COVID AFTER EFFECT: MUCOR MYCOSIS ANIL K KHAWARE ADVOCATE

 

 

COVID AFTER EFFECT: MUCOR MYCOSIS

ANIL K KHAWARE

ADVOCATE

The Covid -19 is quite an enigma, so it seems. The more you delve into it and start assuming victory over the virus, it turns turtle and yet again take further spin to deceive the mankind. It comes out with novelty with impunity and renewed vigour and still with much vengeance. It seems the Covid Virus takes meticulous note of the prospective remedy undertaken in this regard by expert and has the penchant to come out with top spin or ace to hoax us. People are perplexed. No, I am not discussing the mutant variants, that is already delved in much detail before. It is “Mucor Mycosis”, known as Black Fungus and the disease that it causes is known as Black Fungal Disease. The disease is believed to surface after recovery of covid patient and as soon as the covid patient feels that the worst is over, the adjunct in the name of Mucor Mycosis surfaces in some cases. Though, not relatively, in large numbers, still, the numbers are enough to attract attention to the mystery and necessitating a fresh look in the whole episode.

Mucor mycosis (previously called zygomycosis) is a serious but rare fungal disease caused by a group of molds called Mucormycetes. The disease, as illustrated above, is stated to surface after recovery of patients from Covid-19 and as the victim would start resurrecting himself in life, then, in some cases comes the nightmare- Black fungus disease. The hyphal fungi is generally hyaline and in group it is called hyphae and together they are called mycelium. In plants and animals it causes variety of diseases, though, the fungi like yeast (Saccharomyces cerevisiae)  has role in industrial production and biotechnology. The cause and chemistry of black fungus disease thus needs surgical analysis in the above backdrop.

 

MOLDS ARE COSMOPOLITAN IN DISTRIBUTION

These molds are ubiquitous in the environment and mainly  affect people who have health problems or take medicines that lower the body's ability to fight pathogens and sickness. Even as India reels under the second wave of Covid-19, Doctors at Delhi-based Sir Ganga Ram Hospital (SGRH) have again reported multiple cases of deadly fungal infection Mucor mycosis amongst the patients who had recovered from COVID-19 and was recuperating from COVID. In fact, during the first Covid wave, last year also, the black fungus disease was reported, but probably its intensity was not as high then to cause attention. The black fungal infection, triggered by Covid-19, last year caused many of the patients lose their eyesight. This time the intensity is more.

The Covid-19 patients with weak immunity are more prone to this black fungal Mucor mycosis disease. The black fungal infection, triggered by Covid-19, is reported to have lost eye sight and even eyes were to be removed in cases where the pathogen caused further entry into sinuses and if it leads to brain it may cause death of the patient.

USE OF STEROIDS

In Covid-19 treatment, life-saving steroids and medicines which incidentally suppress immunity are used. Steroids are chemicals and like hormones and made in human body naturally. Steroids are designed to reduce inflammation. They are also known as corticosteroids. These are chemicals readily fight inflammation and in fact immune system in activated in such a way so as to reduce inflammation. However, on the flip side as the steroids stop or slow the immune system  process, which may be causing inflammation. However, the immune system also takes a beat to negate the onslaught in the process. In addition, if one diabetic Covid-19 patient is on oxygen support, then he or she gets exposed to the humidifier. This increases the chance of the fungal infection. In order to minimize the effect of black fungus, blood sugar level has to be controlled and steroids if and when used should be used judiciously. The humidifier, if the Covid-19 patient is on oxygen support, should have clean water and that overall cleanliness of the covid-19 patient should be maintained. Further, if there is any new oral ulcer, it has to be treated immediately.

Use of steroids in treatment of corona virus infection and the fact that many Covid-19 patients have diabetes as co-morbidity could be one of the reasons for this rise in black fungus cases again. Covid-19 infected patients with weak immunity are more prone to this deadly infection. Use of Steroids increases sugar and suppresses immunity and therefore such patients shall be prone to be infected with Mucor mycosis.

WHEN MUCOR MYCOSIS SETS IN

According to the CDC (Centre for Diseases Control and Prevention), this is a rare, but critical fungal infection. These molds are present naturally in the environment. However, it affects humans, when the body’s immunity system has been weakened and it is vulnerable. It affects the lungs and the sinuses following inhalation of fungal spores from the air. It is also believed that the fungus might also enter the body through the outlet such as open wounds or cuts.

