EPC Constructions India Ltd v. Matix Fertilizers and Chemicals Ltd 2025 INSC 1259 - IBC - Preferential Shareholders - Creditors
Insolvency and Bankruptcy Code, 2016 - Section 7 - Preference shareholders do not enjoy the status of the creditors of the company and do not fulfil the definition of a financial creditor for the purpose of Section 7 of the IBC. (Para 36) Preference shares are part of the company’s share capital and the amounts paid up on them are not loans. (Para 20)
Insolvency and Bankruptcy Code, 2016 - Section 7- to maintain a proceeding under Section 7, an application has to be filed by a financial creditor and the application has to be filed when a default has occurred- For a default “to kick in” there should be non-payment of debt, when whole or any part of the debt has become due and payable and is not paid. (Para 34)
Case Info
- Case name: EPC Constructions India Limited Through Its Liquidator – Abhijit Guhathakurta v. M/s Matix Fertilizers and Chemicals Limited.
- Neutral citation: 2025 INSC 1259.
- Coram: K.V. Viswanathan, J. and J.B. Pardiwala, J. (both sign the judgment).
- Judgment date: 28 October 2025.
Caselaws and Citations
- Innoventive Industries Ltd v. ICICI Bank — on default under Section 7 IBC.
- Radha Exports (India) Pvt Ltd v. K.P. Jayaram — share subscription amounts are not “financial debt.”
- Anuj Jain, IRP for Jaypee Infratech Ltd v. Axis Bank Ltd — elements of “financial debt” under Section 5(8) IBC.
- Global Credit Capital Ltd v. Sach Marketing Pvt Ltd — interpretation of “means and includes” in Section 5(8) and commercial effect of borrowing.
- Pioneer Urban Land and Infrastructure Ltd v. Union of India — expansive reading of “commercial effect of borrowing” (relied upon by appellant but found inapposite).
- Lalchand Surana v. Hyderabad Vanaspathy Ltd (AP High Court) — unredeemed preference shareholders do not become creditors.
- CIT v. Rathi Graphics Technologies Ltd (Delhi High Court) — conversion of interest into shares extinguishes interest liability.
- State Bank of India v. Commissioner of Income Tax, Ernakulam — book entries not determinative of true nature.
- Union of India v. Association of Unified Telecom Service Providers of India — accounting standards cannot override contractual/statutory definitions.
Statutes/Laws Referred
- Insolvency and Bankruptcy Code, 2016: Sections 3(11) (debt), 3(12) (default), 3(33) (transaction), 3(37) (definitions via Companies Act), 5(7) (financial creditor), 5(8) (financial debt), 7 (initiation by financial creditor), 33(5) (permission during liquidation).
- Companies Act, 2013: Sections 2(84) (share), 43 (kinds of share capital), 55 (issue and redemption of preference shares), 123 (dividends), and references to AS-32 context (accounting treatment not determinative).
#SupremeCourt holds that Preference shareholders do not fulfil the definition of a financial creditor for the purpose of Section 7 of the IBC. https://t.co/DU9hAA2BBr pic.twitter.com/Y7OcRXgQRE
— CiteCase 🇮🇳 (@CiteCase) October 28, 2025
