New Delhi: The Supreme Court on Tuesday dismissed a batch of review petitions challenging a 2022 judgment passed by a two-judge bench, which held that a definition of a secured creditor under the Insolvency and Bankruptcy Code included the government. A bench comprising AS Bopanna and Bela M Trivedi said the submission of the counsel for the review petitioners deserves to be out rightly rejected for the simple reason that any passing reference of the impugned judgment made by the bench of the equal strength could not be a ground for review.
“It is a well-settled proposition of law that a co-ordinate bench cannot comment upon the discretion exercised or judgment rendered by another co-ordinate Bench of the same strength," said the bench. The apex court said if a bench does not accept as correct the decision on a question of law of another bench of equal strength, the only proper course to adopt would be to refer the matter to the larger bench, for an authoritative decision, otherwise the law would be thrown into the state of uncertainty because of conflicting decisions.
Last year, a two-judge bench of the apex court ruled in the Rainbow Papers vs Gujarat State Tax Department case that the government was a secured creditor. The appellants filed a review petition earlier this year, urging the court to reconsider its stance. Under IBC, secured creditors such as banks and financial institutions get priority in getting repaid through the resolution process, however, unpaid dues to vendors, suppliers and government dues are treated as operational credit, and they fall lower in the so-called waterfall mechanism.
The apex court said the counsel for the review petitioners has failed to make any mistake or error apparent on the face of the record in the impugned judgment and has failed to bring the case within the parameters laid down by this court in various decisions for reviewing the impugned judgment.