In most of the people and in ordinary situation the fungi is not known to cause any harm. However, for such set of people, who have weakened immune systems, breathing in Mucor mycetis spores can cause an infection in the lungs or sinuses which can spread to other parts of the body, It is also assumed that Mucor mycosis is not contagious and hence, it cannot transmit between people and animals.  If the disease symptom are diagnosed early and prompt and appropriate antifungal treatment are administered, the likelihood of patients winning over it is high.

symptoms OF 'Black fungus INFECTION

The probable symptoms are as under:

(i)    Pain and redness around eyes and/or nose/swelling

(ii)   Fever & Headache

(iii)  Coughing & Shortness of breath

(iv)  Bloody vomits & Altered mental status

(v)   Attack on jaw

(vi)  Blackish discoloration over bridge of nose/palate

(vii)  Toothache, loosening of teeth, jaw involvement

(viii)   Blurred or double vision with pain; fever, skin lesion; thrombosis & necrosis

(ix)  Chest pain, pleural effusion, haemoptysis, worsening of respiratory symptoms

(x)   Sinusitis – nasal blockade or congestion, nasal discharge (blackish/bloody), local pain on the cheek bone One sided facial pain, numbness or swelling

What is required to be done

(i)    Control of hyperglycemia

(ii)   Monitor blood glucose level post-COVID-19 discharge and also in diabetics

(iii)  Use of steroid judiciously – correct timing, correct dose, and duration

(iv)  Use of clean, sterile water for humidifiers during oxygen therapy

(v)   Use antibiotics/anti fungals judiciously

CARE

(i)         It is commonly believed that Warning signs and symptoms should not be ignored. Moreover, it should not be assumed that all the cases with choked nose as cases of bacterial sinusitis, more particularly, relating to the issues of immune suppression and/or in a situation when COVID-19 patients are on immune modulators relates to black fungal disease.

(ii)          Aggressive investigations should be the norm for identifying and detecting fungal epidemiology and by adopting wholesome instruments and measures   such as (KOH staining & microscopy, culture etc

(iii)     Immediate recourse to the treatment is crucial tor Mucor mycosis.

 

How to protect from Mucor Mycitis

(i)    Use of masks

(ii)   Wearing shoes, long trousers, long sleeve shirts and gloves;  while handling soil (gardening), moss or manure

(iii)   Maintain personal hygiene, including thorough scrub bath

(iv)   The diabetic control

(v)   If patients is still on steroids , use of it should be reduced

(vi)  immune modulating drugs should be reduced

(vii)  antifungal prophylaxis  should not be used

(viii)   Advisory, if and when issued by the Government should be strictly adhered to.

In addition to this, proper medical treatment may be accessed, such as:

i) Installing peripherally inserted central catheter (PICC line)

ii) Maintaining adequate systemic hydration

iii) Infusing normal saline IV before Amphotericin B infusion

iv)  Antifungal therapy, for at least 4-6 weeks as per guideline

(iv)      Clinical  monitoring of patients and with radio-imaging for response and to detect disease progression may be necessary

The team which shall be of utmost importance shall comprise of Microbiologist, Internal Medicine Specialist, Neurologist, ENT Specialist, Ophthalmologist, Dentist Surgeon (maxillofacial/plastic), Biochemist

According to health experts, Mucor mycosis (previously called zygomycosis) has been a cause of disease and death in transplants, ICU, and immune deficient individuals for a long. However, it is a matter of serious concern that the cases of black fungal infections are on a rise in unsuspected Covid patients. In fact, Covid patients who have recovered from the virus are increasingly being pushed back into the ICUs due to Mucor mycosis. Last year, the black fungus or Mucor mycosis had caused high mortality with many patients suffering from loss of eyesight, removal of jawbones and nose.

What is Liquid Medical Oxygen?

The discussion will be incomplete, until Liquid Medical Oxygen is discussed at length, here. India is currently facing a medical oxygen shortage due to an unprecedented surge in COVID-19 cases. The supply of medical oxygen is extremely important for severe COVID-19 patients as one of the most common symptoms of the virus is shortness of breath and difficulty in breathing. One of the ways through which medical oxygen can be supplied is Liquid Medical Oxygen (LMO). Liquid Medical Oxygen is high purity oxygen used for medical treatment. It has been developed for use in the human body. Due to its low melting and boiling points, oxygen is in a gaseous state at room temperature. The liquification enables storage in larger volume and easier transportation.

 

 

How is Liquid Medical Oxygen (LMO) produced?

