NEW DELHI: In a significant decision, Supreme Court on Monday ruled that maintenance payable to the estranged wife and children would get priority over claims of secured, financial and operational creditors over the assets of a husband’s firm facing proceedings under the Insolvency and Bankruptcy Code.
A bench of Justices Surya Kant and Ujjal Bhuyan refused to buy the excuse of the husband that he was not earning well to pay the huge arrears of interim maintenance fixed by SC for his estranged wife and children and that his diamond factory was running in loss. “We direct that the charge of arrears of maintenance, payable to respondents, shall have preferential right over assets of the appellant, over and above the rights of a secured creditor or similar right holders under the insolvency framework,” it said.
The bench further ordered, “Wherever such proceedings are pending, that forum is directed to ensure that the arrears of maintenance are released to the respondents forthwith. No objection of any secured creditor, operational creditor or any other claim shall be entertained opposing the entitlement of the respondents for maintenance.”
The bench justified its order by giving priority to maintenance over claims of creditors by saying, “Right to maintenance is commensurate with right to sustenance. This right is a subset of right to dignity and a dignified life, which in turn flows from Art 21 of Constitution.
“In a way, the right to maintenance being equivalent to a fundamental right will be superior to and have overriding effect than the statutory rights afforded to financial creditors, secured creditors, operational creditors or any other such claimants encompassed within the waterfall mechanism under the Insolvency and Bankruptcy Code, 2016, or similar such laws.”
SC said if the husband failed to pay arrears of maintenance to the wife, the family court “shall take coercive action against the husband and, if so required, may auction immovable assets for purpose of recovery of arrears of maintenance”.
In Nov 2022, Supreme Court had stayed a Gujarat HC order which had directed maintenance of Rs 1 lakh to the wife and Rs 50,000 each to the children and fixed the interim maintenance at Rs 50,000 to the wife and Rs 25,000 each to two children every month. The bench confirmed its interim order.
The wife had pointed out to SC that though the husband was paying monthly instalment of Rs 3.7 lakh for 10 years against a Rs 5 crore loan he had taken to purchase a house, he misled SC by showing his annual income as Rs 2.5 lakh.