitted that Section 238 of the IBC will be applicable if

there is any conflict between the two legislations.     It is

submitted  that, in the  present  case, there is  no  such conflict

between the Tea Act and the IBC.  It is submitted that even the

learned NCLAT in the impugned order recognizes and/or records

that the provisions of the IBC and the Tea Act are not

inconsistent with each other.   It is submitted that the IBC

process can be started  if the  permission  is  obtained  from the

Central  Government by a financial creditor or an operational

creditor.   It is  submitted  that the  provisions of  Section 7  or

Section 9 may not require the consent of the Central Government

to initiate such proceedings, but when the management of the tea

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gardens have been taken over by the Central Government under

the Tea Act, one will have to consider the provisions of the Tea

Act which requires the consent of the Central Government.  It is

submitted that, therefore, the  process  of insolvency resolution

under the IBC has not been stopped, but what it requires is an

additional permission under the Tea Act for the purpose of

initiation of such insolvency proceeding.    It is submitted that

this should be logical as the management of the tea gardens is

already  under the  Central  Government  under the  Tea  Act for

public interest and for the interest of workers of the tea gardens.

4.6 It is further submitted by Shri Shyam Divan, learned Senior

Advocate appearing on behalf of the appellant that both IBC and

the Tea Act  are  welfare legislations.   IBC  is  a  general  Act for

corporate resolution process for all corporates, but the Tea Act

protects corporates which have tea gardens.   The Tea Act is a

special  legislation enacted by the Parliament for protecting the

Tea Industries and Tea Gardens and provides for taking over the

management by the Tea Board or the Central Government or any

person authorized by the Central Government for running the tea

gardens or protection of the workers. It is submitted that,

therefore, its  provisions  can  be  harmoniously  construed  along

with the IBC.  

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4.7 Shri  Shyam Divan,  learned Senior Advocate appearing on

behalf of the appellant has heavily relied upon the decision of this

Court in the case of  Macquarie  Bank Ltd. v.  Shilpi  Cable

Technologies Ltd.  (2018) 2 SCC 674 as well as the recent

decision of this Court dated 14.08.2019 in the case of K. Kishan

v. M/s. Vijay Nirman Company Pvt. Ltd. (2018) 17 SCC 662, on

non­applicability of Section 238 of the IBC.   Making the above

submissions and relying upon the above decisions of this Court,

it is submitted by Shri Shyam Divan,  learned Senior Advocate

appearing on behalf of the appellant­corporate debtor that since

there is no inconsistency between the Tea Act and the IBC, there

is no occasion to apply Section 238 of the IBC to give overriding

effect.    

4.8 Making the above submissions and relying upon the above

decisions of this Court, it is prayed to allow the present appeal

and quash and set aside the impugned judgment and order

passed by the learned NCLAT and restore the order passed by the

NCLT, Kolkata by holding that in absence of the consent of the

Central Government as provided under Section 16G of the Tea

Act, the insolvency proceedings initiated by the respondent­

operational creditor under Section 9 of the IBC shall not be

maintainable.  

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5. The present  appeal is  vehemently  opposed  by  Shri  Amar

Dave, learned Advocate appearing on behalf of the respondent­

operational creditor.

5.1 It is vehemently submitted by Shri Amar Dave, learned

Advocate appearing on behalf of the respondent­operational

creditor that the IBC is a complete Code in itself.  It is submitted

that the IBC is a consolidating and amending law relating to re­

organization and insolvency resolution and for matters connected

therewith or incidental thereto.   It is submitted that the Code,

which was promulgated in 2016, has not provided for the pre­

requisite of obtaining consent from the Central Government for

initiating corporate insolvency resolution process like the Tea Act,

which is an earlier Act enacted in 1953.   It is submitted that,

thus, such a pre­requisite of obtaining consent cannot be

imported and/or read into the Code when the self­contained

Code itself does not provide for it.   

