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The Supreme Court through its judgement dated 27.10.2025 in the matter of Novenco Building and Industry A/S v Xero Energy Engineering Solutions Private Limited & Another1 held that when deciding a commercial suit involving an application for urgent interim relief in intellectual property infringement cases, plaintiff's perspective must be duly considered, and Courts may dispense with the mandatory pre-institution mediation requirement under Section 12A the Commercial Courts Act, 2015.
Referring to Section 43 of the Companies Act, the Supreme Court observed that PS forms part of a company's share capital, and the amounts paid thereon are not loans. Since the company had neither made profits nor created reserves or fresh share proceeds for redemption, the PS had not become due or payable, therefore, no default had occurred.
The Supreme Court clarified that preferential shareholders, who have not redeemed their shares shall remain investors and not creditors. It was further held that for a Section 7 application to be maintainable under the IBC, there must exist a financial debt disbursed against the time value of money, which was absent in the case of PS.
Footnote
1 Special Leave Petition (C) No. 2753 of 2025.
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