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2020 (9) TMI 1070 - Tri - Insolvency and BankruptcyCIRP Process - validity of the order of the Presiding Officer under the Payment of Wages Act, 1936 - Scope of Section 238 of the IBC, 2016 - moratorium was declared u/s 14 - violation of provisions of Section 14 as well as Section 238 of IBC, 2016 - HELD THAT - The Hon'ble Supreme Court has clearly held in the case of Alchemist Asset Reconstruction Company Ltd. Vs. M/s. Hotel Gaudavan Pvt. Ltd. 2017 (12) TMI 1107 - SUPREME COURT held that the steps that have to be taken under the Insolvency Code will continue unimpeded by any order of any other Court - The ratio decidendi of the Hon'ble Supreme Court is binding on all subordinate authorities of the State vide Articles 141 144 of the Constitution of India. The order passed by the Presiding Officer under the Payment of Wages Act, 1936, is still-born and a nullity in law and cannot stand in view of the foregoing narrative and the provisions of law as enunciated in this order and consequently stands invalidated - A copy of this order may be served on the Presiding Officer so as to take note of this Tribunal's order and to refrain from acting against the interest of justice. Application allowed.
Issues involved:
1. Interpretation of Section 14 and Section 238 of the Insolvency and Bankruptcy Code, 2016 in relation to actions taken by the Presiding Officer under the Payment of Wages Act, 1936. 2. Validity of judgment passed by the Presiding Officer under the Payment of Wages Act, 1936 during Corporate Insolvency Resolution Process (CIRP). 3. Application of the moratorium under Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 on arbitration proceedings. Analysis: 1. The Tribunal considered an application under Section 14, read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016, related to the actions taken by the Presiding Officer under the Payment of Wages Act, 1936. The Presiding Officer directed the Corporate Debtor to pay a specific sum within a set period, despite the Corporate Debtor undergoing CIRP. The Resolution Professional (RP) argued that the Presiding Officer failed to consider Section 238 of the IBC, 2016 and the impact of the moratorium under Section 14. The Tribunal found the judgment void ab-initio and non-est in law due to its inconsistency with Section 14 and Section 238 of the IBC, 2016, citing the Supreme Court's decision in a similar case. 2. The Tribunal emphasized that the judgment passed by the Presiding Officer under the Payment of Wages Act, 1936 was invalid and could not stand legally. The Tribunal highlighted the importance of following the provisions of law, including the moratorium under the IBC, 2016, and the binding nature of the Supreme Court's decisions on subordinate authorities. The order passed by the Presiding Officer was deemed null and void, and the Tribunal directed the RP to update on further developments, indicating the matter's continuation. 3. The Tribunal referred to a Supreme Court case regarding the effect of the moratorium under Section 14(1)(a) of the IBC, 2016 on arbitration proceedings. The Supreme Court decision clarified that once an insolvency petition is admitted, no new arbitration proceedings can be initiated against Corporate Debtors during the moratorium period. The Tribunal, following the Supreme Court's ruling, set aside an order related to arbitration proceedings initiated post-moratorium and emphasized that such proceedings were non-est in law. Additionally, the Tribunal quashed a criminal proceeding aimed at obstructing the IRP's duties under the Insolvency Code. In conclusion, the Tribunal's judgment clarified the application of the moratorium under the IBC, 2016 on various legal proceedings, emphasizing the need for consistency with statutory provisions and higher court decisions. The decision invalidated the Presiding Officer's order under the Payment of Wages Act, 1936 and highlighted the RP's responsibility to update on the case's progress.
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