Other-Bar of jurisdiction [Sec. 63 & 231]

Whether attachment order passed prior to initiation of CIRP of Award Debtor shall remain unaffected to ensure the realization of the decretal dues or arbitral award? – Candor Gurgaon Two Developers & Projects Pvt. Ltd. Vs. Srei Infrastructure Finance Ltd. – Calcutta High Court

Hon’ble Calcutta High Court held that:
(i) Following the procedure as laid down under the IBC, 2016, once Resolution Applicant submits resolution plan and it is approved by the committee of creditors, the Adjudicating Authority is to take the call and once such plan is accepted the moratorium under Section 14 of the Code ceased to operate. But that does not permit the proceeding including one in the execution to dance back to life. The provision as laid down under Section 31 of the Code of 2016 takes over.
(ii) The execution proceeding appears to be not maintainable for the simple reason that if by way of execution the claim is satisfied and thereby the quantum of money is realized and given to the Corporate Creditor (in this case the Award Holder) it would amount to preferential transaction, which is not permitted under Section 43 of the IBC, 2016.
(iii) The provision of Section 231 of the IBC, 2016 is eloquent about ouster of jurisdiction of Civil Code in respect of matter in which the Adjudicating Authority or the Board is empowered by or under the Code of 2016. The order of attachment in favour of the Award Holder, in view of Section 238 of the IBC, 2016 as a natural corollary shall be void.

Whether attachment order passed prior to initiation of CIRP of Award Debtor shall remain unaffected to ensure the realization of the decretal dues or arbitral award? – Candor Gurgaon Two Developers & Projects Pvt. Ltd. Vs. Srei Infrastructure Finance Ltd. – Calcutta High Court Read Post »

High Court has no territorial jurisdiction to entertain prayers with respect to debt assignment deed which is a subject matter of proceedings before NCLT/NCLAT | Jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to insolvency resolution has to be determined by NCLT – Tejinder Pal Setia v. Kone Elevators India Pvt. Ltd. and Anr. – Delhi High Court

Hon’ble Delhi High Court held that:
(i) As such, this Court has no territorial jurisdiction to entertain the prayers of the plaintiff with respect to the assignment deed dated 03.02.2023, which is the fulcrum of the present suit.
(ii) Sections 63 and 231 IBC create a bar on the jurisdiction of the civil court in respect of any matter in which the NCLT and NCLAT has jurisdiction under the IBC and the adjudicating authority under the Code is competent to pass any order.
(iii) The jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT.

High Court has no territorial jurisdiction to entertain prayers with respect to debt assignment deed which is a subject matter of proceedings before NCLT/NCLAT | Jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to insolvency resolution has to be determined by NCLT – Tejinder Pal Setia v. Kone Elevators India Pvt. Ltd. and Anr. – Delhi High Court Read Post »

Moratorium u/s 14 of IBC does not impose any restriction on charging of any interest/Penal Interest during the CIRP period and it is not in the domain of the IBC, 2016 to decide any contractual interest liability – Mr. Arun Kumar Vs. Ms. Sripriya Kumar – NCLAT Chennai

In this important judgment, NCLAT held that:
(i) A simple and purposive reading of this Section 14 does not specify any ‘interest waiver’ during the period of moratorium.
(ii) The role of the RP under IBC, 2016 is only to collate the Claims and that he does not have any adjudicatory powers. The Claim of the Creditors does not stop on initiation of CIRP.
(iii) It is not in the domain of the IBC, 2016, even to decide any contractual interest liability. Section 14 does not impose any restriction on charging of any interest till the amount is paid. It is the commercial wisdom of the CoC with respect to the quantum of amounts to be paid to the Creditors within the Provisions of the Code.
(iv) There is no provision in the Code that enables the Corporate Debtor or a Guarantor to seek remission in the interest claims from the Financial Creditors solely on the basis that there is a Resolution Plan.
(v) Having not challenged the decision of the CoC in not qualifying him as a Prospective Resolution Applicant, the Promotor cannot now at the belated stage after the approval of the Plan by the Adjudicating Authority states that he is interested in offering a viable solution.
(vi)The Promotor being an MSME is given an opportunity under the Provisions of the Code to present a Plan. At the same time, the Code does not contemplate any kind of preference to be given to an MSME Promotor by the CoC while accepting a Resolution Plan.