5.2 It is further  submitted  that importing the  requirement  of

obtaining consent of the Central Government prior to initiating

the corporate insolvency resolution process would be completely

contrary to the over­riding nature of the Code, and of the clear

legislative  intent of  keeping the arms of the Government away

from the resolution process and of not delaying the process of

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resolution. It is further submitted that an examination of Chapter

IIIA of the Tea Act reveals that the object of restarting/revival of

the tea company is a writ large in the scheme of the Tea Act.  It is

submitted that the said object of restarting/revival is borne out

from Section 16B(2), Section 16E(1)(b), Section 16I(1) and Section

16K of the Tea Act.  It is submitted that restarting/revival of the

company is also the object of the IBC, as is clear from the

Preamble of the IBC and also as observed by this Court in the

case of Swiss Ribbons Pvt. Ltd. v. Union of India [AIR 2019 SC

739 : (2019) 4 SCC 17].   It is submitted that therefore  in the

event of any conflict between the two legislations, the provisions

of the IBC would prevail by virtue of Section 238 of the IBC.

5.3 It is submitted by Shri Dave, learned Advocate appearing on

behalf of the respondent­operational creditor that the  present

case is not one where Section 16G of the Tea Act applies at all, as

the management has not been “taken over” by the Central

Government or the Tea Board.   It is submitted that the

notification dated 28.01.2016 was issued under Section 16E(1) of

the Tea Act.  It is submitted that, according to the sub­section (2)

thereof, the provisions of Section 16G shall  apply to a notified

order made under Section 16E(1).   It is submitted that Section

16G(1) shall be applicable when the management of a tea

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undertaking or tea unit owned by a company has been taken over

by the Tea Board.  It is submitted that thus Section 16G(1) of the

Tea Act does not automatically get triggered with the issuance of

a notification under Section 16E(1) of the Tea Act, but becomes

applicable once the management of a tea undertaking or tea unit

owned by a company has been taken over by the Tea Board.  It is

submitted that, in the present case, pursuant to the interim

order passed by the Division Bench of the High Court of Calcutta

in which the notification dated 28.01.2016 is challenged by the

corporate debtor, the appellant­corporate debtor continues to be

in  management and control of the tea  units/gardens.   It is

submitted that therefore application of Section 16E(1) is no

longer prevalent  and consequently Section 16G of the Tea Act

shall not be applicable at all.  

5.4 It is further submitted by Shri Dave, learned Advocate

appearing on behalf of the respondent­operational creditor that

Section 16G(1)(c) of the Tea Act is applicable to a proceeding for

“winding up” and not to proceeding for  initiation of  “corporate

insolvency resolution process”, as the both are not one and the

same proceedings.   It is submitted that winding up of a company

is provided for, and governed by, the Companies Act.   It is

submitted that, on the other hand, initiation of corporate

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insolvency resolution process is provided for, and governed by,

the Insolvency and Bankruptcy Code, 2016.  It is submitted that

both these processes are distinct from one another and not

synonymous with one another.  It is submitted that the power of

the Parliament to make any law relating to winding up can be

traced to Entry nos. 33 and 34 of the Union List of the Seventh

Schedule of the Constitution.   It is submitted that, on the other

hand, the power of the Parliament to make any law relating to

insolvency can be traced to Entry no. 9 of the Concurrent List of

the Seventh Schedule of the Constitution.   It is submitted that,

thus, winding up and insolvency proceedings are not one and the

same as they have been mentioned under two separate entries in

two separate lists in the Seventh Schedule.   It is submitted that,

as such, Section 16G(1)(c) of the Tea Act, which mandates that

no winding up proceeding can lie in any court against a company

which has been taken over by the Tea Board without consent of

the Central Government, does not and cannot be interpreted to

mean that the said section applies to any proceeding for initiation

of corporate insolvency resolution  process against a company

which has been taken over by the Tea Board.  It is submitted that

the learned NCLAT has rightly held that Section 16G(1)(c) relates

to winding up and, on the other hand, Section 9 of the IBC is not

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a proceeding for winding up, but for initiation of “corporate