There are various methods through which LMO can be produced. The most common production method is the separation of oxygen in Air Separation Units (ASUs). ASUs are production plants that separate large volumes of gases. ASUs use a method known as the 'Fractional Distillation Method' to produce pure oxygen from atmospheric air. In the Fractional Distillation Method, the various gases constituting atmospheric air are separated into different components after cooling them into a liquid state. Liquid oxygen is then extracted from it. The atmospheric air is first cooled to -182 degree celsius. Oxygen liquifies at this point. Since, the boiling point of Nitrogen is -196 degree celsius, it remains in a gaseous state. The “Argon” is an inert gas and has a boiling point similar to that of oxygen (-186 degree celsius) and hence a significant amount of Argon liquifies along with Oxygen. The mixture of Oxygen and Argon thus produced is drained, decompressed and passed through a second low-pressure distillation vessel in order to separate the two gases. Ultimately, purified liquid oxygen is obtained using cryogenic containers. For ready references the chemical nature/properties of “Oxygen” and “Nitrogen” are described as under:

Nitrogen

Atomic number	7
Atomic Weight	14.0067
Melting point	−209.86 °C (−345.8 °F)
Boiling Point	−195.8 °C (−320.4 °F)
Density (1 atm, 0° C)	1.2506 grams/litre

 

Oxygen

Atomic Number	8
Atomic weight	15.9994
Melting point	−218.4 °C (−361.1 °F)
Boiling point	−183.0 °C (−297.4 °F)
Density (1 atm, 0 °C)	1.429 g/litre

 

In addition to the above sources of medical oxygen, there are also portable oxygen generators known as 'Oxygen Concentrators' that can be used at home. If a patient's oxygen saturation level is 94% or above, it still means there is sufficient oxygen in their body. Use of medical oxygen by these individuals can deprive someone whose saturation level is well below 90% or 80%. In fact, oxygen saturation levels of 92 or 93 should not be considered critical; instead, this level is only a buffer that enables the patient to reach the hospital on time.

 

INFECTION REORTED BEFORE & COVID CRISIS

The infection was reported last year in Gujarat’s Ahmedabad and Karnataka’s Bengaluru. In Ahmedabad, Mucor mycosis was reported in five patients who were all either suffering from Covid19 or had recovered from it. The Black Fungus infection or 'Mucor mycosis'  is a serious infection being detected in patients who are or have suffered from the Covid 19 virus. The disease often manifests in the skin and also affects the lungs and the brain. With a number of Mucor mycosis cases detected in Delhi, Maharashtra, and Gujarat, experts in the National Covid-19 task force has issued an evidence-based advisory on the disease.

The advisory from the government reveals that is a fungal infection that mainly affects people who are on medication that reduces their ability to fight environmental pathogens, informing that the infection might turn fatal if not provided proper treatment.  'Mucor mycosis' usually infects the sinuses or lungs of such people after fungal spores are inhaled from the air. 

The fungus finds its way among people hospitalized or recovering from Covid 19, with some requiring urgent surgery. Usually, Mucor mycetes do not pose a major threat to those with a healthy immune system.

It is also believed that black fungal infection inter alia may be also caused due to liquid oxygen (Medical oxygen) and as large quantity of it is inhaled by Covid patient for oxygenation, the production of liquid oxygen if not carried out in clean environment, the fungi may find its way in the liquid oxygen and finds is entry in the lungs of patients, which may be noticed after cure from COVID. Moreover, when in hospital, it is expected that care in oxygen should be such so as to insulate the patient from any such prospective infection and still further, the moment early symptoms are detected, rather than seeking discharge of patient after purported treatment and cure of patient, the treatment of black fungus should also be unveiled.

The responsibility of Government i.e state and the hospitals cannot be undermines, in case of any negligence. It is also to be understood that in the face of high number of COVID Patients and lack of oxygen in various hospitals. Many patients had unfortunately died. The level of care from Doctor who possibly worked under stress and for long hour also could not be immaculate.  Still, there cannot be any compromise with life of a person and inadequacies and negligence has to be accordingly dealt with.   

PLAUSIBLE TREATMENT

It is being said that the “overall mortality rate is around 50 per cent", but early identification and treatment can lead to a better outcome.

Early clinical suspicion on symptoms such as nose obstruction, swelling in the eye or cheeks, and black dry crusts in the nose should immediately prompt the conduct of a biopsy in the OPD and start of the antifungal therapy as early as possible.

The firm, Bharat Serums and Vaccines Limited, became the first company in India to receive the approval from Drug Controller General of India (DCGI) to use anti-fungal medication — Liposomal Amphotericin B or LAmB — as a medical intervention in patients of Mucor mycosis. According to Bharat Serums and Vaccines (BSV), the patients suffering from black fungus from progressing the stage of surgery. BSV is indigenously developing and manufacturing the formulation of Amphotericin B including Liposomal Amphotericin B and Lipid Complex Amphotericin B - the anti-fungal medications that have been recommended for use in life-threatening fungal infections such as Mucor mycosis. BSV, incidentally is the first Indian company having obtained regulatory approval of Liposomal Amphotericin B.

