SC: Maintenance to wife will get priority over claim of creditors

SC: Maintenance to wife will get priority over claim of creditors

Dhananjay.Mahapatra@timesofindia.com 11.12.2024

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 the SC for his estranged wife and children and that his diamond factory was run ning in loss. 

“We direct that the charge of arrears of maintenance, payable to the respondents, shall have preferential right over the assets of the appellant, over and above the rights of a secured creditor or similar right holders under the insolvency framework,” it said. It 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 the right to sustenance. This right is a subset of the right to dignity and a dignified life, which in turn flows from Article 21 of the Constitution of India. “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.”

The 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 the immovable assets for the purpose of recovery of arrears of maintenance”