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2019 (12) TMI 1374 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor faield to make repayment of its debt - existence of debt and dispute or not - whether NCLT can order possession of the property of Corporate Applicant to facilitate the CIRP process and allow the Resolution Professional to take possession of the assets of Corporate Applicant, pending adjudication of pending suit filed by Corporate Applicant seeking possession of the shed from the applicant? - HELD THAT - Section 60(5) and (b)(c) of the Code empowers NCLT to entertain the dispute raised in the suit, section 63 of the Code further bars the jurisdiction of the civil court in matters pertaining to the NCLAT, section 231 of the Code also bar the jurisdiction of the civil court from granting any injunction in respect of any action taken or in pursuance of any order passed by the Adjudicating authority under this Code. This code is a self-contained legislation conferring the supervisory powers on the NCLT over CIRP process right from the stage of application being made for initiation of the CIRP process to the completion of the CIRP/ Liquidation as the case may be - Upon conjoint reading of section 60(5), section 63, section 231 and section 238, the jurisdiction of Civil Court is excluded related to the matters related to I B code. Therefore, it can be held that NCLT can order possession of the property of Corporate Applicant to facilitate the CIRP process and allow the Resolution Professional to take possession of the assets of Corporate Applicant. It is the case of Corporate Applicant that he is seeking possession in the suit, whereas the Applicant is only claiming recovery of monies in his suit. There are no restraint orders passed in both the cases. Therefore, the Resolutions Professional's claim for possession of shed before the adjudicating authority in view of CIRP order, can be entertained under the I B Code. In view of the overriding powers under section 238 of the Code and Rule 11 of NCLT Rules 2016, and it is directed that Resolution Professional/ Liquidator shall be allowed to take possession of the Shed from the Applicant - Application disposed off.
Issues Involved:
1. Legality of the Applicant's occupation of the Shed. 2. Jurisdiction of the National Company Law Tribunal (NCLT) versus Civil Court. 3. Powers of the Resolution Professional (RP) under the Insolvency and Bankruptcy Code (IBC), 2016. 4. Impact of pending civil suits on the Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: 1. Legality of the Applicant's occupation of the Shed: The Applicant claimed that he was not in illegal occupation of the Shed, asserting his right based on an Agreement dated 28th January 1997, and his status as an erstwhile employee of the Corporate Applicant. The Applicant also mentioned a pending Special Suit No. 23 of 2009 for recovery of monies from the Corporate Applicant. Conversely, the Resolution Professional argued that the Applicant was in illegal occupation, citing Clause 7 of the Agreement which entitled the Petitioner to ask the Applicant to vacate the Shed within one month of notice. The Corporate Applicant had already filed Special Suit No. 21/2009/A seeking possession of the Shed. 2. Jurisdiction of the National Company Law Tribunal (NCLT) versus Civil Court: The Tribunal emphasized that under Section 60(5) of the IBC, 2016, the NCLT has jurisdiction to entertain and dispose of any application or proceeding by or against the Corporate Applicant. This jurisdiction is exclusive, as further reinforced by Sections 63 and 231 of the Code, which bar the jurisdiction of civil courts in matters pertaining to the NCLT. The Tribunal cited the judgment in *Liberty House Group Pte Ltd. Vs. State Bank of India and Ors.*, which confirmed that no civil court shall have jurisdiction over matters under the NCLT's domain. 3. Powers of the Resolution Professional (RP) under the Insolvency and Bankruptcy Code (IBC), 2016: The Tribunal noted that the RP has the duty to take control and custody of any asset over which the Corporate Applicant has ownership rights, as per Section 18 of the IBC. This includes assets not in the possession of the Corporate Applicant. The Tribunal referred to the judgment in *Swiss Ribbons (P) Ltd. Vs. Union of India*, which clarified that the RP has no adjudicatory powers but must take control of assets subject to ownership determination by a court or authority. The Tribunal also referenced the *Innoventive Industries Ltd. Vs. ICICI Bank* case, emphasizing the unified and exhaustive nature of the IBC. 4. Impact of pending civil suits on the Corporate Insolvency Resolution Process (CIRP): The Tribunal acknowledged the pending suits: Special Suit No. 21/2009/A by the Corporate Applicant for possession of the Shed, and Special Suit No. 23 of 2009 by the Applicant for recovery of money. The Tribunal stated that the moratorium under the IBC temporarily stayed the suit filed by the Applicant, but the suit for recovery of possession by the Corporate Applicant would continue. The Tribunal concluded that the RP's claim for possession of the Shed could be entertained under the IBC, given the absence of restraint orders in the pending suits. Conclusion: The Tribunal directed that the Resolution Professional/Liquidator shall be allowed to take possession of the Shed from the Applicant, agreeing with the decision of the Member (Judicial). The application was disposed of accordingly, upholding the overriding powers of the IBC and the exclusive jurisdiction of the NCLT.
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