insolvency resolution process” to ensure revival and continuation

of the corporate debtor by protecting the corporate debtor from

its own management and from corporate debt by liquidation.   In

support of his above submissions, Shri Dave, learned Advocate

appearing on behalf of the respondent­operational creditor, has

heavily replied upon the decisions of this Court in  Innoventive

Industries Ltd. v. ICICI Bank [AIR 2017 SC 4084 at paras 16,

51 and 56 : (2018) 1 SCC 407],  Swiss Ribbons Pvt. Ltd.  [AIR

2019 SC 739 at paras 10 to 12 : (2019) 4 SCC 17] and  a decision

in PCIT v. Monnet Ispat and Energy Ltd.  (2018) 18 SCC 786.

Making the above submissions and relying upon the above

decisions of this Court, it is prayed to dismiss the present appeal

and to confirm the impugned judgment and order passed by the

learned NCLAT.

6. The short question which is posed for consideration of this

Court is whether before initiation of the proceedings under

Section 9 of the IBC, a consent of the Central Government as

provided under Section 16G(1)(c) of the Tea Act, 1953 is required

and/or whether in absence of any such consent of the Central

Government the proceedings initiated by the respondent­

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operational creditor under Section 9 of the IBC would be

maintainable or not?

7. Sections 16G of the Tea Act reads as under:

“16G. Application of Act 1 of 1956.—(1) Where the  management of a tea  undertaking or tea  unit owned by  a  company has  been  taken over  by  any person or body of persons authorised by the Central Government  under this  Act, then,  notwithstanding anything contained in the said Act or in the memorandum or articles of association of such company,—  

(a)   it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company;  

(b) no resolution passed in a meeting of the shareholders of such company shall be given effect to unless approved by the Central Government;  

(c) no proceeding for the winding up of such company or for the appointment of receiver in respect thereof shall lie in any court except with the consent of the Central Government.  

(2) Subject to the provisions contained in sub­ section (1), and to the other provisions contained in this Act, and subject to such other exceptions, restrictions and limitations, if any, as the  Central Government may, by notification in the Official Gazette specify in this  behalf, the  Companies  Act, 1956, shall continue to apply to such company in the same manner as it applied thereto before the issue of the notified order.”

7.1 In the  present case, it is true that  by  notification  dated

28.01.2016 issued under Section 16E of the Tea Act, the Central

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Government authorised the Tea Board to take over the

management or the control of the seven tea estates mentioned in

the said notification.  However, the appellant challenged the said

notification before  the High Court  of  Calcutta and the  learned

Single Judge of the High Court dismissed the said petition.

However, in an appeal, the Division Bench of the High Court of

Calcutta vide the interim order dated 20.09.2016 has permitted

the appellant­corporate debtor to continue with the management

of the said tea estates.  Therefore, in effect, the appellant herein

has been continued to be in management and control of the tea

estates, despite the notification under Section 16E dated

28.01.2016.   At this stage, it is required to be noted that

notification under Section 16E of the Tea Act was issued by the

Central Government and the Central Government authorised the

Tea Board to take steps to take over the management and control

of the seven tea estates, having satisfied that the said seven tea

gardens were being managed by the appellant in a manner highly

detrimental to the tea industry and public interest.   Despite the

same, very surprisingly, by an interim arrangement, the Division

Bench of the High Court of Calcutta has handed over the

management and control of the seven tea gardens to the

appellant, because of whose mis­management, it has deteriorated

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the condition of the tea gardens run by the appellant.  Be that as

it may, the fact remains that, pursuant to the interim

arrangement/order  passed  by the  Division  Bench  of the  High

Court dated 29.09.2016, the appellant­corporate debtor is

continued  to  be in  management  and  control of the seven  tea

gardens and they are running the tea gardens.  Therefore, in the

facts and circumstances of the case, and more particularly when,

despite  the notification under Section 16E of the Tea Act, the

appellant­corporate debtor is continued to be in management and

control of the tea gardens/units and are running the tea gardens

as if the notification dated under Section 16E has not been

issued,  Section 16G of the  Tea  Act,  more  particularly  Section

16G(1)(c),  shall  not  be applicable  at  all.  On a  fair reading of

Section 16G of the Tea Act, we are of the opinion that Section

16G of the Tea Act shall be applicable only in a case where the

actual management of a tea undertaking or tea unit owned by a

company has been taken over by any person or body of persons

authorised by the Central Government under the Tea Act.

