2017 (5) TMI 1471 - Tri - Insolvency and Bankruptcy

Order of stay -pending suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law - Held that - Insolvency and Bankruptcy Code, 2016 will prevail over all other law in force, including the Company Act, 1956 under which winding up proceedings have been initiated. It appears that the aforesaid provisions have not been brought to the Hon ble Judge of the Madras High Court. In the circumstances we give liberty to the parties to bring this fact to the notice of the Hon ble Madras High Court, Chennai. Thereafter, the order of stay is not vacated the Appellate Tribunal will decide the case on merit. Further as the appellant has already moved before the Hon ble Madras High Court and have obtained an order of stay on 4 May, 2017 from the High Court, then in such circumstances the appellant will reply as to why the appeal be dismissed, the appellant having already moved before the Hon ble High Court

Summary

Issues:
1. Stay of insolvency proceedings by the Madras High Court.
2. Interpretation of Section 14 of the Insolvency and Bankruptcy Code, 2016.
3. Application of Section 238 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The judgment deals with the issue of a stay granted by the Madras High Court on insolvency proceedings initiated by the Adjudicating Authority, Chennai Bench. The Tribunal examined Section 14 of the Insolvency and Bankruptcy Code, 2016, which declares a moratorium on various actions upon the insolvency commencement date. The provision prohibits the institution or continuation of suits against the corporate debtor, transfer of assets, enforcement of security interests, and recovery of property by owners or lessors during the moratorium period. It was noted that all pending suits or proceedings against the corporate debtor are stayed under Clause (a) of sub-section (1) of Section 14.

Furthermore, the Tribunal analyzed Section 238 of the Insolvency and Bankruptcy Code, 2016, which states that the provisions of the Code will prevail over any other law in force. This means that the Code supersedes any inconsistent provisions in other laws, including the Company Act, 1956, under which winding up proceedings were initiated. The Tribunal observed that the provisions of the Insolvency and Bankruptcy Code, 2016, were not brought to the attention of the Hon'ble Judge of the Madras High Court. Therefore, the parties were granted liberty to inform the High Court about these provisions, and if the stay order is not vacated, the Appellate Tribunal would decide the case on merit.

In conclusion, the Tribunal directed the appellant to explain why the appeal should not be dismissed since they had already obtained a stay order from the Madras High Court. The matter was scheduled for further hearing on a specified date to allow the parties to address the issues raised regarding the stay order and the applicability of the relevant provisions of the Insolvency and Bankruptcy Code, 2016.