LAW

The Disaster Management Act 2005 is currently in place and there is prescription to deal with the issue in hand. However, any wrong in the above context, if attributable on State could be dealt with under Article 226 of Constitution of India and by way of a writ petition. If State is found wanting, it may not only be censured by the High Courts, but necessary directions including payment of damages to the victims and their family could be passed. I may hasten to add, though, that the issue of damages shall, generally, be the domain of civil law, but writ courts, still, has the authority to pass comprehensive orders in apt cases, even in writ jurisdiction i.e extra-ordinary jurisdiction. Conversely, in law of torts, if wrong is attributable either on state or any private parties like private hospitals a civil suit for damages owing to negligence attributable against any of them or against them jointly and severally could be field and necessary orders could be passed.

Yet another aspect is negligence under Consumer Protection Act 2019. If negligence is found palpable against a hospital or Doctor or doctors, they will be amenable to the trap of Consumer Protection Act 2019.

It may be noted that the law of damages and negligence has to go a long way in Indian context and unlike common law, the finding out of liability index and granting of adequate damages is still far away. It is generally believed that a grave crime,  (wrong, even if seen from the perspective of law of torts) relating to Bhopal Gas Tragedy emanating from Methyl Isocynate (MIC) could not adequately compensate the peoples who have lost their life and many injured. In the case of COVID also, the situation in the country remained heart writhing and precious lives are lost. The moot point is whether they can be compensated?      

It shall be of significance in this context to refer to some judicial precedents:

(1) Rylands v Fletcher (1868) LR 3 HL 330 The law of “strict liability” was propounded in the case and law of torts was conceptualized, then and it was held that any wrongs committed by any agency even if evidence is not forthcoming, it will be construed as strict liability against the person. It was propounded in the backdrop that contractor had left a dugged mine unsealed when constructing a reservoir and it was later found that this was attributable on the contractor and he cannot escape from the liability.    The House of Lords affirmed their decision of courts of exchequer chamber and  the contractor was held guilty.

(2)    MC Mehta vs Union of India & Ors                   1987 SCR (1) 819; AIR 1987 965 Supreme Court

In the backdrop of Bhopal Gas Tragedy the case related to leakage of oleum gas from Shriram Food and Fertilisers Ltd. complex at Delhi. The chaos was resulted in Delhi. At that time One person died in the incident and few were hospitalized. The case laid down the principle of absolute liability and it was held that of any action or omission could be attributable on a defaulting party, the pleas such as Act of God or adopting reasonable caution  shall not be available to the perpetrator. The principles of Strict Liability enunciated in 1868 was thus amplified with a doctrine of absolute liability”.

The article 21 of Constitution of India ordains that everyone is entitled to “Right to Life” and that mean the life itself presupposes life with dignity. If contaminated oxygen is allowed to be produced that is the first stage of negligence, in fact, it is akin to criminal negligence. The oxygen when infused from the outlet of hospital and through pipeline to a patient, the same should also be checked of quality parameter. In Covid times such were the need that probably the hospital authorities might not even had time to quality check, as patients were dying. The responsibility ought to be fixed as a patient who reposes faith in a hospital or system cannot be treated so shabbily.

The effect of black fungus, particularly, if not detected early could be fatal as narrated. As regards law, if the instrumentality of state is found negligent and death or deformities is caused due to the negligence and that  had a direct bearing on the cause of illness, removal of eye or death, then instrumentality of state could not claim indifference and should be held liable. The production of medical oxygen and availability of it if compromised and administering that contaminated oxygen, if causes injury or death, the by virtue of a writ petition under Article 226 of Constitution of India , state could be sued and under the extra-ordinary jurisdiction a command could be issued to the state. Generally, no damages are contemplated in writ jurisdiction, but in apt cases, the high court could direct the state to pay compensation for the negligence. Similarly, a civil suit seeking damages/compensation could be filed against state for losses to body and life.

The hospital, if found guilty of administering contaminated oxygen in this context could also be sued for medical negligence before the Consumer Commission. The negligence shall be akin to grossest deficiency in service and the case shall be made out under the Consumer Protection Act 2019.

REMARK

It is indeed painful that in a developing country like India, as is evident in this Covid wave as well that a large number of people have breathed their last, though, life was bubbling in them, in some cases the death was the direct cause of lack of oxygen availability. These are the basic necessity and the citizen remained deprived of the life and right to life so to say owing to deficient action or inadequate action or omission on the part of  state. The life lost is irreversible and by no means the agony could be neutralized. The position and development of a nation shall be of no consequence, if basic necessity could not be afforded to a citizen. The Government of the days at both Centre and State levels whichever political spectrum they belong to shall have to share responsibility to the catastrophe which appears to have been accentuated due to lack of planning and action. There has been vast changes of late and government appears to have risen from slumber. The prompt action on the part of the government even a son today is of utmost necessity. I am sanguine that our country shall again rise to the occasion and better future awaits us.