Moratorium u/s 14 of IBC does not impose any restriction on charging of any interest/Penal Interest during the CIRP period and it is not in the domain of the IBC, 2016 to decide any contractual interest liability – Mr. Arun Kumar Vs. Ms. Sripriya Kumar – NCLAT Chennai Read Post »

Whether a judgment creditor can withdraw decretal amount/money deposited by Corporate Debtor (judgment debtor) in a Trial Court during moratorium under Section 14 of IBC – Reliance Communication Ltd. Vs. Rajendra P. Bansal – Bombay High Court

Hon’ble High Court held that NCLT could never sit in appeal over the judgment/decree of a Civil Court. Such a judgment/decree can only be corrected in appeal and, therefore, the NCLT would not have jurisdiction to hear and decide the First Appeal. Section 231 creates a bar on the jurisdiction of a civil court only where the Adjudicating Authority (i.e., NCLT in this case) has the jurisdiction over a given issue. The moratorium that is imposed under Section 14 applies only to proceedings against the corporate debtor and only applies qua the assets and properties of the corporate debtor. If monies deposited in court or any other asset/property does not belong to the corporate debtor, the moratorium would not preclude/prevent a creditor from enforcing its rights against the monies/assets/properties.

Whether a judgment creditor can withdraw decretal amount/money deposited by Corporate Debtor (judgment debtor) in a Trial Court during moratorium under Section 14 of IBC – Reliance Communication Ltd. Vs. Rajendra P. Bansal – Bombay High Court Read Post »

Issue of claim any injunction before High Court during pendency of the Liquidation proceeding – Alliance Broadband Services Pvt. Ltd. Vs. Manthan Broadband Services Pvt. Ltd. – Calcutta High Court

In this case, The Liquidator has refused to recognize the petitioner as secured creditor or to allow the petitioner to sell the pledged shares towards the partial satisfaction of the claim of the petitioner against the respondent. Hon’ble High Court held that as per Section 238 of the IBC, 2016 is having override effect in any other law for the time being in force. In view of my prima facie findings that this Court cannot pass any interim order at this stage. This Court is of the view that the matter in issue in the suit can be more appropriately and effectively decided and adjudicated by the NCLT. In the present case, Section 430 of the Companies Act, 2013 itself provides an additional bar by stating that no injunction shall be granted by any civil court in respect of any action taken or to be taken in pursuance of any power conferred on the NCLT by the Companies Act, 2013.

Issue of claim any injunction before High Court during pendency of the Liquidation proceeding – Alliance Broadband Services Pvt. Ltd. Vs. Manthan Broadband Services Pvt. Ltd. – Calcutta High Court Read Post »

As Section 238 of the Code is having the override effect in any other law for the time being in force and thus the suit cannot be proceeded further as the claim made by the plaintiff in the instant suit is similar to the claim raised before the Liquidator – C. Surendra Trading & Investment Pvt. Ltd. Vs. Aditi E-Oils Pvt Ltd. & Anr. – Calcutta High Court

In the instant case, one of the financial creditors of the defendant had initiated proceeding under Section 7 of the Insolvency and Bankruptcy Code 2016 against the defendant and the Tribunal had admitted the application and appointed Liquidator. The Liquidator had made Public announcement calling upon all the stakeholders of the defendant company for submission of their respective claim, if any, and the plaintiff has lodged its claim before the Liquidator but the same was rejected on the ground of limitation but in appeal the Learned Tribunal had admitted the claim of the plaintiff and admittedly the same is to be adjudicated by the Liquidator.

As Section 238 of the Code is having the override effect in any other law for the time being in force and thus the suit cannot be proceeded further as the claim made by the plaintiff in the instant suit is similar to the claim raised before the Liquidator – C. Surendra Trading & Investment Pvt. Ltd. Vs. Aditi E-Oils Pvt Ltd. & Anr. – Calcutta High Court Read Post »

Unlike Section 14 of IBC (CIRP Moratorium), under Section 33(5) of IBC (Liquidation Moratorium) there is no absolute bar in a suit or legal proceedings continuing along with the Liquidation proceedings. Bar on the Civil Court u/s 63 and 231 of IBC would only be in respect of fresh suits – Elecon Engineering Company Ltd. Vs. Energo Engineering Projects Ltd. & Ors – Delhi High Court

