Doctrine of necessity: NCLAT too can extend its powers under section 60(5) of IBC, 2016 to meet out the ends of Justice in order to avoid liquidation of the Corporate Debtor – Mr. C. Sivasami Vs. Mr. A.R. Ramasubramania Raja, Liquidator of Topknit Processing Mills Pvt. Ltd. and Anr. – NCLAT Chennai
Hon’ble NCLAT held that:
(i) The concept of the ‘doctrine of necessity’, which has to be read in accordance with the provisions contained under section 60(5) of I & B Code, 2016, it provides for meeting out such inevitable circumstances in form of the powers vested with the Tribunals and particularly the NCLT as referred to in Section 60(5) of I & B Code, 2016, to pass any appropriate order for fruitfully disposing of any application or proceedings in order to meet the purpose of CIRP, as against the Corporate Debtor.
(ii) When the provisions contained under section 60(5) of I & B Code, 2016, it starts with a non-obstinate clause, that means it has an overriding effect to any of the provisions to the contrary, of the Code as contained therein and that the exercise of inherent powers have been vested with the Tribunal to carry out the exceptions in order to meet out the objective of the Code in order to avoid liquidation and to enable the Corporate Debtor to transition into position of being a going concern.
(iii) The NCLAT too can extend its powers under section 60(5) to meet out the ends of Justice in order to avoid liquidation of the Corporate Debtor.