Therefore, taking over the actual management and control by the

Central Government or by any person or body of persons

authorised  by the  Central  Government is  sine  qua  non  before

Section 16G of the Tea Act is made applicable.  Therefore, in the

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facts and circumstances of the case, Section 16G(1)(c) shall not

be applicable at all, as the appellant­corporate debtor is

continued to be in management and control of the tea

units/gardens.

7.2 Now, so far as the main issue, namely, whether before

initiation of the proceedings under Section 9 of the IBC, a prior

consent  of the Central  Government  as provided under Section

16G(1)(c) of the Tea Act is required or not and/or in absence of

any such consent of the Central  Government, the proceedings

under Section 9 of the IBC shall be maintainable or not, is

concerned, at the outset, it is required to be noted that the IBC is

a complete Code in itself.  In a recent decision of this Court in the

case of  Swiss  Ribbons  Pvt. Ltd.  (supra), this  Court had an

occasion to consider the Statement of Objects and Reasons of the

IBC and also the Preamble of the IBC, which when noted by this

Court in its earlier decision in  Innoventive Industries Ltd.

(supra), in paragraphs 25 and 26 in the case of  Swiss Ribbons

Pvt.  Ltd.  (supra), this  Court  has  referred  to the  Statement  of

Objects and Reasons of the IBC and the Preamble of the IBC.

Paragraphs 25 and 26 are as under:

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25. The  Statement of  Objects and  Reasons for the Code have been referred to in Innoventive Industries [Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407 :  (2018) 1 SCC (Civ) 356] which states: (SCC pp. 421­22, para 12)

“12. … The Statement of Objects and Reasons of the Code reads as under:

‘Statement of Objects and Reasons.— There is no single law in India that deals with insolvency and bankruptcy. Provisions relating to insolvency and bankruptcy for companies can be found in the Sick Industrial Companies (Special Provisions) Act, 1985, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Companies Act, 2013. These statutes provide for creation of multiple fora such as Board of Industrial and Financial Reconstruction (BIFR), Debts Recovery Tribunal (DRT) and National Company Law Tribunal (NCLT) and their respective Appellate Tribunals. Liquidation of companies is handled by the High Courts. Individual bankruptcy and insolvency is dealt with under the  Presidency Towns  Insolvency Act, 1909, and the Provincial Insolvency Act, 1920 and is dealt with by the courts. The existing framework  for insolvency and bankruptcy  is inadequate, ineffective  and results in  undue delays  in resolution, therefore, the proposed legislation.

2.The objective of the Insolvency and Bankruptcy Code, 2015 is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals  in a time­ bound manner for  maximisation of  value  of

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assets of such persons, to promote entrepreneurship, availability of credit and balance the  interests  of  all the stakeholders including alteration in the priority of payment of government dues and to establish an Insolvency and Bankruptcy Fund, and matters connected therewith or incidental thereto. An effective legal framework for timely resolution of insolvency and bankruptcy would support development of credit markets and encourage entrepreneurship. It would also improve Ease of Doing Business, and facilitate more investments leading to higher economic growth and development.

3. The Code seeks to provide for designating NCLT and DRT as the adjudicating authorities for corporate persons and firms and individuals, respectively, for resolution of insolvency, liquidation and bankruptcy.  The Code separates commercial aspects of insolvency and bankruptcy proceedings from judicial  aspects.  The Code also seeks to provide for establishment of the Insolvency and Bankruptcy Board of India (Board) for regulation of insolvency professionals, insolvency professional agencies and information utilities. Till the Board is established, the Central Government shall exercise all powers of the Board or designate any financial sector regulator to exercise the powers and functions of the Board. Insolvency professionals will assist in completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged in the  Code. Information  Utilities would collect, collate, authenticate and disseminate financial information to facilitate such proceedings. The Code also proposes to establish a  fund to be called  the  Insolvency and Bankruptcy Fund of India for the purposes specified in the Code.

