2021 (12) TMI 125 - HC - Companies Law

Direction to maintain status quo - seeking vacation of stay granted - petitioner submits that the impugned order is wholly without jurisdiction and the Tribunal has failed to appreciate that the petitioner is a secured creditor whose rights are to be governed under the SARFAESI Act - HELD THAT - There are no reason to stay the impugned order. Once the petitioner has itself approached the Tribunal by way of an application to seek vacation of order of status quo granted on 30.09.2021, which application is pending adjudication before the Tribunal and is now listed on 15.11.2021, the Tribunal will necessarily consider the petitioner s plea that the impugned order was without jurisdiction. Moreover, it is the petitioner s own case that it has already taken possession of the subject properties and therefore merely because it has been directed to maintain status quo, no grave or irreparable loss is likely to be caused to the petitioner if the direction to maintain status quo continues further. While issuing notice in the petition, the application for interim relief being CM APPL. 35687/2021 is rejected - List on 29.11.2021.

Summary

Issues:
1. Challenge to NCLT orders directing to maintain status quo.
2. Jurisdiction of NCLT in secured creditor's case under SARFAESI Act.
3. Petitioner's plea for setting aside impugned order.
4. Consideration of petitioner's application for vacation of stay.
5. Rejection of application for interim relief.
6. Granting time for filing counter affidavit.

Analysis:
The High Court considered a petition challenging NCLT orders directing the parties to maintain status quo. The petitioner, a secured creditor under the SARFAESI Act, contended that the orders were without jurisdiction as the possession of subject properties was not with the Corporate Debtor. The Court noted that the petitioner had applied for vacation of the status quo order, pending before the Tribunal for adjudication on 15.11.2021. The Court observed that since the petitioner had taken possession of the properties, maintaining status quo would not cause irreparable loss. The Tribunal was expected to consider the petitioner's application on the given date, as all parties were directed to complete pleadings. Consequently, the Court rejected the application for interim relief, emphasizing the upcoming Tribunal hearing on the matter.

The Court addressed the jurisdictional issue raised by the petitioner, asserting that the Tribunal would consider the plea of lack of jurisdiction during the pending application for vacation of the status quo order. The Court highlighted that the petitioner's possession of the properties mitigated the urgency of setting aside the impugned order. The Tribunal's directive to complete pleadings by all parties indicated a comprehensive consideration of the matter on 15.11.2021. Consequently, the Court declined to stay the impugned order, emphasizing the ongoing Tribunal proceedings and the lack of grave loss to the petitioner due to the status quo directive.

In response to the petitioner's argument that the impugned order lacked jurisdiction, the Court emphasized the pending application before the Tribunal for vacation of the status quo order. The Court noted that the Tribunal was set to review the petitioner's application on 15.11.2021 and directed all parties to complete pleadings. Given the petitioner's possession of the subject properties and the Tribunal's scheduled consideration of the matter, the Court found no grounds to stay the impugned order. The Court's decision rested on the expectation that the Tribunal would address the jurisdictional concerns during the upcoming hearing, ensuring a comprehensive review of the petitioner's plea.

The Court rejected the petitioner's application for interim relief, citing the pending Tribunal proceedings and the lack of significant harm to the petitioner due to the status quo directive. The Court pointed out that the petitioner's possession of the properties and the Tribunal's scheduled consideration of the matter on 15.11.2021 indicated a comprehensive review process. Given these circumstances, the Court found no basis to stay the impugned order, emphasizing the ongoing Tribunal proceedings and the absence of substantial harm to the petitioner.