                              -----------   

                             
 

REHABILITATION OR DISSOLUTION OF COMPANY- MAINTAINABILTY THRESHOLD OF SECTION 7 & 9 OF PETITION UNDER INSOLVENCY & BANKRUPTCY CODE 2016 : ANIL K KHAWARE

 

 

REHABILITATION OR DISSOLUTION OF COMPANY- MAINTAINABILTY THRESHOLD OF Section 7 & 9 OF PETITION UNDER Insolvency & Bankruptcy Code 2016 : ANIL K KHAWARE

 

Whether the consent of the Central Government as provided under Section 16 G(1) (c)  of the Tea Act 1953 is mandatory?

                             

                                                                      Anil K Khaware

                                                                      Advocate

By virtue of the present article, the landscape of section 7 & 9 of I & B Code 2016 is sought to be analysed. Whether any fetter could be attached to the power of National Company Law Tribunal (NCLT) under I & B Code 2016 as regards the conflict with any other law, more particularly, as is the case, here, the provisions of Tea Act 1953.The I & B Code 2016 was enacted with a view to ensure efficacy and expediency of the issues relating to bankruptcy of company and mode and manner of entertaining the petition of bankruptcy and for taking steps of rehabilitation of company or for liquidation, if no rehabilitation is probable.                                                                     

Thus, the objective of the Insolvency and Bankruptcy Code, 2015 ( In short “code or “IBC””) is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons in a time­ bound manner with a view to maximize the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the priority of payment of government dues and to establish an Insolvency and Bankruptcy Fund, and matters connected therewith or incidental thereto. Without any pale of doubt, a legal framework, to be effective, shall entail timely resolution of Insolvency and Bankruptcy issues and provide succor to the development of credit markets and encourage entrepreneurship. In essence, this will improve Ease of Doing Business, and facilitate more investments –a sine qua non of higher economic growth and development.

 

As always, even in National Company Law Tribunal (In short “NCLT”), the first barrier to a petition is to pass the threshold of maintainability. In IBC Code, after its codification and in view of its overriding effect, plethora of objection to maintainability of case for initiation of resolution process are routinely raised. In the present article, an interesting aspect is being deliberated and that relates to applicability of Tea Act 1953 relating to affairs of a tea company vis a vis applicability of IBC 2016.  Whether Tea Act 1953 ( In short “Act”) shall have precedence over IBC 2016 and whether any process initiated under section 7 & 9 of IBC shall not be maintainable? The bar of maintainability has thus to cross the threshold in the discussion delineated below, in the light of the judgments rendered by the hon’ble Supreme Court.  

 

The issue in hand is a proceeding challenging the Central Government Notification dated 28.01.2016, authorizing the Tea Board to take over the management and to take control of the Seven (7) “Tea Estates” of the ­corporate debtor. The hon’ble High Court of Calcutta had made an interim arrangement for the management of Seven (7) Tea Estates, while the High Court has directed/permitted the corporate debtor to run the gardens in a prudent business­like manner and to pay both the current and arrear dues of the workers, with a view to ameliorate the conditions of the workers as also that of the Tea Estates.

The broad canvas of the matter can be appreciated in the light of the discerning analysis of hon’ble Supreme Court in a case captioned as Duncans Industries Ltd Vs A. J. Agrochem (CIVIL APPEAL NO. 5120 OF 2019) had dealt with Section 16G(1)(c) of the Tea Act 1953. The operational creditor had preferred insolvency proceedings before NCLT against the corporate debtor. It was contended then, that once the management of tea unit has been taken over by the Central Government, the proceedings for winding up or appointment of receiver cannot be initiated without the consent of the Central Government. The corporate debtor, thus, maintained that if the prior approval of the Central Government has not been taken, as mandated under Section 16G of the Tea Act, 1953 the insolvency proceeding under Section 9 of the IBC shall not be maintainable. Pertinently, the NCLT Kolkata had accepted the objection of corporate debtor and held that in view of the statutory provisions under Section 16G of the Tea Act 1953 and as the prior consent of the Central Government had not been obtained for initiating insolvency proceedings , thus, the proceedings under Section 9 of the IBC shall not be maintainable. The NCLAT (National Company Law Appellate Tribunal) , Calcutta, had reversed that in an appeal preferred by Operational Creditor and it was held by the NCLAT that the consent of the Central Government in terms of Section 16G of the Tea Act 1953 shall not be necessary and insolvency proceedings under the Code can proceed without demur. The ­corporate debtor had impugned the judgment of NCLAT in a statutory appeal, assailing the judgment of NCLAT before the hon’ble Supreme Court.

