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Varsha Yogish

Consultant in the Finance Team at the Bangalore office of Cyril Amarchand Mangaldas. Varsha advises on insolvency and bankruptcy matters. She has earlier worked as a law research associate at the National Company Law Tribunal, Bengaluru Bench. She can be reached at varsha.yogish@cyrilshroff.com

Overriding the IBC’s over-rider

Insolvency resolution regimes, globally, function as an exception to otherwise accepted norms of commercial law.[1] The Indian Insolvency and Bankruptcy Code, 2016 (“Code”), is no exception: a mere glance at the Code will display how it has a liberal sprinkling of non-obstante clauses.[2] From a specific dispute resolution mechanism, to an overarching carve out for insolvency resolution mechanism, the legislature has inserted non-obstante clauses in the Code as guidance of its intent. One would imagine that this would have ensured sufficient clarity for all stakeholders, avoided disputes and ensured timely insolvency resolution. Yet, as market participants try to understand the scope and intent of non-obstante clauses in the Code, such clauses continue to generate legal debate and litigation[3]. Perhaps, the stakes are too high for the parties to resist litigating. And some would argue not without good legal reason: after all, the Hon’ble Supreme Court has over the years identified exceptions[4] to the Latin maxim ‘leges posteriores priores contraries abrogant’ i.e. in the event two special statutes contain non obstante clauses, the non-obstante clause in the chronologically later special statute shall prevail[5].
Continue Reading Overriding the IBC’s Over-Rider?

Group Insolvency Norms

The recognition of a company’s separate juristic personality by the UK’s House of Lords in its landmark ruling in Salomon v. Salomon A Company Ltd.,[1] remains the basis for modern corporate law.[2] The ruling in effect drew a corporate veil around the legal personality of the company thereby establishing the separate legal identity of a corporate.

While India also follows the separate juristic personality of corporates as a general principle, exceptions have been incorporated over the years by way of legislative action[3] and juridical pronouncements.[4] In the context of insolvency law, the corporate veil is typically lifted in instances where a group company could be held liable for the debts of its associate and subsidiary companies, or if a group of companies functioned as a collective.
Continue Reading Staggered Lifting of the Corporate Veil: A Case for Group Insolvency Norms