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Supreme Court suggests amendment in the Insolvency and Bankruptcy Rules, 2016

The Supreme Court while discussing the merits in the case of Uttara Foods and Feeds Private Limited vs Mona Pharmachem, has suggested an amendment permitting for settlement between the parties even after the admission of case under the Insolvency and Bankruptcy Code, 2016 (“Code”). At present, the Code and subsequent Rules (defined hereinafter) only permit withdrawal of a case before its admission by the Tribunal.

An appeal was filed by the corporate debtor, Uttara Foods and Feeds Private Limited, in the Supreme Court under Article 142 of the Constitution (inherent powers of the Supreme Court) which allows the Supreme Court to “pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it.” The appeal was filed because the corporate debtor was not given the relief by the National Company Law Appellate Tribunal owing to lack of authority under the Code to do so.

The apex court took in record the settlement and expressed a view to amend the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (“Rules”) so as to include such inherent powers so as to obviate such unnecessary appeals before the Supreme Court.