Hon’ble High Court held that legislature in its wisdom has decided not to include ‘pending suits or legal proceedings’ within the scope of moratorium under Section 33(5) of the IBC. To be noted that even the proviso to Section 33(5) of the IBC only uses the word ‘instituted’, but does not use the word ‘pending’. Further, in terms of the said proviso, even a fresh suit or legal proceedings may be instituted by the Liquidator with the prior approval of the Adjudicating Authority. So, unlike Section 14 of the IBC, under Section 33(5) of the IBC there is no absolute bar in a suit or legal proceedings continuing along with the liquidation proceedings. It also held that a reading of Section 63 of the IBC would reveal that the bar on the Civil Court is only to ‘entertain any suit or proceeding in respect of any matter on which NCLT has the jurisdiction under this Code’. This would not apply to suits, which were already pending before the commencement of liquidation proceedings.

Unlike Section 14 of IBC (CIRP Moratorium), under Section 33(5) of IBC (Liquidation Moratorium) there is no absolute bar in a suit or legal proceedings continuing along with the Liquidation proceedings. Bar on the Civil Court u/s 63 and 231 of IBC would only be in respect of fresh suits – Elecon Engineering Company Ltd. Vs. Energo Engineering Projects Ltd. & Ors – Delhi High Court Read Post »

Whether the Adjudicating Authority has the powers to pass Orders under Section 60(5)(b) of the Code for recovery of amounts by the Corporate Debtor against its Sundry Debtors – Shri Ramachandra D. Choudhary RP of M/s. Oasis Tradelink Ltd. Vs. Bansal Trading Company – NCLAT New Delhi

The only point which is to be examined is whether the Adjudicating Authority was justified in dismissing the Applications preferred by the Liquidator as not maintainable. Keeping in view the ratio in Gujarat Urja Vikas Nigam Ltd. Vs. Mr. Amit Gupta (2021) ibclaw.in 44 SC, NCLAT held that the remedy for recovery of debts, disputed or not, cannot be determined in summary proceedings and the Code does not contemplate adjudication of any such nature. Any such steps taken under Section 60(5) of the Code before the Adjudicating Authority, would tantamount to bypassing/short-circuiting the Judicial Proceedings. The Appellant is well within its powers to take appropriate steps to file legal proceedings, if the circumstances so warrant. The Code expressly provides for the Liquidator to institute or defend any Suit, Prosecution or other Legal Proceedings, Civil or Criminal, in the name or on behalf of the Corporate Debtor.

Whether the Adjudicating Authority has the powers to pass Orders under Section 60(5)(b) of the Code for recovery of amounts by the Corporate Debtor against its Sundry Debtors – Shri Ramachandra D. Choudhary RP of M/s. Oasis Tradelink Ltd. Vs. Bansal Trading Company – NCLAT New Delhi Read Post »

The Adjudicating Authority (NCLT) is not empowered to deal with the matters falling under the purview of another authority (under PMLA) – Kiran Shah, RP of KSL and Industries Ltd. Vs. Enforcement Directorate, Kolkata – NCLAT New Delhi

NCLAT held that the Appellant/Resolution Professional even though has filed Company Appeal being dissatisfied with the order dated 31.12.2020[filed by the Applicant/IRP for KSL Industries Ltd./Corporate Debtor under Sections 14,18,25 & 60(5) of Code] seeking to set aside the Attachment of the Property of the Corporate Debtor by the Respondent/Enforcement Directorate vide order dated 24.10.2019 passed by the Adjudicating Authority PMLA etc., this Tribunal makes it candidly clear that filing of Application under Section 60(5) of the Code is not an all pervasive one, thereby conferring Jurisdiction to an Adjudicating Authority (NCLT) to determine any question/issue of priorities, question of Law or Facts pertaining to the Corporate Debtor when in reality in Law, the Adjudicating Authority (NCLT) is not empowered to deal with the matters falling under the purview of another authority under PMLA. Viewed in that perspective, IA 81 of 2020 in CP(IB) No. 397/NCLT/AHM/2018 filed by the Applicant/IRP for KSL & Industries Ltd is held by this Tribunal as not maintainable in law. Resultantly, the Appeal fails. In fine, the Company Appeal is dismissed.

The Adjudicating Authority (NCLT) is not empowered to deal with the matters falling under the purview of another authority (under PMLA) – Kiran Shah, RP of KSL and Industries Ltd. Vs. Enforcement Directorate, Kolkata – NCLAT New Delhi Read Post »

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