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4. The Code seeks to provide for amendments in the Indian  Partnership  Act, 1932, the Central Excise Act, 1944, Customs Act, 1962, the Income Tax Act, 1961, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Finance Act, 1994, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, the  Payment  and Settlement  Systems Act, 2007, the Limited Liability Partnership Act, 2008, and the Companies Act, 2013.

5. The  Code  seeks to  achieve the  above objectives.’”

26. The Preamble of the Code states as follows:

“An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution  of corporate  persons,  partnership firms and individuals in a time­bound manner for  maximisation of value  of  assets  of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of government dues and to establish an Insolvency and Bankruptcy  Board of India,  and  for  matters connected therewith or incidental thereto.”

7.3 After noticing and considering the Statement of Objects and

Reasons for the IBC and the Preamble to the Code, thereafter this

Court has observed and held in paragraphs 27 and 28 as under:

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“27. As is discernible, the Preamble gives an insight into  what is sought to  be  achieved  by the Code. The  Code is first and foremost, a  Code for reorganisation and insolvency resolution of corporate debtors. Unless such reorganisation is effected in a time­bound manner, the value of the assets of such persons will deplete. Therefore, maximisation of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective  of the Code.  This, in  turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought  back into the economic  mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme —workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximise their investment. Timely resolution of a corporate  debtor  who  is  in  the red,  by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. (See ArcelorMittal [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] at para 83, fn 3).

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28. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation.  The Code is  thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for  creditors.  The interests  of the  corporate  debtor have, therefore, been bifurcated and separated from that of its promoters/those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process.  The timelines  within  which the resolution process is to take place again protects the corporate  debtor's  assets from further  dilution, and  also  protects all its creditors and  workers  by seeing  that the resolution process goes  through as fast  as  possible  so that  another  management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends.

7.4 Section 16G(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 of

the IBC shall  not  be limited  and/or restricted to  winding  up

and/or 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 Pvt.

Ltd.  (supra),  referred to hereinabove,  the primary  focus of the

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legislation while enacting the 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 time­bound  manner.  Therefore, the  entire

“corporate insolvency resolution process” as such cannot be

equated with “winding up proceedings”.   Therefore, considering

Section 238 of the IBC, which is a subsequent Act to the Tea Act,

1953, shall be applicable and the provisions of the IBC shall have

an over­riding effect over the Tea Act,  1953.   Any other view

would frustrate the object and purpose of the IBC.   If the

submission on behalf  of the  appellant that  before initiation of

proceedings under Section 9 of the IBC, the consent of the

Central Government as provided under Section 16G(1)(c) of the

Tea  Act is to  be  obtained, in that  case, the  main  object  and

purpose of the IBC, namely, to complete the “corporate

insolvency resolution process” in a time­bound manner, shall be

frustrated.    The sum and substance  of the  above  discussion

would be that the provisions of the 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 of the IBC would be required and even

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without such consent of the Central Government, the insolvency

proceedings under Section 7 or Section 9 of the IBC initiated by

the operational creditor shall be maintainable.    

8. In view of the above and for the reasons stated above, the

present appeal fails and the same deserves to be dismissed and is

accordingly dismissed.  The impugned judgment and order dated

20.06.2019 passed by the learned NCLAT holding that insolvency

petition under Section 9 of the Insolvency and Bankruptcy Code,

2016 initiated by the respondent­operation creditor shall be

maintainable, is hereby confirmed.  No costs.

..................................J. (ARUN MISHRA)

...................................J. (M. R. SHAH)

New Delhi                                              ...................................J. October 04, 2019                                   (B. R. GAVAI)