Note: The doctrine of harmonious construction reconciles conflicts between statutes by interpreting them in a manner that ensures their coherent operation, avoiding the nullification of any statute.

Facts:

• PTC India Financial Services Limited (PIFSL) (Appellant) was a Non- Banking Finance Company (NBFC) investing in power and energy sector projects in India a company registered under the Companies Act, 2013.
• NSL Nagapatnam Power and Infratech Limited (Borrower) was a subsidiary of Mandava Holdings Private Limited (MHPL), which pledged 31,80,678 shares of NSL Energy Ventures Private Limited (NEVPL) to secure a Rs. 125 crore loan from PIFSL.
• Venkateswarlu Kari (Respondent) was the Interim Resolution Professional (IRP) for the Borrower appointed by NCLT.
• Appellant advanced a loan of Rs. 125 crores to the Borrower, secured by a pledge of shares from MHPL.
• NEVPL approached the NCLT for insolvency proceedings under Section 10 of the IBC, which was granted, and an IRP was appointed.
• The Borrower defaulted, leading PIFSL to invoke the pledge and file an application under the Insolvency and Bankruptcy Code (IBC).
• The case was initially filed with the National Company Law Tribunal (NCLT), which allowed PIFSL to withdraw its application under Section 7 of the IBC and file proof of claim with the IRP.
• The IRP rejected both PIFSL's and MHPL's claims due to valuation disputes of the pledged shares.
• PIFSL and MHPL filed applications with the NCLT against the rejection of their claims. On 6th July 2018, the NCLT accepted MHPL’s claim and directed the IRP to value the pledged shares as of 16th January 2018.
• PIFSL appealed the NCLT's order to the NCLAT, which dismissed the appeal and upheld the decision of the NCLT.
• Hence, an appeal was filed before the Supreme Court.
  
  

Background/ Procedural Posture:

NCLT’s Holding

• MHPL claimed to have stepped into PIFSL's shoes as a creditor for the value of the pledged shares, while PIFSL submitted a financial claim of Rs. 169,19,17,637/-.
• Both claims were initially not crystallised by the IRP due to valuation issues.
• PIFSL and MHPL filed separate applications against the rejections.
• The NCLT disposed of these applications, accepting MHPL’s claim and directing the IRP to appoint an independent valuer to assess the fair market value of the pledged shares as of 16th January 2018.
  

NCLAT’s Holding

• PIFSL challenged the NCLT's order before the National Company Law Appellate Tribunal (NCLAT).
• The NCLAT dismissed the appeals, holding that PIFSL had become the 100% owner of the pledged shares upon invocation and could realise its dues through their sale and transfer.
• The NCLAT concluded that once PIFSL had exercised the right to become the owner of the shares, it could not use Section 176 of the Contract Act to reclaim the debt.
• The IRP could not consider Section 176 of the Contract Act for collating PIFSL's financial claim under Section 18 of the IBC.
• The suit reached the Supreme Court due to disputes over the valuation of pledged shares and the legal status of beneficial ownership and creditor rights under the IBC.
  

Main Issue:

Does the Depositories Act, 1996, along with Regulation 58 of the SEBI (Depositories and Participants) Regulations, 1996, take precedence over the provisions for pledge contracts under Indian contract law? (Paragraph 1)