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Company & Insolvency LawSupreme Court of India

Omkara Assets Reconstruction Private Limited v. Amit Chaturvedi and Ors.

Civil Appeal · 2026 INSC 189Decided 24 Feb 2026
Civil Appeal No.11417 of 2025
Justice Sanjay Kumar · Justice K. Vinod Chandran

Background

A financial creditor (predecessor of Omkara Assets Reconstruction) sought to recover over Rs.154 crore owed by a corporate debtor company and applied to the Adjudicating Authority under the IBC to start Corporate Insolvency Resolution Proceedings (CIRP). The company resisted, pointing to a decades-old Scheme of Arrangement (SOA) with its creditors that was pending, and later belatedly sanctioned, before the Punjab and Haryana High Court under the Companies Act. The National Company Law Appellate Tribunal had put the insolvency case on hold until the High Court proceedings concluded, prompting the creditor's appeal to the Supreme Court.

Decision Breakdown

The Supreme Court found that the company had never complied with the statutory timelines for finalizing the Scheme of Arrangement: the required "second motion" for court sanction was filed years late, the sanction itself came a decade after the creditors' meeting, and even the sanction order was not filed with the Registrar of Companies within the prescribed period. Because of these prolonged, uncured lapses, the Court held the SOA had become defunct and unenforceable, and there was no valid reason to let it override or stall the IBC proceedings on grounds of "judicial discipline." Relying on precedent that the IBC has an overriding effect under Section 238 and exists to revive companies rather than let stale arrangements shield mismanagement, the Court set aside the Appellate Tribunal's order and restored the initiation of CIRP by the Adjudicating Authority.

Lesson Learnt

A restructuring scheme approved under company law cannot be used indefinitely to block insolvency recovery proceedings if its own statutory procedures and timelines were never properly followed. Courts will not let procedural delay by a defaulting company be dressed up as "pending litigation" to escape accountability to creditors.

Omkara Assets Reconstruction Private Limited v. Amit Chaturvedi and Ors. – Legal Case Shots | LegalAware