 

The Corporate debtor’s contentions before the hon’ble Supreme Court may be culled out as under:

(i)       The Tea Act 1953, being is a “Special Act” for the purpose of providing           control by the Union of India of the Tea Industry and Section 16 D (1)  of the Tea Act, 1953 provides for taking over the tea unit and the     tea undertaking, inter alia if the Central Government is of the opinion that the tea unit is being managed in a manner highly detrimental to the  tea industry or to public interest and Section 16 D(4) provides that the Central Government shall take such steps as may be necessary for the  purpose of efficiently managing the business of the undertaking.

(ii)      Insolvency process is also meant to culminate in liquidation, if there is     no revival. It is submitted that since Section 16G of Tea Act permits for   the Central Government to take over the management of a tea estate which is not run properly, the prior permission under Section 16 G  shall  be applicable to such an estate, the management of which has been taken over by the Government. Sectuion 16 E  refers to the power of the  Central Government to restart the tea undertaking if it is found necessary in the interest of the general public.

(iii)     The “winding up” process under the Companies Act , 1956 includes the insolvency proceedings under the IBC. It is submitted that, therefore,   initiation of any proceedings for winding up or liquidation, by way of  insolvency proceedings under the IBC shall be maintainable only after the consent of the Central Government is obtained, as required under Section 16 G  of the Tea Act 1953.

(iv)     The Tea Act , 1953 apply to tea units, the management of which have been taken over for the purpose of stimulating the production and  manufacturing of tea and the control by the Tea Board of the manufacturing of tea from the tea units is in public interest as the latter  was a welfare legislation. The Tea Act 1953 is a Central Act  and applies only to companies which are having tea gardens or tea units. If the provisions of the Tea Act are applicable, then on a conjoint reading of Section 16 G , Section 16 J  and Section 16 M of the Tea Act, an  application under Section 7 or Section 9 of the IBC shall not be maintainable without the consent of the Central Government.

(v)      The reliance by NCLAT on Section 238 of the IBC 2016  to hold that the   IBC will have an overriding effect over the Tea Act 1953 is incorrect as  Section 238 of the IBC 2016 may only be applicable in the event of any   conflict between the two legislations. There is no such conflict between  the Tea Act 1953 and the IBC 2016 and the provisions of the IBC and  the Tea Act  are not inconsistent with each other. It is contended by the corporate debtor that whereas the provisions of Section 7  or Section 9  of  the code may not require the consent of the Central Government to    initiate such proceedings, but when the management of the tea gardens   have been taken over by the Central Government under the Tea Act  1953, then the provisions of the Tea Act 1953 shall have to apply and the consent of the Central Government shall be necessary. In the face of   above, the process of insolvency resolution under the IBC cannot be    permitted.

(vi)     Both IBC 2016 and the Tea Act  1953 are welfare legislations. Whereas    IBC is a general Act for corporate resolution process for all corporates,but the Tea Act  protects corporates which have tea gardens. The Tea Act 1953 being special legislation enacted by the Parliament for protecting the Tea Industries and Tea Gardens and thus provides for taking over the management by the Tea Board or the Central Government or any person authorized by the Central Government for    running the tea gardens or protection of the workers. The provisions, thus, should be construed harmoniously.

(vii)    The hon’ble Supreme Court in a matter captioned as Macquarie Bank Ltd Vs Shilpi Cable Technologies Ltd (2018) 2 SCC 674 as well as in K. Kishan Vs M/s Vijay Nirman Company Pvt Ltd  (2018) 17 SCC 662 had dealt with non­ applicability of Section 238 of the IBC 2016 and since  there is no inconsistency between the Tea Act  1953 and the IBC 2016 , thus, there can be no occasion to apply Section 238 of the IBC to give  overriding effect.

Contentions of Operational Creditor

(i)       The IBC is a complete Code in itself and it has consolidated and amended law relating to re-­ organization and insolvency resolution and for matters connected therewith or incidental thereto. The IBC 2016 has  not prescribed any pre­ requisite of obtaining consent from the Central Government for initiating corporate insolvency resolution process like   the Tea Act,  1953 which is an earlier Act enacted in 1953 and hence, such a pre­requisite of obtaining consent cannot be imported and/or read   into the Code when the  Code does not specifically provide for it.

