State Consumer Disputes Redressal Commission
Pushpa Gupta & Anr. vs Ksn Buildwell Pvt. Ltd. & Anr. on 22 April, 2024
PUSHPA GUPTA & ORS. VS. KSN BUILDWELL PVT. LTD. & ORS.
22.04.2024
IA-1224/2023 in EA- 135/21
Vide this order we shall dispose of an application on behalf of
Complainants/Decree Holder for issuance of warrants of arrest in the
name of directors.
The Counsel for the Respondent No.3/J.D. No.3 submitted that
the case of M/s K.S.N. Buildwell Pvt. Ltd. is pending before the Hon'ble National Company Law Tribunal, Delhi. Further, moratorium proceedings and corporate insolvency resolution process have been initiated against the JD Company.
We deem it appropriate to refer to Company Petition No. (IB)- 552 (ND)/2021 in the case titled as 'Omkara Assets Reconstruction Pvt. Ltd. Vs. K.S.N. Buildwell Pvt. Ltd.'. The operating part of the above-mentioned case of the NCLT is produced herein:
"12. As a sequel to the above discussion and in terms of Section 7 (5) (a) of the Code, the present application is hereby, admitted.
13. Mr. Anil Matta having registration number IBBI/IPA- 001/IP- P00223/2017-2019/10422 is appointed as an Interim Resolution Professional for corporate debtor.
14. In pursuance of Section 13 (2) of the Code, we direct that public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by Explanation to Regulation 6(1) of the IBBI Regulations, 2016) with regard to admission of this application under Section 7 of the Insolvency & Bankruptcy Code, 2016.
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15. We direct the applicant Financial Creditor to deposit a sum of Rs. 2 Lakhs with the Interim Resolution Professional namely Mr. Anil Matta to meet out the expenses to perform the functions assigned to him in accordance with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within three days from the date of receipt of this order by the Financial Creditor. The said amount however is subject to adjustment towards Resolution Process cost as per applicable rules.
16. We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the provisions of Section 14 (1) (a),
(b), (c) & (d) of the Code. Thus, the following prohibitions are imposed:
17. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as may be specified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14(3) (b) of the Code."
It is evident on a bare perusal of the above-mentioned order that the NCLT has declared moratorium in terms of Section 14 of the Code PAGE 2 OF 4 and an Interim Resolution Professional has been appointed for corporate debtor.
Further, it is also imperative to refer to Section 14 of the Insolvency and Bankruptcy Code, 2016 which is reproduced below:
"Section 14: Moratorium.
*14. (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:--
(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor......."
A perusal of the aforementioned provision makes it clear that in the cases where the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority shall be prohibited.
PAGE 3 OF 4 Therefore, as per the above-mentioned case and law discussed the continuation of the said proceedings i.e. proceedings arising out of E.A. No. 135/21 and I.A. No. 1224/23 despite imposition of moratorium will defeat the very purpose of the code.
Consequently, the present E.A. 135/2021 filed by the Decree Holder is put to rest for the time being, till the moratorium is in operation in C.P. (IB) No. 552 of 2021.
I.A No. 1224/2023 filed by the Decree Holder for issuance of warrants of arrest is put on hold.
List the matter on 27.11.2024.
(Justice Sangita Dhingra Sehgal) President (J.P. Agrawal) Member (General) PAGE 4 OF 4