Gujarat High Court
Onaway Industries Limited vs Sicom Limited & on 23 September, 2017
Author: Rajesh H.Shukla
Bench: Rajesh H.Shukla
C/SCA/17656/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 17656 of 2017
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ONAWAY INDUSTRIES LIMITED....Petitioner(s)
Versus
SICOM LIMITED & 1....Respondent(s)
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Appearance:
MR KAMAL TRIVEDI, Advocate General & Sr. Advocate
appearing with MR. PARTH CONTRACTOR for Petitioner.
DS AFF.NOT FILED (N) for the Respondent(s) No. 1
MR MANISH R BHATT, Sr. Advocate with MR MAULIK G
NANAVATI for Respondent(s) : 2,
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CORAM: HONOURABLE MR.JUSTICE RAJESH H.SHUKLA
Date : 23/09/2017
ORAL ORDER
1. The present petition is filed by the petitioner under Articles 19(1)(g), 226 and 300A of the Constitution of India as well as under the provision of the Insolvency and Bankruptcy Code, 2016 and in the matter against the order passed by the Hon'ble National Company Law Tribunal at Ahmedabad dated 01.08.2017 for the prayers as prayed for in the petition inter alia to grant stay against the respondent no.1 from making any recovery of the dues from the respondent no.2 during the moratorium period in violation of Section 14 of the Insolvency and Bankruptcy Code, Page 1 of 8 HC-NIC Page 1 of 8 Created On Mon Oct 02 04:18:28 IST 2017 C/SCA/17656/2017 ORDER 2016 and the order dated 01.08.2017 passed by the Hon'ble National Company Law Tribunal at Ahmedabad in C.P. (I.B.) No.53/7/NCLT/AHM/2017 on the grounds stated in the memo of petition.
2. Heard learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor for the petitioner and learned Senior Counsel, Shri Manish R. Bhatt appearing with learned advocate, Shri Maulik Nanavati for the respondent no.2.
3. Learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor referred to the background of the facts, which has been reflected from the order passed by the Adjudicating Authority i.e. NCLT, Ahmedabad Bench, Ahmedabad produced on record and specifically referred to the provision of the Insolvency and Bankruptcy Code, 2016. He also referred to the scheme and submitted that once the proceedings are admitted under the Insolvency and Bankruptcy Code, 2016 and is pending for consideration, the respondent no.1, SICOM Ltd. on the basis of the order passed by the Debt Recovery Tribunal, Ahmedabad produced at Page 2 of 8 HC-NIC Page 2 of 8 Created On Mon Oct 02 04:18:28 IST 2017 C/SCA/17656/2017 ORDER AnnexureE2 cannot make recovery by recovering the property mortgaged, for which, the panchnama is produced at AnnexureI. Therefore, learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor has submitted that as the Member of the NCLT, Ahmedabad Bench is not available due to Navaratri holidays, they have to move this Court urgently.
4. Learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor has also pointed out that the respondent no.1 is the Member of the Committee of Creditors and, therefore, is very much aware about the proceedings as per the Insolvency and Bankruptcy Code, 2016 and, therefore, could not have proceeded further in the manner for the recovery of the dues or for enforcement of the order of the Hon'ble Debt Recovery Tribunal in such a manner. He, therefore, submitted that as no other remedy is available, the present petition is moved. Learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor has pointedly Page 3 of 8 HC-NIC Page 3 of 8 Created On Mon Oct 02 04:18:28 IST 2017 C/SCA/17656/2017 ORDER referred to Page No.26 referring to the Members of the Committee and has also pointedly referred to the Resolution and the proceeding in the meeting to substantiate his submission with regard to the proceeding including the agenda produced on record. It is in this background, he has submitted that the interim relief may be granted till regular bench of NCLT, Ahmedabad is available.
5. Learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor has also referred to the provision of Section 18 of the Insolvency and Bankruptcy Code, 2016, which provides "Duties of interim resolution professional" and emphasized Sections 18(1)(b), (c), (d) and (f) and submitted that once the interim resolution professional is incharge, he will take charge of all properties and the procedure as provided in the Insolvency and Bankruptcy Code, 2016, has to be followed. He, therefore, submitted that control over and monitoring of the assets of corporate debtor is now required to be taken care as provided in the Insolvency and Bankruptcy Code, 2016 and if any such recovery is made, it will affect the very Page 4 of 8 HC-NIC Page 4 of 8 Created On Mon Oct 02 04:18:28 IST 2017 C/SCA/17656/2017 ORDER purpose of the Insolvency and Bankruptcy Code, 2016 and the procedure prescribed by the Insolvency and Bankruptcy Code, 2016.
6. Learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor referred to the judgment of the Allahbad High Court in Writ - C No. 30285 of 2017 in case of Sanjeev Shriya Vs. State Bank of India & Ors. connected with Writ - C No. 30033 of 2017 in case of Deepak Singhania & Anr. Vs. State Bank of India and pointedly referred to some of the observations that the object of IBC is provided and it has been discussed that "other creditor cannot proceed for execution or the recovery". In that case, it has been specifically stated that SBI had not disassociated itself from the proceeding before the NCLT in the same manner like in the present case. He submitted that the respondent no.1 is the Member of the Committee.
7. Learned Senior Counsel, Shri Manish Bhatt appearing with learned advocate, Shri Maulik Nanavati for the respondent no.2 through its Resolution Professional, Shri Sundaresh Bhat has also supported the submission made by learned Page 5 of 8 HC-NIC Page 5 of 8 Created On Mon Oct 02 04:18:28 IST 2017 C/SCA/17656/2017 ORDER Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor with regard to the pending proceeding before the National Company Law Tribunal, Ahmedabad. He also referred to the provision of Section 231 of the Insolvency and Bankruptcy Code, 2016 and the duties and procedure to be adopted by the resolution professional. He further submitted that the provision of the Insolvency and Bankruptcy Code, 2016 do not justify any such procedure for recovery at the behest of one of the creditors.
8. In view of these rival submissions and having regard to the background of the facts and the provisions of the Insolvency and Bankruptcy Code, 2016, it is required to be considered whether such recovery is permissible. The provision of Section 231 of the Insolvency and Bankruptcy Code, 2016 provides for the bar of jurisdiction, which has reference to the authority in respect of adjudication to be made. The provision of Section 238 of the Code, 2016 refers to overriding effect on this, which reads as under: "238. Provisions of this Code to override Page 6 of 8 HC-NIC Page 6 of 8 Created On Mon Oct 02 04:18:28 IST 2017 C/SCA/17656/2017 ORDER other laws.
The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law."
9. Therefore having regard to the background of the facts and circumstances and considering overriding effect as provided in Section 238 of the Insolvency and Bankruptcy Code, 2016 as stated above, prima facie the procedure has been prescribed by the Insolvency and Bankruptcy Code, 2016, which is required to be considered, particularly when the matter is pending before the NCLT, Ahmedabad bench.
10. Therefore without any further elaboration, having regard to the provision of the Insolvency and Bankruptcy Code, 2016 and also the judgment as referred to above by learned Advocate General & Senior Counsel, Shri Kamal Trivedi appearing with learned advocate, Shri Parth Contractor of the resolution professional, interim protection is required to be granted till the matter could be taken up by NCLT, Ahmedabad bench.
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11. Hence following order : th Notice to the respondents returnable on 5 October, 2017.
Learned Senior Counsel, Shri Manish Bhatt appearing with learned advocate, Shri Maulik Nanavati waives service of notice for respondent no.2.
In the meantime, status quo is directed to be maintained till then and no coercive steps regarding the possession of the property in question shall be taken till then.
Direct service is permitted today.
(RAJESH H.SHUKLA, J.) Gautam Page 8 of 8 HC-NIC Page 8 of 8 Created On Mon Oct 02 04:18:28 IST 2017