(ii)      Alleged requirement of obtaining consent of the Central Government   prior to initiating the corporate insolvency resolution process would be   completely contrary to the over­riding nature of the Code, and of the clear legislative intent of keeping the arms of the Government away from the  resolution process and of not delaying the process of resolution. Moreover, bare perusal of Chapter IIIA of the Tea Act 1953 reveals that   the object of restarting/revival of the tea company writ large in the scheme of the Tea Act . The said object of restarting/revival is borne out from Section 16 B (2) Section 16 E (1) (b)  , Section 16 I(1)  and Section 16 K  of   the Tea Act. It is submitted that restarting/revival of the company is also    the object of the IBC, as is clear from the Preamble of the IBC and also as    observed by the hon’ble Supreme Court in the case of Swiss Ribbons Pvt Ltd Vs Union of India  [AIR 2019 SC 739 : (2019) 4 SCC 17]. Hence, in the   event of any conflict between the two legislations, the provisions of the  IBC would prevail by virtue of Section 238 of the IBC.

(iii)  In the present case Section 16 G of the Tea Act does not have any    applicability, as the management has not been “taken over” by the Central Government or the Tea Board. The notification dated 28.01.2016 was issued under Section 16 E (1)  of the Tea Act. It is submitted that, according to the sub ­section (2) thereof, the provisions of Section 16  G shall apply to a notified order made under Section 16 E (1). Section 16  G (1) shall be applicable when the management of a tea undertaking or  tea unit owned by a company has been taken over by the Tea Board. Thus, Section 16 G (1)  of the Tea Act does not automatically get triggered  with the issuance of a notification under Section 16 E (1) of the Tea Act,but becomes applicable once the management of a tea undertaking or tea unit owned by a company has been taken over by the Tea Board.

(iv)     In the case in hand, pursuant to the interim order passed by the Division      Bench of the High Court of Calcutta in which the notification dated 28.01.2016 is challenged by the corporate debtor, the ­corporate debtor continues to be in management and control of the tea units/gardens and therefore, application of Section 16 E(1)  is no longer prevalent and consequently Section 16 G  of the Tea Act shall not be applicable at all.

(v)  Section 16G(1)(c) of the Tea Act is applicable to a proceeding for “winding      up” and not to proceeding for initiation of “corporate insolvency   resolution process”, as the both are not one and the same proceedings. The winding up of a company is provided for, and governed by The Companies Act, 1956 whereas, on the other hand, initiation of corporate insolvency resolution process is provided for, and governed by,  the Insolvency and Bankruptcy Code, 2016 and both these processes are  distinct from one another and not synonymous with one another. The power of the Parliament to make any law relating to winding up may be  traced to Entry nos. 33 and 34 of the Union List of the Seventh Schedule of the Constitution, on the other hand, the power of the Parliament to make any law relating to insolvency can be traced to Entry no. 9 of the Concurrent List of the Seventh Schedule of the Constitution and therefore, winding up and insolvency proceedings are not one and the same as they have been mentioned under two separate entries in two    separate lists in the Seventh Schedule.

(vi) Section 16 G (1) (c)   of the Tea Act 1953, which mandates that no winding    up proceeding shall lie in any court against a company which has been  taken over by the Tea Board without the consent of the Central Government, does not and cannot be interpreted to mean that the said   section applies to any proceeding for initiation of corporate insolvency resolution process against a company which has been taken over by the Tea Board.

(vii)    The NCLAT has rightly held that Section 16 G (1) (c)  relates to winding up      and, on the other hand, Section 9 of the IBC is not a proceeding for  winding up, but for initiation of “corporate insolvency resolution process” to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from corporate debt by liquidation and reference was made to Innovative Industries Ltd Vs ICICI Bank  [AIR 2017 SC 4084 at paras 16, 51 and 56 : (2018) 1 SCC  407], Swiss Ribbons Pvt. Ltd. [AIR 2019 SC 739 at paras 10 to 12 :   (2019) 4 SCC 17] and a decision in PCIT v. Monnet Ispat and Energy Ltd. (2018) 18 SCC 786.

The hon’ble Supreme Court has noted that the IBC is a complete Code in itself. In the case of Swiss Ribbons Pvt. Ltd. (supra) and in Innoventive Industries Ltd. (supra), in paragraphs 25 and 26, it is held as under:  

‘Statement of Objects and Reasons— There is no single law in India  that deals with insolvency and bankruptcy. Provisions relating to  Insolvency and Bankruptcy for companies can be found in the Sick Industrial Companies ( Spewcial Provisions) Act  1985, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Ac , 2002 and the Companies Act , 2013. These statutes provide for creation of multiple fora such as Board of Industrial and Financial Reconstruction (BIFR), Debts Recovery Tribunal (DRT) and   National Company Law Tribunal (NCLT) and their respective Appellate  Tribunals. Liquidation of companies is handled by the High Courts. Individual bankruptcy and insolvency is dealt with under the Presidency Town Insolvency act , 1909, and the Provincial Insolvency Act , 1920   and is dealt with by the courts. The existing framework for insolvency and bankruptcy is inadequate, ineffective and results in undue delays in   resolution, therefore, the proposed legislation.

