Scheme Of Compromise Sanctioned By Court Under Companies Act Cannot Be Frustrated By Invoking Provisions Of SARFAESI Act: Calcutta HC

The Calcutta High Court has ruled that a "scheme of arrangement/compromise sanctioned by a company court cannot be unilaterally frustrated by invoking the provisions of the SARFAESI Act." This significant judgment establishes the supremacy of a company court's order in matters of corporate restructuring. The court held that once a scheme is legally approved, it is binding on all creditors, including secured creditors, and they cannot resort to parallel recovery mechanisms under the SARFAESI Act to bypass the terms of the sanctioned scheme.