The Code seeks to provide for designating NCLT and DRT as the adjudicating authorities for corporate persons and firms and individuals, respectively, for resolution of insolvency, liquidation and bankruptcy. The Code separates commercial aspects of insolvency and bankruptcy proceedings from judicial aspects. The Code also seeks to provide for   establishment of the Insolvency and Bankruptcy Board of India (Board) for regulation of insolvency professionals, insolvency professional  agencies and information utilities. Till the Board is established, the   Central Government shall exercise all powers of the Board or designate any financial sector regulator to exercise the powers and functions of the Board. Insolvency professionals will assist in completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged in the Code. Information Utilities would collect, collate, authenticate and disseminate financial information to facilitate such proceedings. The  Code also proposes to establish a fund to be called the Insolvency and Bankruptcy Fund of India for the purposes specified in the Code.

The Code seeks to provide for amendments in the Indian Partenrship Act  1932, the Central Excise Act , 1944, Customs Act,  1962, the Income Tax Act 1961, the Recovery of Debts Due to Banks and Financial Institutions  Act, 1993, the Finance Act, 1994, the Securitization and Reconstructionof Financial Assets and Enforcement of Security Interest Act , 2002,  the Sick Industrial Companies (Special Provisions) Repeal Act,  2003, the Payment and Settlement Systems Act,  2007, the Limited Liability Partenership Act , 2008, and the Companies Act 2013.

As is discernible, the Preamble gives an insight into what is sought to be  achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless,  such reorganization is effected in a time­ bound manner, the value of the assets of such persons will deplete. Therefore, maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which,  in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all  stakeholders are looked after as the corporate debtor itself becomes a   beneficiary of the resolution scheme —workers are paid, the creditors in  the long run will be repaid in full, and shareholders/investors are able to  \maximize their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to  support the development of credit markets. Since, more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and  development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only  availed of as a last resort, if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation,  the liquidator can sell the business of the corporate debtor as a going concern (Ref: S Arcelor Mittal (India) P Ltd Vs Satish Kumar Gupta  (2019) 2 SCC 1].

It can thus be seen that the primary focus of the legislation is to ensure  revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters/those who are in   management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium   imposed by Section 14  is in the interest of the corporate debtor itself,   thereby, preserving the assets of the corporate debtor during the   resolution process. The timelines within which the resolution process is  to take place again protects the corporate debtor's assets from further dilution, and also protects all its creditors and workers by seeing that the  resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the  corporate debtor to achieve all these ends. The Section 16 G (1) (c) refers to the proceeding for winding up of such company or for the appointment of receiver in respect thereof. Therefore, as such, the proceedings under Section 9 of the IBC shall not be limited and/or restricted to winding up and/or appointment of receiver only. The winding up/liquidation of the company shall be the last resort and only on an eventuality, when the corporate insolvency resolution process fails. As observed by this Court  in Swiss Ribbons Pvt. Ltd. (supra), referred to hereinabove, the primary focus of the legislation, while enacting the IBC is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor  from its own management and from a corporate debt by liquidation and such corporate insolvency resolution process is to be completed in a time­ bound manner. Therefore, the entire “corporate insolvency resolutionprocess” as such cannot be equated with “winding up proceedings”.   Therefore, considering Section 238 of the IBC, which is a subsequent Act to the Tea Act  1953, shall be applicable and the provisions of the IBC   shall have an over­riding effect over the Tea Act , 1953. Any other view  would frustrate the object and purpose of the IBC. If the submission on  behalf of the appellant that before initiation of proceedings under Section 9 of the IBC, the consent of the Central Government as provided under Section 16 G (1) (c)  of the Tea Act is to be obtained, in that case, the main object and purpose of the IBC, namely, to complete the “corporate insolvency resolution process” in a time­ bound manner, shall be frustrated.

The hon’ble Supreme Court has held thus that the provisions of the IBC would have an over­riding effect over the Tea Act  1953 and that no prior consent of the Central Government before initiation of the proceedings  under Section 7  or Section 9 of the IBC would be required and  even without such consent of the Central Government, the insolvency  proceedings under Section 7  or Section 9 of the IBC initiated by the operational creditor shall be maintainable.

                                           -------------